Lake Elmo deductible could go up 500 times current level

Six employees at Lake Elmo City Hall have quit since March. At least three have publicly cited a hostile work environment as a factor. (Gazette staff photo by Alicia Lebens)

Due to months of fighting and staff turnover, the League of Minnesota Insurance Trust could raise the city of Lake Elmo’s insurance deductible to $250,000 per claim — 500 times more than the current deductible. Dan Greensweig, the assistant director of the League of Minnesota Cities Insurance Trust, came before the council Aug. 16 with the news that he and the insurance trust’s other staff members are planning to recommend the increase to the board of directors Sept. 7.

“The city’s coverage is up for renewal in January, and I think it is not likely a surprise that the LMCIT board is concerned about what is going on in Lake Elmo,” Greensweig said. “As you know, we are a self-insurance pool, and any losses in one city are shared with every other city that belong to that pool, so we need to make sure that one city isn’t making unacceptable risk increases for the others.”

He told the council there hasn’t been an increase in the number of claims the city has filed with the insurance trust.

“To be fair, there haven’t been a lot of claims in Lake Elmo, however I have to say that it doesn’t diminish the concern we have of the risk that we see being generated here,” Greensweig said. “I think it boils down to a couple fundamental issues: First it’s conflict we see among council members … and second is the relationship between council and staff.”

Staff from the League of Minnesota Cities and the Bureau of Mediation Services have offered to help council members over the past 10 months, but Greensweig said council behavior has not improved.

“Unfortunately, the kind of interaction we see in Lake Elmo too often reflects a deep lack of trust and an inability to work together on relatively simple issues like approving an agenda,” Greensweig said. “That leaves the board questioning the council’s ability to communicate with residents, the business community and other units of government.”

The actions taken by the insurance trust are not punishments or a desire to impose certain policies on the city, Greensweig said.

“While we don’t care what a city’s policies are, we do care deeply about processes on how the city got there,” Greensweig said. “It’s the processes in Lake Elmo that has us worried.”

Turnover in staff and administrative leadership has also plagued the city for years, and Greensweig indicated that staffing instability is a sign of problems at city hall.

“As you know, there has been a tremendous amount of turnover here in Lake Elmo, and especially noted in the administrator’s position in the past number of years,” Greensweig said. “To us, that is a strong indication that the environment created by the council affects city hall and the employees’ ability to get their jobs done. It’s also a red flag for potential claims.”

Former city administrator Dean Zuleger is currently suing the city due to comments made by current and former city council members and the alleged release of private employee data.

“I wish I had an easy answer for you,” Greensweig said. “In the last 10 months, the League has tried to provide assistance and I have met with all of you. We are convinced that all of you are decent people and want to see what is best for the city. Unfortunately, it appears that you just haven’t found a way to work as a group in a constructive way.”

Greensweig said now is the time for the insurance trust board of directors to take action in order to protect its other city members.

“We are trying to find a balance between helping a member that is having some problems and protecting the rest of the members,” Greensweig said. “What we are planning to suggest to the board is imposing a significantly higher deductible (per claim) — something in the neighborhood of $250,000.”

He told the board that the city’s current deductible is $500 per claim, and there was an audible gasp from the audience packed in the council chamber.

“That’s a lot more skin in the game on the part of the city,” Greensweig said. “Even if there are no additional claims, we hope that it gives incentive to the city to really focus on taking steps to minimize risks and passing them on to your residents.”

The League of Minnesota Cities Insurance Trust will meet Sept. 7 to receive Greensweig’s recommendation, hear from representatives from the city and make a decision. The action could take effect when the insurance policy is renewed in January 2017 or could take affect in October.

“We don’t like seeing our members struggling this much and — on a personal level — I can’t imagine this is fun for you,” Greensweig said.

Contact Alicia Lebens at [email protected]