Employer-Funding of Division of Workers' Compensation Approved by Committee

By Loretta Macktal, Executive Assistant to the Vice President, Government Relations

Capitol Update, May 23, 2003 Share this on FacebookTweet thisEmail this to a friend

Senate Budget Subcommittee No. 3 on Health, Human Services, Labor and Veterans Affairs voted 3-0 on May 21 to impose a fee on employers to fund 100 percent of the Division of Workers' Compensation (DWC) Budget. The cost shift to employers would save the General Fund $73.7 million in 2003-04. Employers are currently assessed 20 percent of the DWC budget.

While the General Fund would save $73.7 million under the budget proposal, employers would be assessed approximately $102 million for 2003-04 according to the budget request. Subcommittee Chair Senator Wesley Chesbro (D-Arcata) indicated that the funds were needed in order for the DWC to implement the savings in AB 749 (Calderon), the workers' compensation benefits increase that was signed by the governor last year.

CMTA opposes the increase without reform to the system. While other legislation is pending, there is no guarantee of any passage with significant savings to employers. Major efforts are already underway by opponents to derail any legislation that would provide any systemic reforms or savings to employers.

The assessment also has no funding oversight and no direction as to how money is to be used by DWC. When funding comes from the General Fund, the DWC has to compete for funds with other agencies and the Legislature is motivated to scrutinize their budget request very closely. However, under the 100 percent assessment provision, there is no reason for such scrutiny. CMTA believes that without some oversight body that includes employers, the DWC budget will grow annually. Although Senator Chesbro assured employers that he would continue to provide oversight of the funds there is nothing in statute that would bind subsequent legislators to this commitment.

CMTA has also recommended an expansion of the user-funding beyond just employers.
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