HomeMy WebLinkAbout1/3/2007 - STAFF REPORTS - 2.H. p A LM S.n
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c4`liog `P CITY COUNCIL STAFF REPORT
DATE: January 3, 2007 Consent Calendar
SUBJECT: APPROVING FISCAL YEAR 2006-07 ASSESSMENT OF SELF-
INSURANCE PLAN TO THE STATE OF CALIFORNIA-SELF
INSURANCE PLANS
FROM: David H. Ready, City Manager
B',Y; Human Resources
SUMMARY
Labor Code Sections 62.5 and 62.6 authorizes the Department of Industrial Relations to
assess California employers for the costs of the administration of the worker's
compensation program. As a result, the City of Palm Springs is required to pay an
allocation of the total assessment and is billed for its share annually by the Department
of Self-Insurance Plans,
RECOMMENDATION:
Adopt Minute Order No. , Approving Fiscal Year 2006/2007 Department of
Industrial Relations, Self-Insurance Plans License Fees and Trust Funds to the State of
California-Self Insurance Plans in the amount of $40,930.47.
STAFF ANALYSIS:
Labor Code 62.5, the provision that created the Workers' Compensation Administration
Revolving Fund, is also known as the "User Funding Assessment." Labor Code 62.5
and 62.6 require that the user funding assessment and fraud surcharge be allocated
between insured and self-insured employers in proportion to payroll for the most recent
year for which information is available.
Additionally, Senate Bill 899 (2004) increased the employer share from 20 percent of
the total program cost to 100 percent. According to the Director of the Department of
Industrial Relations, the increased assessment this will provide a stable funding source
to allow the courts to resolve claims more quickly and improve the overall operation of
the system.
ITEM NO.A
City Council Staff Report
January 3, 2007-- Page 2
Self-Insurance Plan Assessment
FISCAL IMPACT: Finance Director Review:
The funds are budgeted and are available in 540-0903-48500.
Susan Mills, Director of Human Resources
Davi�HRea dy, City Ma r
Attachments: Invoice No. 49299 (State of California — Self Insurance Plans)
November 9, 2006 memo from John M. Rea, Acting Director,
Department of Insurance Plans
Methodology (Pages 1-5)
MINUTE ORDER NO.
APPROVING FISCAL YEAR 2006-07 DEPARTMENT
OF INDUSTRIAL RELATIONS, SELF-INSURANCE
LICENSE FEES AND TRUST FUNDS TO THE
STATE OF CALIFORNIA-SELF INSURANCE PLANS
IN THE AMOUNT OF $40,930.47.
I, James Thompson, City Clerk of the City of Palm Springs, hereby certify
that this Minute Order , approving the payment of Invoice #49299
for FY 2006/2007 for DWC, DOI Fraud Investigation, SIP License Fees
and Subsequent Injury and Uninsured Employer Trust Funds to the State
of California, Self-Insurance Plans in the amount of $40,930.47, was
adopted by the City Council of the City of Palm Springs, California, in a
meeting thereof held on the 3rd day of January, 2007.
James Thompson, City Clerk
STATE OF CALIFORNIA
DEPARTMENT OF INDUSTRIAL RELATIONS
SELF-INSURANCE FLANS
2265 Watt Avenue, Suite 1
Sacramento,CA 95825 Li
Phone No.(916)574-0300 ,
FAX(916)483-1535 �'l " i' 'a `„ , 'i'•
December 15, 2006 Certificate No 7176
Invoice No, 49299
City of Palm Springs
INVOICE FOR FY 2006/2007 FOR DWC,DOI FRAUD INVESTIGATION, SIP LICENSE FEES
AND SUBSEQUENT INJURY AND UNINSURED EMPLOYER TRUST FUNDS
I.WORKERS' COMPENSATION USER FUNDING ASSESSMENT:
BASE YEAR ANNUAL REPORT: PUBLIC SECTOR: 2006
A. PAID INDEMNITY AMOUNT ON ALL CLAIMS IN BASE YEAR REPORTED $ 1,381,619.00
ON SELF INSURER'S ANNUAL REPORT(Line 4,Page 2)- - - - - - - - - - - - - - -
B.USER FUNDING ASSESSMENT FACTOR(Multiplier): . . . . . . . . . . . . . . . . x 019662
-- -C:USER FUNDING ASSESSMENT DUE: . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,165.39
fi.DEPARTMENT OF INSURANCE FRAUD INVESTIGATION ASSESSMENT:
BASE YEAR ANNUAL REPORT: PUBLIC SECTOR: 2006
A.PAID INDEMNITY AMOUNT ON ALL CLAIMS 1N BASE YEAR RLPOR'FL^'D $ 1,381,619.00
ON SELF INSURER'S ANNUAL REPORT(Line 4,Page 2): . .005451
B.FRAUD SURCHARGE FACTOR(Multiplier): . . . . . . . . . . . . . . . . . . . . . x
C.FRAUD ASSESSMENT DUE- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 7,53121
111.LICENSE FEE ASSESSMENT:
A.BASF FEE- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 0.00
(Suction 15230,Title 8,California Code of Regulations)
TOTAL NUMBER OF CLAIMS ADJUSTING LOCATIONS: + $ 0.00
(S300 for each additional claim adjusting location) $ 0-00
B.PER CAPITA CHARGE OF 25 CENTS FOR EACH EMPLOYEE 0.00
I- Number of Employees- - - - - - - - - - - - - - - - - - - - -
25
2. Per Capita Charge - - - - - - - - - - - - - - - - - - - - - - - - - - - - x .
$ O00OD
C.ANNUAL LICENSE FEE TOTAL: . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.00
IV. SUBSEQUENT INJURY BENEFITS TRUST FUND $ 1,381,619.00
A.PAID INDEMNITY AMOUNT ON ALL CLAIMS IN BASF YEAR REPORTED
ON SELF INSURER'S ANNUAL REPORT(Line 4,Page 2)- - - - - - - - - - - - - - -
B-INJURY BENEFITS TRUST FUND FACTOR(Multiplier): . . . . . . . . . . . . . . .x .002727
C.INJURY BENEFITS TRUST FUND DUE: . . . . . . . . . . . . . . . . . . . . . . . . $ 3,767.68
V. UNINSURED EMPLOYER BENEFITS TRUST FUND
A.PAID INDEMNITY AMOUNT ON ALL CLAIMS IN BASE YEAR REPORTED $ 1,381,619-00
ON SELF INSURER'S ANNUAL REPORT(Line 4,Page 2): . . . . . . . . . . . . . .
B.EMPLOYER BENEFITS TRUST FUND FACTOR(Multiplier); . . . . . . . . . . . . x 001785
C.EMPI,OYFR BENEFITS TRUST FUND DUE: - - - - - - $ 2,466.19
TOTAL ASSESSMENTS DUE (Line IC,TIC,MC,PX,VC). . . . - - $ 40,930.47
PAY THIS AMOUNT: S 40,930.47
PAYMENT DUE ON OR BEFORE: .Ianuary 15, 2007
Payment Instructions:
A.Make check payable to: Self-Insurance Plans
B. Indicate invoice number on check.
C. Mail check and a copy of this invoice to address on letterhead
STATE Or CALIFORNIA ARNOLDSCIWAR21NEOGER, Governor
DEPAIZIMENT OF INDUSTRIAL RELATIONS
OFFICE OF THE DIRECTOR
P.0.Box 4206M
San rrnndsco,CA 944142
(510)286-7100
DATE: November 9, 2006
TO: California Self-Insured Employer
FROM: John M. Rea, Acting Director, Deparmcnt of Industrial Relations
_. SUBJECT: Fiscal Year 2006/07-Workers' Compensation Administration Revolving Fund
Assessment;
Uninsured Employers Benefits Trust Fund Assessment;
Subsequent Injuries Benefits Trust Fund Assessment; and
Workers' Compensation Fraud Account Assessment
Labor Code Sections 62.5 and 62-6 authorize the Department of Industrial Relations to assess
employers for the costs of the administration of the workers' compensation program. Previously,
this assessment limited the employer share to 20 percent of the total program cost- The major
workers' compensation reform in Senate Sill 899 (2004) contained provisions to increase the
employer share to 100 percent. This increased the total amount of the assessment, but will
provide a stable funding source to allow the courts to resolve claims more quickly and improve
the overall operation of the system-
The purpose of this letter is to inform you that you will be receiving an invoice for your share of
the assessments authorized by Labor Code Sections 62.5 and 62.6. The Labor Code requires
allocation of the total assessment between insured and self insured employers in proportion to
payroll for the most recent year available.
Total Self-Insured
Authority Type Assessment Employer
for all Payers Assessment
Factor
Labor Code Workers' Compensation Administration
§ 62-5 Revolving Fund Assessment CARF) 189 919.750 0.0]9662
Labor Code Uninsured Employers Benefits Trust Fund S33 818,877 0.001785
§ 62.5 Assessment(UEBT'F)
Labor Code Subsequent Injuries Benefits Trust Fund S17,931,733 0.002727
62-5 Assessment SIBTF
Labor Code Workers' Compensation Fraud Account $39 479,534 0.005451
62.6 Assessment RALTD
n
Fiscal Year 2006/07 Assessments
Page 2
Attached is a worksheet detailing the methodology used to compute the Workers' Compensation
Administration Revolving Fund, Uninsured Employers Benefits Trust Fund, Subsequent Injuries
Trust Fund allocation and Workers' Compensation Fraud Account Assessment and to allocate
the assessment between insured and self-insured employers.
Your share of the various assessments will be calculated by multiplying the self insured employer
assessment factors for each assessment by the total indemnity paid by your organization.
If you have any questions, please contact the Self-Insurance Plans office in Sacramento at
(916)574-0300.
Enclosure
California Department of Industrial Relations
2006-2007 Workers'Compensation Administration Revolving Fund Assessment,
Uninsured Employers Benefits Trust Fund Assessment,
Subsequent Injuries Benefits Trust Fund Assessment and
Workers'Compensation Fraud Account Assessment
METHODOLOGY
Labor Code Sections 62.5 and 62.6 require the Department of Industrial Relations to levy the total amounts of the
Workers'Compensation Administration Revolving Fund Assessment,Uninsured Employers Benefits Trust Fund
Assessment,Subsequent Injuries Trust Fund Assessment and Workers'Compensation Fraud Account Assessment
between insured employers and self-insured employers in proportion to payroll paid in the most recent year for which
information is available.
01: Determine Total Assessments Required for 2006-2007
Workers'Compensation Administration Revolving Fund Assessment(Labor Code§62.5)... $113,235,082
Total AssessmerR Required....................... . $180 M9750
Fund Balance........ .. .. ...... .... ($92767412)
OWC&SIP 0506 Overeollections...... .... S16OM744
S113,E351062
1.2 Uninsured Employers Benefits Trust Fund Assessment(Labor Cade§62.5)-------------------- $9,276,968
Total Assessment Required . ... =$Ili,977
Fund salance............................................... (530916 els) .
OWC&SIP 05M ------------------ S5 374 904
$9,z7B,969
1.3 Subsequent Injuries Benefits Trust Fund Assessment(Labor Code§62.5)...................... $15,722,172
Total A-cp5mpnt Rcguimd $17,931,722
Fund Balanoa.................. ............ ($9290495)
pwc A SIP 0506 Ovorcollcc0ens............... 51 0139 3
$15,722,172
(1.4) Workers;Compensation Fraud Account Assessment(Labor Cade§62.6)........................ $29,128,944
i p nv ntl wlnoensahon fraud account assessment is ekubLshed by Inc Ocpu mcnr of Insurance,Fraud Commrs on.
Total Assessment Reguired.............. $39 479 534
Fund Balance.... .. .... (S11 BOB 6521
OWC&SIP 0506 Ondemollechona....- S145B 262
$29,tzs,sa¢
Step 2: Determine Payroll Amounts
(2.1) Total payroll for insured employers........................... ... ............................... $334,243,418,204
Source: C hrcfnie Wer er.Compon.,tpn Insurance Rating 5umau(WCIR )poLq year 2003
(2.2) Payroll for self-insured employers .... . . . . ... . . ....... S159,595,564,881 1
2a.1 2004-05 Fiscal Year for Public Sector'.......... .... $71,713,78o,026
(5: 2005 for Private Sector.... $99,291,784,855
-Sov S:Wpedmerrl erindr dal Relations,pfflcc of Sal(ansurance Plans(etdudes Sf to of Cardomra)
(2.3) Payroll for State of Callfomia(including SCIF)............................................... $12,749,141,557
"So.. fOcparrmcnrofpersnnnel Admn,l ,en,F,.o1Ynpr PWO C)
(2.4) Total payroll for self-insured employers....................... ...... ....... ................. $172,344,706,438 2
(2.5) Total combined payroll ............................................ . . .. ... . .. .. ............. $556,588,124,642 3
(Insured and seM-insured employers)
f-Y. 06.07 ME rl-1000LOGY- Page 1 of 5 11/09/2006
California Department of Industrial Relations
2006-2007 Workers'Compensation Administration Revolving Fund Assessment,
Uninsured Employers Benefits Trust Fund Assessment,
Subsequent Injuries Benefits Trust Fund Assessment and
Workers'Compensation Fraud Account Assessment
Step 3: Calculate Proportional Payroll for Insured and Self-Insured
Employers
(3.1) Insured Employers:
Insured Employer Payroll _ Methodology Section(2.1) _ $384,243,416,204 = 69.04%
Total Combined Payroll Methodology Section(2.5) $556,588,124.642
(3.R) Self-Insured Employers:
Self-Insured Employer Payroll _ Methodology Section(2.4) - $172,344,706,438 = 30.960/.
Total Combined Payroll Methodology Section(2.5) S556,588,124,642
I R7)pavmll fnr SrN-Inxumd Emnlnve.m,T.ofMethodology Section R 21)and Mcihodology sngion(222)
2 P,h iMwi Pavmll for selfJmmmd Emninoors=L of MetnDdology section(2.2)and Metnodolepy Sedion(L3)
3 LM ToFal6ombincd�. =£of Melheddogy Section(21)and Methodology section(24)
Step 4: Determine the Total Assessments for Insured and Self-Insured
Employers
Workers' Compensation Administration Revolving Fund Assessment
Calculation for Insured Employers:
11� (WCARF Asscssmcm) X 69.04% _ $113,235.082 X 69.04•/. ............................... $78,177,501
ll� INCREASED by credits due individual insurers which underoollected against previous
advances[CCR§15$09].................................................. ................................................... 14,261,841
I► DECREASED by insurer overcollec8on 0506[pursuant to CCR §15606(t)] ($17,$75,352)
(4.1) Resulting Final Insured Employers workers'Compensation User Funding Assessment....... ... ..... $74,8637990
Calculation for Self-Insured Employers:
(WCARFAsscssmcn0 X 30,96% = $113.235,082 X 30 96% . ....................... $35,057,581
INCREASED by the Sclf-Insurer undercollection from pnor year ,-- $1,502,608
(4.2) Resulting Final Self-Insumd Employers Workers'Compensation User Funding Assessment..... .... $36,550,189
_ Uninsured Emp�ers Benefits Trust DEBT Fund Assessment
Calculation for Insured Employers-
I• (DEBTF Assessmant)X 69.04% = $9,276,968 X 6904% ................................... $6,404,819
INCREASED by credits due individual insurers which undercollected against previous
advances[CCR§156091...................................................................................................... 4,786,038
► DECREASED by the Insurer overcollection for 0506 [pursuant to CCR §15506(f)] ($6,822,1 69)
(4.3) Resulting Final Insurad Employers UEB7 Fund Assessment.................................................. $4,368,663
Calculation for Self-Insured Employers:
■ (UEBTFAsscssment) X 30.96% _ $9,276,968 X 30.96% ........ .......................... $2,812,149
► DECREASED by the Self-Insurer under-collection from prior year $447,285
(4.4) Resulting Final Self-Insured Employers DEBT Fund Assessment $3,319,434
FY- 06.07 METHODOLOGY- Page 2 of 5 11/0912006
California Department of Industrial Relations
2006-2007 Workers'Compensation Administration Revolving Fund Assessment,
Uninsured Employers Benefits Trust Fund Assessment,
Subsequent Injuries Benefits Trust Fund Assessment and
Workers'Compensation Fraud Account Assessment
Subse vent Injuries Benefits Trust SIBT Fund Assessment
Calculation for Insured Employers:
► (SIBTFAssessment) X 69.04% = $15.722.172 X $9,04% .............................. $10,854,588
► INCREASED by credits due individual insurers which undermilected against previous
advances[CCR§156091........................................................ ............................................. 747,496
■ DECREASED by the Insurer overcollection for 0506 [pursuant to CCR §15605(Q].............. .......... ($1,284,281)
(4.5) Resulting Final Insured Employers SIBT Fund Assessment.................................................. $10,317.802
Calculation for Self-Insured Employers:
► (SIBTFAssessmerit) X 30.96% = $15,722,172 X 3096% ................................... $4,867,684
► DECREASED by the Self-Insurer undercollection from prior year............................................ $203,347
(4.6) Resulting Final Self-Insured Employers SIBT Fund Assessment.. .. ........................... $5E(3,931
Workers' Compensation Fraud Account Assessment
Calculation for Insured Employers:
► (FraudAssessmerd) X 69.04% = $29,128,944 x 69,04% .............................. $20,110,623
► INCREASED by coedits due individual insurers which undercollecled against previous
advances[pursuant to CCR § 15609]..................................................................................... 9,899,071
► INCREASED by the insurer undercollection 0506[pursuant to CCR § 15606(Q]----------.................... ($2,575,689)
(4.7) Resulting Final Insured Employers Workers'Compensation Fraud Account Assessment.. $27,434,005
Calculation for Self-Insured Employers:
► (Fraud Assessment) X 30.96% = $29,128,944 X 30,96% $9,018,321
► INCREASED by the Self-Insurer ondercollection from prior year.............................................. $1,117,427
(4.8) Resulting Final Self-Insured Employers Workers'Compensation Fraud Account Assessment........ $10,135,748
Step 5: Calculate the Assessments Factors
Workers' Com ensation Administration Revolving Fund Assessment Factor
5.1 Calculation for Insured Employers:
Total Insured Emplovern Assessment _ $74 853,990 = 0.004483
Total Direct Workers'Compensation^ $16,700,000,000
-EMmatod Prammm(Soumc- WCIRS eaGmale for Zoos PQIIW Year)
E91Calculation for Self-Insured Employers:
Total Self-Insured Employer Assessment - 536 560.189 0.019662
Total Amt.of workers'Comp.Indemnity Pd" $1,859 412,619
-$per+l Pt,of lnduatrlal Relelmns,c000 or 5elr4nsuranee Plan,;[I of ryletbodology Se ns(5 21)N(5.23)]:
i21 200r 05 Public Sector.......................................... $863,097,192
5,1 2005 Private Sector. ........................ ... ............. $833,349.484
(523) 20e5-05State of Cafriomis.... ... .......................... 5162,965.943
-s Re :Oopa=enrorP==n Aaminrsnatnon
FY- 06-07 METHODOLOGY- Page 3 of 5 11/092005
California Department of Industrial Relations
2006-2007 Workers'Compensation Administration Revolving Fund Assessment,
Uninsured Employers Benefits Trust Fund Assessment,
Subsequent Injuries Benefits Trust Fund Assessment and
Workers'Compensation Fraud Account Assessment
Uninsured Em to ers Benefits Trust UEBT Fund Assessment Factor
5.3 Calculation for Insured Employers:
Total Insured Employers Assessment �4 368,668
- = 0.000267
Total Dined Workers'Compensation' $16,700 000,000
' ma1td Pmmium(Snumo WCJR8esTlmaferar2006Par Ycmr)
(5.4) Calculation for Self-Insured Employers:
Total Self-Insured Employer Assessment = 3 819 434 0 0.001785
Total Amt.of Workers'Comp.Indemnity Pd^ $1,859,412,619
"SOURCE. pppf,of lndusUlar Relate ns,OR of SrJ(Jn yimncc Plans[Z of MefnWWOgy 5e ..(54 1)to(54.3)):
5.4.T 2004-05 Pubic Sector....... ...............- .. $863,097,192
SA. 2005 Private Sector...................... ......................... $833 349,484
(5,4.3) 2005.06 Slaty of Cafzomia....................................... $162,965,943
''Sa�RCF:pgpgrtmenf mlPemonnel Fltlminchatipn
Subsequent Injuries Benefits Trust(SIBT) Fund Assessment Factor
5.5 Calculation for Insured Employers:
Total Insured Employers Assessment _ S 317317.802 = 0.000618
Total Direct Workers'Compensation' $16,700,000,000
-�dimok,!Pmmipm(Source: WCIRa esL=Ie for 20ne Poky Year)
5.6 Calculation for Solf4nsured Employers:
Total Self-Insured Employer Assessment $5.070.931 = 0.002727
Total Amt of Workers'Comp,Indemnity Pd.— $1,859,412,619
-550/l RCE;Oepf of Indushial RcJafhns,016ce of Self-InSurnnQ Pions fF of Mmtnotlology SecGens(5 6 TJ b(5 6,3)f
5.5.T 2004-05 Pu6(c Sector................. $863,f97,f92
........................
PAZ 2005 Private Sector.......... .. .... ...... ....................... $833,349,484
(5.6.3) 2005-06 State of Caffomis.. . .... ........................ $162,965,943
SOURCE;Oeparlmenf cr Pe"nnd Admrnistrdaon
Workers' Compensation Fraud Account Assessment Factor
(5.T) Calculation for Insured Employers:
Total Insured Employer Surcharge = 2�7,4g4,()05 = 0.001643
Total Direct Wprkers'Compensation^ $15,700,000,000
-Eshmafcd Pmmlum(Source WOIR6 esfmu(p for 2000 Pohcy Yeaft
HECalculation for Self4miured Employers:
Total Self-Insured Employer Surcharge 10 135 7, 48 = 0.005451
Total Amt.of Warkam'Camp.Indemnity Pd.— $1,859.412,619
�SpURCF. pspt pt Intlusfnal RelsLem,O/fipe of ScNansurance Plens fE o/Methodology BccAmns(5 e.TJ to(5.6 3)J
S.Yd 2004-05 PUALC Sector............................................. S863,097,192
L&L4 2009 Pfrvafe Segpr................................................. S833,349,484
(5.8.aJ 2006-06 Stare pI�Irfvmra................................... ... $16$�43
—SOURCE;PePortment of Personnel Adminiata6on
F1(- 06-07 METHODOLOGY- Page 4 of 5 11/09f2006
California Department of Industrial Relations
2006-2007 Workers'Compensation Administration Revolving Fund Assessment,
Uninsured Employers Benefits Trust Fund Assessment,
Subsequent Injuries Benefits Trust Fund Assessment and
Workers'Compensation Fraud Account Assessment
Step 6: Determine Individual Employer's Workers' Compensation
Administration Revolving Fund Assessment
f6.11 Individual Insured Employers:
Assessment Factor[ 0.004483 ] X Employers Expected Assessable Premium•
(6.2) Calculation for Individual Self-Insured Employers,
Assessment Factor[ 0.019662 ] X Yotal Indemnity Paid by the Employer
Step 7: Determine Individual Employers Uninsured Employers Benefits
Trust(DEBT) Funding Assessment
f7.11 Individual Insured Employers:
Assessment Factor[ 0-000262 ] X Employer's Expected Assessable Premium*
(7.Y) Calculation for Individual Self-Insured Employers,
Assessment Factor[ 0.001785 ] X Total Indemnity Paid by the Employer
Step 8: Determine Individual Employers Subsequent Injuries Benefit Trust
(SIBT) Funding Assessment
rMill Individual Insured Employers:
Assessment Factor[ 0.000618 ] X Employer's Expected Assessable Premium'
(8.2) Calculation for Individual Self-Insured Employers:
Assessment Factor[ 0.002727 ] X Total Indemnity Paid by the Employer
Step 9: Determine Individual Employer's Workers' Compensation
Fraud Account Assessment
g-1 Individual Insured Employers:
Assessment Factor[ 0.001643 ] X Employers Expected A-�sessiblo Premium•
(9.%) Calculation for Individual Self-Insured Employers,
Assessment Factor[ 0.005451 ] X Total Indemnity Paid by the Employer
Assessable Premium
The pmmmm the insured is charged after all rating adjustments(experience rating, schedule rating,premium discounts.
expense constants,retrospective rating, etc.)except for adjustments resulting from the application of deductible plans or
the return policyholder dividends
FY- 06-07 METHODQLpGY- Page 5 of 5 11/09/2000