BLOOMINGTON - The sweeping changes to the city of Bloomington's self-insurance program highlight why the City Council hired a city manager with a strong financial background, the mayor said Wednesday.

"When we brought in David Hales, it was to use his financial expertise," Steve Stockton said. "You are now seeing why."

On Tuesday the council approved about $400,000 in contracts to take over the management of its self-insurance from RimCo (Risk and Insurance Management Co.) for this year. Of that, about $35,000 is for consultant Michael Nugent of Northbrook to develop proposals for how to handle its insurance over the long term.

Last year, RimCo received about $1.9 million in administrative fees from the city.

Stockton said that when the council went searching for a new city manager last year, it was looking for someone who could tackle its top two issues: the city budget and the self-insurance program.

Hales started in January and his first job was to balance the city's $77 million budget. Once that was done, he moved on to RimCo.

RimCo started in 2001 as a nonprofit company to oversee the city-owned Central Illinois Risk Pooling Authority, which handles the money the city sets aside for insurance claims. RimCo was supposed to bring in more municipalities to help share administrative costs with Bloomington.

Nugent said the primary problem with RimCo was that it offered a high level of service at the start. That priced it out of many markets.

"It was evident that the cost of (RimCo) was unusually high compared to what other cities had," he added.

There are five other clients that used RimCo as a consultant, but none joined the insurance pool itself.

Stockton said members of the RimCo and CIRPA boards along with the City Council questioned the costs more than a year ago.

Stockton said the boards and the council delayed taking action at the time because they needed to give RimCo an opportunity bring in new clients, a goal set by the board at that time.

None of the board members for CIRPA or RimCo was paid or holds an ownership stake in RimCo, Stockton said in response to questions about board members' financial interests in the self-insurance program.

The five-member CIRPA board includes the mayor, one alderman and the city manager. RimCo's five-member board traditionally included the mayor and the city manager.

RimCo will dissolve at the end of June, but its agreement with the city will end May 31.

On Wednesday, the city moved its files out of RimCo's offices at 2203 E. Empire St. and into offices at the Government Center.

Alternative Services Concepts, a Nashville, Tenn.-based firm, will set up offices at the Government Center and begin handling claims June 1.