ATTACHMENT 1
DRAFT
M I N U T E S
COMMONWEALTH OF PENNSYLVANIA
COAL AND CLAY MINE SUBSIDENCE INSURANCE FUND
BOARD MEETING

January 29, 1997

A regular meeting of the Mine Subsidence Insurance Board was called to order at 10:05 a.m. on January 29, 1997 in the Department of Environmental Protection’s Conference Room located on the Fifth Floor of the Rachel Carson State Office Building, Harrisburg, PA. Board members present at the meeting were: Roderick A. Fletcher, PE, Director, Bureau of Mining and Reclamation, Designated Chairman for James M. Seif, Secretary of the Department of Environmental Protection (DEP); Sharon E. Webb, Assistant General Counsel, Designated Board Member for Board Member Barbara Hafer, State Treasurer; and Michael Burkett, Actuary, Designated Representative for Board Member Linda S. Kaiser, Commissioner of Insurance. Also attending were the following DEP employees: Curt Pieper, Special Assistant to the Deputy Secretary for Mineral Resources Management; Marc Roda, Assistant Counsel; David Hogeman, Chief of the Division of Environmental Analysis and Support; Frances Williams, MSI Program Supervisor; Samuel Faith, Assistant to the Director of the Bureau of District Mining Operations; Lawrence Schnurr, MSI Program Supervisor; and Lawrence Ruane, MSI Program Administrator.

The following is a summary of the actions taken at the meeting:

I. Approval of the Minutes of the Previous Meeting

The meeting was called to order and the minutes of the July 26, 1996 and the October 4, 1996 meetings were approved.

II. Review of Marketing RFP

The preliminary draft of the Request for Proposal (RFP) for marketing was reviewed by the Board. After a general discussion about the level of detail that the Board wishes to have with such projects, the Board recommended language be added to the RFP to specify the revenue and expense projections that the RFP requires of the vendors. Language was also added to the attachment to the Fiscal Year (FY) 1997-98 Budget that limited the FY 1997-98 marketing expenses to $100,000.

III. Review of FY 1995-96 Operational Performance and Premium Rates

The Board reviewed the operational and financial performance of the MSI Fund and determined to leave the insurance coverage rates unchanged. It was noted by the staff that the average cost of coverage, at the average coverage level, is $1 per $1,000 of coverage.

IV. Review of FY 1996-97 Budget and Expenditures, Excess Reserves Report, and Consideration of FY 1997-98 Authorization to Expend Resolution

The Board reviewed documents that demonstrated the administrative expenditures for FY 1995 and projected expenditures for FY 1997. After a general discussion of the documents and administrative costs, the Board authorized up to 2.2 million dollars for the administrative costs of the MSI Program for FY 1997-98.

V. Inflation Factor Review and Resolution to Adopt Revised Inflation Factor

Upon review of various construction cost indices, the Board revised the MSI Coverage Inflation Index (the index that is provided to allow policyholders, at their option, to increase their coverage to keep pace with inflation) from 3% to 2%.

VI. By-Law Review

The Board briefly examined some provisions of its By-Laws, or operational procedures. The By-Laws have not been revised since 1979 and the Board determined that a more extensive review would take place at the next regularly scheduled MSI Board Meeting. The staff was directed to prepare draft revisions and to submit them to the Board with the next regular meeting’s agenda.

VII. Next Meeting and Adjournment

The Board considered a date for the next regular meeting and directed that the next meeting should be held in October or November. The precise date of the meetings would be set so that the meeting will correspond with the availability of fiscal reports and budget documents. The Board noted that by so doing, the broadest number of routine issues may be considered by the Board at a time when the topics are most relevant to the MSI Fund’s fiscal and operational performance. With no further business before the Board, the meeting was adjourned.

KEY OBLIGATIONS

1. The MSI Staff will circulate the MSI Board Resolutions for signatures.

2. The MSI Marketing Committee will make the revisions to the RFP recommended by the Board and process the RFP.

3. The staff will prepare draft revisions to the MSI Board By-Laws and distribute them with the agenda for the next regular Board Meeting.

4. The MSI staff will notify the Board as to the time and date of the next MSI Board Meeting (tentatively planned for the second week of October 1997, or to coincide with the availability of Fiscal Year ending reports and the proposed FY 1998-99 Budget.

5. The Board will be provided with updated information relating to the Marketing Plan.