COMMONWEALTH OF PENNSYLVANIA
COAL AND CLAY MINE SUBSIDENCE INSURANCE FUND
BOARD MEETING
October 4, 1996
A regular meeting of the Coal and Clay Mine Subsidence Insurance (MSI) Board was called to order at 10:00 on October 4, 1996 in the Department of Environmental Protection's Conference Room located on the Fifth Floor of the Rachel Carson State Office Building, Harrisburg, Pennsylvania.
Board members present at the meeting were: Peter T. Slack, 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 Representative for Board Member Catherine Baker-Knoll, State Treasurer; 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; David Hogeman, Chief of the Division of Environmental Analysis and Support; Frances Williams, MSI Program Supervisor; Sherry Datres, Budget Analyst; and Lawrence Ruane, MSI Program Administrator.
The following is an account of the actions taken at the meeting:
I. Approval of the Minutes of the Previous Meeting
The minutes of the July 26, 1996 meeting were reviewed and the Board directed that all future minutes be written in more of an outline form. Once completed, the minutes should be forwarded to the Board for consideration.
Prior to the discussion of the agenda items, the Board noted the accomplishments of the working sessions that had been held on August 27 and September 5. In these sessions, budgets, expenditures, and authorizations to expend for a seven year period were examined. As a result, the Board had a much better understanding of the fiscal process and MSI’s fiscal experiences.
II. Review of Fiscal Year (FY) 96 Rebudget and Consideration of amended Authorization to Expend
In support of a proposed resolution to increase the Fiscal Year (FY) 1996-97 authorization to expend monies from the MSI Fund to pay for the administrative costs of the MSI Program, the MSI staff presented the FY 1996-97 Rebudget Request to the Board. These documents demonstrated that the expenses of the program would rise from $1,541,106 to $2,100,457 because of permanently increased work requirements. The Board unanimously approved the resolution and directed that language be added to the Rebudget document to state that the marketing expenses for FY 96-97 would be used internally. The Board also directed that a phrase be added to the Resolution to state that the Rebudget was approved by the Office of the Budget.
The Board was provided with an update to the MSI Marketing Plan in which $100,000 was projected as the cost of the marketing efforts for FY 97 through 2001. The Break-Even Analysis and the Cost Benefit Analysis sections of the Marketing Plan were revised to reflect that change. The results demonstrated that the returns of the marketing efforts will be marginal in the first year but that subsequent years should show an ever increasing rate of return if the target growth of 4,100 policies per year is realized.
III. Review of FY 1997-98 Budget Request and a Resolution to Authorize an Expenditure
The Board reviewed the FY 97-98 Budget Request which estimates the cost of the MSI administrative operations at $2,203,237. Further review of the budget and the spending authorization was deferred until a later meeting.
IV. Other Business
Prior to the meeting being adjourned, the Board was informed that the MSI Marketing Committee will meet at the end of October to draft the RFP for Marketing. As directed by the Board, the RFP will require the vendor to provide a cost analysis, and the Board will review the RFP before it is processed.
The Board was informed that the efforts to recover MSI costs for active mining subsidence damage has been progressing. A coal operator has offered to repay the Fund for over $500,000 in damages that are recoverable under the provisions of the Federal Energy Policy Act.
To provide better notice of the MSI Board Meetings to the public, the Board authorized the publication of the meeting announcements in the PA Bulletin, in addition to the Sunshine Act Notices that have historically been placed in the Patriot News. The Department, through its Policy Office, would also make the announcement information and attachments available over the Internet via its World Wide Web site.
V. Next Meeting
The Board established that a meeting should be scheduled for sometime in December to further review the FY 97-98 budget, the associated spending resolution, and the Fund’s operational performance.
VI. Adjournment
With no further business, the meeting was adjourned.
KEY OBLIGATIONS
1. The minutes of the last two Board Meetings will be forwarded to the Board as soon as they are available.
2. The MSI Marketing Committee will continue to develop a RFP for marketing which will include a cost analysis, and the Board will participate in the review of the RFP.
3. Notice of the MSI Board Meetings will be published in the PA Bulletin, in addition to the Patriot News, and the Department will make the information available on the Internet.
4. The next meeting will be scheduled for December in which the fiscal year (FY) 1997-98 budget will be reviewed, FY 1997-98 spending authorization considered, and the MSI Fund’s operational performance will be reviewed.
Attachment 1
COMMONWEALTH OF PENNSYLVANIA
COAL AND CLAY MINE SUBSIDENCE INSURANCE FUND
BOARD MEETING
July 26, 1996
A special meeting of the Coal and Clay Mine Subsidence Insurance (MSI) Board was called to order at 10:05 on July 26, 1996, in the Department of Environmental Protection's Conference Room located on the Fifth Floor of the Rachel Carson State Office Building, Harrisburg, Pennsylvania.
Present at the meeting were: Peter T. Slack, 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 Representative for Board Member Catherine Baker-Knoll, State Treasurer; 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; David Hogeman, Chief of the Division of Environmental Analysis and Support; Frances Williams, MSI Program Supervisor; Lawrence Schnurr, MSI Program Supervisor; Edward Motycki, MSI Section Chief; and Lawrence Ruane, MSI Program Administrator.
The following is an account of the actions taken at the meeting:
I. Approval of the Minutes of the Previous Meeting
The minutes of the February 20, 1996, meeting were reviewed and approved with corrections to some typographical errors.
II. Review and Discussion of Business and Marketing Plans
In support of a proposed resolution to increase the Fiscal Year (FY) 1996-97 authorization to expend moneys from the MSI Fund to pay for the administrative costs of the MSI Program, the MSI staff presented the Business and Marketing Plans to the Board. These documents demonstrated current and projected increases to the MSI workload and the increases to staff and funding needed to meet these increases. The Business Plan documented that six additional MSI employees were needed to address outstanding and ongoing program needs.
The Board Members briefly discussed the documents and agreed that the outstanding work identified in the Work Load Analysis Section of the Business Plan should be conducted and that the staffing requirements for that work should be met.
The Board was updated on the efforts of the MSI Marketing Committee. The expenditures projected in the Marketing Cost Benefit Analysis Section of the Marketing Plan are now considered to be unrealistic. The Committee plans to secure the services of a marketing firm through the contracting process known as a RFP, and the marketing costs for FY 1997-98 are now estimated to be $100,000. The higher marketing costs are still estimated to be below the premium income that is anticipated from the marketing efforts.
The Board directed the staff to update the Marketing Plan prior to the Regular Board Meeting in September. The revised plan should use an average amount for the net policy premium instead of an amount calculated from a single year and contain revised Break-Even Analysis and Cost Benefit Analysis, which reflect the increased marketing costs. The Board also asked that they be provided a copy of the RFP when it is available and that the RFP require vendors to include a cost analysis in their marketing plans.
III. Consideration of a Resolution to Authorize an Expenditure
In presenting the Resolution to authorize and expend, the staff stated that the most recent estimates indicate that the authorization to expend should be $2,100,457 not the $1,709,106 estimated in the pending resolution. Board members Burkett and Webb questioned if, based upon the expenditures of previous years, the current budgeted amount of $1,541,106 would not be sufficient. After discussions about budget amounts, expenditures, and the budget process, the Board requested extensive background information on MSI budgets and expenditures and tabled the resolution until a future meeting.
V. Next Meeting
A work session was tentatively scheduled for August 27, 1996, in which MSI Budgets, Board Authorizations to Expend, and expenditures would be analyzed and an increase to the Board’s Authorization to Expend for FY 1996-97 would be considered.
VI. Adjournment
With no further business, the meeting was adjourned.
KEY OBLIGATION
1. The MSI Staff will provide the Board with documents pertaining to budgets, expenditures and authorizations to expend.
2. The MSI Marketing Committee will continue to develop a RFP for marketing and the Board will participate in the review of the RFP which will include a cost analysis.
3. The Board will consider an increase to the FY 96-97 spending authorization after it has reviewed the appropriate data in (1) above.
4. The Board will be provided with updated information related to the Marketing Plan.