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Intergovernmental Agreement

Effective July 1, 2020

WHEREAS, Tennessee law identified as the Interlocal Cooperation Act (Tenn. Code Ann. § 12-9- 101, et seq.) and the Tennessee Governmental Tort Liability Act (Tenn. Code Ann. § 29-20-101, et seq.) with special emphasis on (Sec. 401) provide that public entities may contract with one another to perform any activity authorized by law; and

WHEREAS, Utrust and the Member are desirous of setting forth the obligations and responsibilities of each party hereto;

NOW THEREFORE, IN CONSIDERATION OF THESE PREMISES, and the mutual covenants herein contained, the parties, intending to be legally bound, agree as follows:


Establishment and Purpose

Section 1. NAME. Pursuant to the provisions of the Tennessee Interlocal Cooperation Act and the policies and bylaws from time to time promulgated by the Board of Trustees (Board), the members hereby affirm the establishment of the Tennessee School Boards Unemployment Compensation Trust, officially known as Utrust.

Section 2. CLASSIFICATION. Utrust shall be a section 115 organization with the funds collected as provided herein to be used only for the purpose and in the manner set out in this Agreement or Bylaws promulgated pursuant to the authority granted by this Agreement.

Section 3. PURPOSE. The purposes of Utrust are to help members manage unemployment compensation issues, stabilize annual fluctuations in unemployment compensation costs utilizing the reserves of Utrust to pay unemployment claims on behalf of its members when appropriate, to promote excellent employment practices which will diminish unemployment compensation claims and to assist its members, through mini-grants, in making schools better places to work and learn.


Term of Agreement

Section 1. TERM. The term of this agreement shall commence on July 1, 2020 replacing all previous Intergovernmental Agreements for the Tennessee School Boards Unemployment Compensation Trust (Utrust),


Officers and Trustees

Section 1. ELECTION OF TRUSTEES. There shall be (7) Trustees elected by the membership of Utrust, each for a seven-year term, Trustees shall establish procedures for election in the Utrust Bylaws.

Section 2. OFFICERS. Officers of the Trust shall consist of a Chairman, a Vice-Chairman, an Administrator and such other officers as may be established by the Trustees. All officers shall be elected annually by the Board of Trustees, except the Administrator, who shall be employed by and serve at the pleasure of the Board of Trustees.

Section 3. EXPENSES OF TRUSTEES. No Trustee shall receive any salary for services from

the Trust. Any Trustee or other officer of the Trust may submit to the Trust for approval, and be reimbursed for, expenses incurred in the pursuit of his position. Reimbursement for such expenses shall be in accordance with procedures and policies established by the Board of Trustees consistent with the terms of this Agreement.

Section 4. MEETINGS OF TRUSTEES. Regular meetings of the Board of Trustees shall be held; any item of business may be considered at a regular meeting. The time, date and location of meetings of the Board shall be determined by the Board.

Section 5. NOTICE OF MEETINGS. All meetings of the Board shall be conducted in the manner required by law. In the event of any conflict between any provision of this Agreement and any provision of any applicable law, this Agreement shall be deemed modified to the extent necessary to comply with such law. In addition to any notices of meetings required to be served under this Agreement, the Administrator shall cause to be published any schedule or notice of meetings of the Board required by law. Such publication requirement shall be deemed met by announcement on the Utrust website.

Section 6. REQUIRED VOTE. Any action by the Trustees may be taken at a duly constituted meeting. A majority of the Trustees in attendance and voting at a duly constituted meeting where a quorum is present shall be required for action.

Section 7. MANAGEMENT OF THE TRUST. It is the express intention of the settlors of this Trust that the Trustees herein named and their successors in Trust have the exclusive authority to manage this Trust and to delegate to others, as the Trustees may deem necessary, the performance of any duties required in the administration of this Trust. It is also the express intention of the settlors that no court shall substitute its judgment for that of the Trustees in the making of any decisions relative to the carrying out of the Trust.

Section 8. LIABILITY OF TRUSTEES. The Trustees shall use ordinary care and reasonable diligence in the exercise of their power and in the performance of their duties. They shall not be liable for any mistake of judgment or other action made, taken or omitted by them in good faith; nor for any action taken or omitted by any agent, employee or attorney selected with reasonable care; nor for the loss incurred through investment of Trust money, or failure to invest. No Trustee shall be liable for any action taken or omitted by any other Trustee. They shall not be required to give a bond or other security to guarantee the faithful performance of their duties hereunder.

Section 9. INDEMNIFICATION OF OFFICERS AND EMPLOYEES. The Trust shall have the power and authority to indemnify and hold harmless to the full extent permitted by law any person who is or was a Trustee, officer, employee or agent of the Trust when such actions are not in conflict with advice from the Trust’s attorneys.

Section 10. TREASURER. The Trust Administrator shall serve as Treasurer of the Trust, without voting privileges.

Section 11. RESIGNATION OF A TRUSTEE. Any Trustee may resign upon giving notification in writing to the Trust Administrator.

Section 12. APPOINTMENT OF SUCCESSOR TRUSTEES. Upon the death, resignation or removal of a trustee, the remaining trustees shall appoint a new Trustee to serve the remainder of the term.

Section 13. DUTIES OF ADMINISTRATOR. The Administrator shall be the principal operating officer of the Trust and shall supervise and control the operations of the Trust and carry out the purpose of the Trust as directed by the Board of Trustees. Among the duties and authority of the Administrator shall be the following:

  • Sign on behalf of the Trust any instrument which the Trust has authorized to be executed and, in general, to perform all duties incidental to the office of Administrator and such other duties as may be prescribed by the Board of Trustees, consistent with this
  • At each regular meeting of the Board of Trustees and at such other times as requested to do so by the Board, to present a full report of activities and the fiscal condition of the
  • To compile and list annually all claims filed and payouts made for the
  • Make distributions from the Trust funds for payment of claims and administrative expenses of the Trust within the constraints of the budget approved by the
  • Disburse funds held by the Trust as needed to carry out the purposes of the

Section 14. BYLAWS. The Trustees shall adopt by-laws which shall govern and control the operation and administration of the Trust which shall not be in conflict with any terms and provisions of the Intergovernmental Agreement.

Section 15. AMENDMENT OF AGREEMENT. The provisions of this Intergovernmental Agreement may be amended by the Board of Trustees subject to the execution of the so revised Agreement by the members choosing to continue participation in the Trust at each effective date.


Authority and Duties of the Trustees

Section 1. DUTIES. The board shall carry out the purposes and duties of the Trust through its Administrator including, but not limited to, the following:

  • Prepare the annual budget of the Trust and any amendments to that budget;
  • Approve education and other programs relating to claim reduction;
  • Contract for the services of agents, independent contractors, investment counsel, accountants, attorneys, auditors and such other persons as may be necessary to administer and accomplish the purposes of the Trust;
  • Determine the compensation for all such agents, and independent contractors;
  • Prepare annual reports of claims filed and paid by the Trust;
  • Obtain annually an audited report of the financial affairs of the Trust;
  • Receive and hold all payments and contributions paid to it;
  • Procure fidelity bonds for persons as required by this Agreement or by law;
  • Carry out other activities as necessary to carry out the purpose of the Trust or the specific activities enumerated in this Agreement.

Section 2. ETHICAL STANDARDS. As required by Tennessee Code Annotated § 8-17- 102(b), the Trustees shall adopt a code of ethics for the Trust, its officials and employees.



Section 1. PARTICIPATION. Membership in Utrust is closed. However, schools or school districts who are not members of Utrust may apply to participate in the Utrust Appreciation Program. If approved, such participants are not eligible for Utrust mini-grants.

Section 2. MEMBER CLAIMS. A member who is accepted for participation shall thereafter pay contributions on such dates and in such amounts as the Trust shall require for paying unemployment claims and for administering the Trust and shall comply with such decisions, bylaws and regulations promulgated by the Trust. It is specifically agreed that the Trustees may determine the amounts of contributions required based on a participating member’s own experience.

Section 3. SUPPLEMENTARY PAYMENT. Unemployment compensation claims filed by employees of a member system are the ultimate responsibility of the member. However, in order to avoid large fluctuations in the member’s premium from one year to the next, as well as to provide a more readily identifiable amount to be included in each school system’s annual budget, Utrust will use its reserves to pay claims for each member. The member shall reimburse Utrust for claims paid on its behalf in a manner specified in the Utrust Bylaws.

To ensure the financial stability of Utrust going forward, in any eighteen-month period if the total unemployment claims of a member exceeds $10,000 or five times its average claims whichever is higher, then the member system will immediately become responsible for reimbursing the state directly for its own claims for a period of time not to exceed twenty-four months.

Notwithstanding the provisions of this Article, the Trustees shall, at their discretion, have the authority to modify the length of time for calculating when a system has reached a certain amount of claims so that it may be required to pay its unemployment claims directly, the multiplier used to determine when the obligation to directly pay claims is triggered, and the length of time during which the member will be responsible for the direct payment to the state of its unemployment claims. Utrust will notify its members whenever this provision is triggered, and during the time that a member is paying its unemployment claims directly to the state, the Trustees shall adjust the member’s premium accordingly.

Section 4. WITHDRAWAL. Any participating member may withdraw from the Trust and/or terminate participation in the Trust at the end of the program year in which the member is participating by giving at least ninety (90) days written notification to the Trust prior to the close of such program year; and in the event of termination, said participating member shall remain liable for any and all contributions required to be paid by participating member during the remainder of the program year after the giving of notice that participation is being terminated. Any participating member who withdraws from the Trust and/or terminates participation shall have no right or claim to any portion of any surplus in the Fund.


Expulsion of a Member

Section 1. VOTE REQUIRED. By a two-thirds (2/3) vote of the entire Board of Trustees, any Member may be expelled from the Trust. Such expulsion, which shall take effect in the manner set out below, may occur whenever a member: (a) fails to perform any obligation under this Agreement, (b) fails to make payments and supplemental payments due to the Trust, or (c) engages in activities detrimental to the purposes of the Trust.

Section 2. PROCEDURE. No Member may be expelled except after notice from the Trust and after a reasonable opportunity of not less than fifteen (15) days to cure the alleged failure. Within such fifteen-day (15) period, the Member may request a hearing before the Board before a decision is made as to whether to expel. The Trust shall set the date for such hearing, which shall not be less than fifteen (15) days after expiration of the time to cure.

Expulsion of a Member after notice and hearing set forth in this Section shall be final.


Nature and Use of Funds

 Section 1. USE OF FUNDS. The Trust may use Trust funds (a) to pay premiums for group policies, (b) to pay premiums for bonds and errors-and-omissions insurance which may be required by statute, regulation or action of the Trustees, (c) to pay unemployment insurance reimbursement charges imposed by the State of Tennessee against participating members in any group self-insurance program developed and maintained by the Trust, (d) to pay all other expenses and make all payments which the Trustees consider necessary in establishing the Trust and administering the services of the Trust with respect to any compensation paid to any service companies, attorneys, actuaries, accountants, employees, clerical help, custodians, and others as the Trust may deem necessary, (e) to sponsor programs designed to reduce unemployment costs and/or to improve member board’s relationships with their employees. Trustees may elect to invest Utrust funds in stocks and bonds in similar manner to funds held by the Tennessee Consolidated Retirement System. The Trustees shall maintain an appropriate investment policy in of the Utrust Bylaws.


Amendments and Termination of the Trust

Section 1. AMENDMENT. The Trustees may amend the Bylaws at any time to such extent as they deem necessary or advisable.

Section 2. TERMINATION. The Trust shall terminate upon the occurrence of one of the following events:

  • A final determination by a Court of competent jurisdiction, after all appeals have been exhausted or time for appeal has expired, that the Trust is invalid or contrary to the law.
  • The number of Members is not sufficient to support the appropriate spread of risk.
  • The Trustees by an instrument in writing and upon prior notice to each participating member, decide to terminate the Trust whereupon, the Trustees shall pay all obligations of the Trust and distribute any remaining surplus in such manner as they determine fair and equitable to the participating members.


General Trust Provisions

Section 1. FISCAL YEAR. The fiscal year shall be July 1 through June 30.

Section 2. NOTICE. Any notice required by this Agreement shall be in writing and shall be deemed to have been given when notice is sent via registered or certified mail, postage prepaid, return receipt requested to the last known address. Notice may also be sent electronically to the last known e-mail address. General notice is posted on the Trust’s website and specific notice to members is sent to the last known address or e-mail address.

Section 3. VALIDITY AND SAVINGS CLAUSE. In the event any provision of this Agreement shall be declared by a final judgment of a Court of competent jurisdiction to be unlawful or unconstitutional or invalid as applied to any Member, the lawfulness, constitutionally or validity of the remainder of this Agreement shall not be deemed affected thereby.

Section 4. SEVERABILITY. Any provision of this Agreement prohibited by the laws of the State of Tennessee shall be ineffective to the extent of such prohibition without invalidating the remaining portion of this Agreement.

Section 5. SITUS OF CONSTRUCTION. This Trust is executed in the State of Tennessee and all questions pertaining to its validity, construction and administration shall be determined in accordance with the laws of such jurisdiction.

Section 6. CONTRACTS. The Trust shall be authorized to contract with any qualified organization or individual to perform any of the functions necessary for the carrying out of services that the Trustees deem expedient for the proper servicing of those members who use the services of the Trust.

Section 7. AGENCY. The Trust is operated under the provisions of this Intergovernmental Agreement as agent and representative of the participating members only.

Section 8. EXECUTION OF INSTRUMENTS. The name of the Trust may be used to designate the Trustees collectively, and all instruments may be affected by them in such name upon the signature of the Chairman and/or the Trust Administrator.


Responsibilities of Parties

Section 1. RESPONSIBILITIES OF UTRUST. Utrust agrees that so long as the member is participating in the program, it will:

  • Make unemployment compensation coverage available to the Member in accordance with the conditions of this agreement; The Trust will pay claims billed against any member during the time of membership even though the liability for the claim accrued before membership in the Trust. The Trust shall not pay claims billed after membership ceases.
  • Use Utrust reserves to pay the operational, administrative and other expenses determined by the trustees to be beneficial to Utrust.
  • Use member premiums, supplemented by Utrust reserves, to pay all unemployment claims processed by the Department of Employment Security that are assessed against Members after their membership in Utrust commences except as referenced in Article V, Section 3.
  • Provide an annual accounting to Members for the operation of the Trust.
  • Pay dividends to members in a fair and equitable manner as determined by the trustees when they program determine that a favorable operating experience of the Trust warrants such dividends.

Section 2. RESPONSIBILITIES OF THE MEMBER. The member agrees that it will:

  • Pay an annual premium based upon the member’s claims as established by the trustees. Membership in Utrust is automatically forfeited if annual premium is not received on or before July 31 unless waived by the Trustees.
  • Give 90 days written notice prior to the end of the fiscal year ending June 30 if it chooses to discontinue its membership in Utrust.
  • Be governed by the terms of this Agreement, bylaws, and decisions of the Trustees.

This Agreement shall not become effective until Utrust receives and approves this written Agreement signed by the Member’s duly authorized officers.