MEETING DATE:
JUNE 23, 2026
SUBJECT:
Title
RESOLUTION NO. 2026-9624 - APPROVAL OF WITHDRAWAL FROM THE PUBLIC AGENCIES SELF-INSURANCE SYSTEM (PASIS) AND AUTHORIZATION FOR THE CITY MANAGER TO EXECUTE THE WITHDRAWAL AGREEMENT AND ANY ASSOCIATED DOCUMENTS TO EFFECTUATE THE SAME
Body
Recommendation
Recommendation
ADOPT a resolution approving withdrawal from the Public Agencies Self-Insurance System (PASIS) effective July 1, 2026, approving the Agreement for Withdrawal from PASIS Membership between PASIS and the City of San Marcos; and authorizing the City Manager to execute the Withdrawal Agreement and any related documents necessary to effectuate the City’s withdrawal from PASIS.
Body
Board or Commission Action
N/A
Executive Summary
The City of San Marcos currently participates in the Public Agencies Self-Insurance System (PASIS) for worker’s compensation coverage and claims administration.
As part of the City's ongoing efforts to optimize risk management operations, Human Resources / Risk staff completed a best value analysis comparing the city's existing workers' compensation service model with a consolidated approach under the California Joint Powers Insurance Authority (CJPIA). The analysis considered financial impacts, claims administration services, risk management support, and overall program efficiency. Following the evaluation, the City Council adopted Resolution No. 2026-9599 on May 26, 2026, authorizing participation in the CJPIA Excess Workers’ Compensation Protection Program effective July 1, 2026.
To complete the transition to CJPIA coverage, the City must formally withdraw from PASIS and execute a Withdrawal Agreement establishing the terms and conditions of the withdrawal.
Discussion
The proposed Withdrawal Agreement provides for the City's withdrawal from PASIS effective July 1, 2026, and has been approved by the PASIS board in the form presented for the Council’s consideration.
As part of the transition to the California Joint Powers Insurance Authority (CJPIA), all open workers' compensation claims incurred during the city's participation in PASIS, commonly referred to as "tail claims," will transfer to CJPIA for continued claims administration. This transition will allow the City to consolidate workers' compensation coverage, claims administration, and risk management services under a single provider while maintaining continuity of service for claimants and minimizing administrative complexity.
Under the terms of the Withdrawal Agreement, the City will retain responsibility for workers' compensation liabilities associated with claims incurred during its period of participation in PASIS, including claims that remain open after withdrawal. The Agreement also establishes certain continuing obligations related to assessments, reporting requirements, administrative costs, and other expenses attributable to the city's participation in PASIS. In addition, the Agreement requires the City to maintain a minimum fund balance to address future obligations associated with open claims, related reporting requirements, and potential PASIS dissolution costs.
Approval of the Withdrawal Agreement will allow the City to complete the transition from PASIS to CJPIA and establish a unified approach to workers' compensation coverage, claims administration, and risk management services. By consolidating these services under CJPIA, the City will streamline administration, improve coordination of claims management activities, and reduce the need to work through multiple providers for workers' compensation-related services.
Environmental Review
The proposed action is not a project under the California Environmental Quality Act (CEQA) pursuant to Section 15378(b)(5) of the State CEQA Guidelines because it involves organizational and administrative activities of government that will not result in a direct or indirect physical change in the environment.
Fiscal Impact
The City's workers' compensation financing structure will remain unchanged under the CJPIA, with a self-insured retention of $300,000 per claim and excess coverage above that threshold, consistent with the current PASIS program.
The City will continue to be responsible for workers' compensation liabilities associated with claims incurred during its participation in PASIS. All open claims will transfer to CJPIA for continued administration, providing a streamlined approach to workers' compensation coverage, claims administration, and risk management services.
Upon completion of the withdrawal process and acceptance of PASIS' financial statements, PASIS will return the City's reserve funds held in LAIF/CLASS and administrative reserves, less the required $50,000 minimum fund balance. These funds will be placed into a claims reserve fund to support the ongoing administration and payment of claims incurred during the City's participation in PASIS.
Workers' compensation claim costs, insurance premiums, and related program expenses are budgeted annually within the Human Resources/Risk Management budget.
Attachment(s)
Resolution
Withdrawal Agreement between PASIS and the City of San Marcos
Prepared by: Janelle Laughlin, Administrative Services Director
Submitted by: Janelle Laughlin, Administrative Services Director
Reviewed by: Janelle Laughlin, Administrative Services Director
Approved by: Michelle Bender, City Manager