HomeMy WebLinkAbout2006-02-01 STAFF REPORTS 2J �OQPALM Sp4
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q<IFO"`'`♦♦ CITY COUNCIL STAFF REPORT
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DATE: February 1, 2006 Consent Calendar
SUBJECT: APPROVING FISCAL YEAR 2005-06 ASSESSMENT OF SELF-
INSURANCE PLAN TO THE STATE OF CALIFORNIA-SELF
INSURANCE PLANS
FROM: David H. Ready, City Manager
BY: 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 2005/2006 Department of
Industrial Relations, Self-Insurance Plans License Fees and Trust Funds to the State of
I
California-Self Insurance Plans in the amount of $36,557.04.
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 available.
j 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. 2 .J 0
City Council Staff Report
February 1, 2006 -- Page 2
Self-Insurance Plan Assessment
FISCAL IMPACT: IFinance Director Review:
The funds are budgeted and are available in 540-0903-43880.
Susan Mills, Director oFHuman Resources
David H. Ready, City M er
Attachments: Invoice No. 47767 (State of California — Self Insurance Plans)
November 4, 2005 memo from John M. Rea, Acting Director,
Department of Insurance Plans
REVIEWED BY DEPT. OF FINANCE
MINUTE ORDER NO.
APPROVING FISCAL YEAR 2005-06 DEPARTMENT
OF INDUSTRIAL RELATIONS, SELF-INSURANCE
LICENSE FEES AND TRUST FUNDS TO THE
STATE OF CALIFORNIA-SELF INSURANCE PLANS
IN THE AMOUNT OF $36,557.04.
I, James Thompson, City Clerk of the City of Palm Springs, hereby certify
that this Minute Order , approving the payment of Invoice #47767
for FY 2005/2006 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 $36,557.04, was
adopted by the City Council of the City of Palm Springs, California, in a
meeting thereof held on the 1st day of February, 2006.
James Thompson, City Clerk
STATE OF CALIFORNIA
DEPARTMENT OF INDUSTRIAL RELATIONS
SELF-INSURANCE PLANS "W�5
2265 Wait Avenue,Suite I a
Sacramento,CA 95825
Phone No. (916)483-3392
FAX(916)483-1535
January 12, 2006 Certificate No 7176
Invoice No. 47767
City of Palm Springs
INVOICE FOR FY 2005 /2006 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: 2005
A.PAID INDEMNITY AMOUNT ON ALL CLAIMS IN BASE YEAR REPORTED $ 1,358,392.00
ON SELF INSURER'S ANNUAL REPORT(Line 4,Page 2): .
B.USER FUNDING ASSESSMENT FACTOR(Multiplier): . . . . . . . . . . . . . . . . x .017982
C.USER FUNDING ASSESSMENT DUE: . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,426.60
IL DEPARTMENT OF INSURANCE FRAUD INVESTIGATION ASSESSMENT:
BASE YEAR ANNUAL REPORT: PUBLIC SECTOR: 2005
A. PAID INDEMNITY AMOUNT ON ALL CLAIMS IN BASE YEAR REPORTED $ 1,358,392.00
ON SELF INSURER'S ANNUAL REPORT(Line 4,Page 2): . 003772
B.FRAUD SURCHARGE FACTOR(Multiplier): . . . . . . . . . . . . . . . . . . . . x
C.FRAUD ASSESSMENT DUE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,123.85
III.LICENSE FEE ASSESSMENT:
A.BASE FEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.00
(Section 15230,Title 8,California Code of Regulations)
TOTAL NUMBER OF CLAIMS ADJUSTING LOCATIONS: + $ 0.00
($300 for each additional claim adjusting location) $ 0.00
B. PER CAPITA CHARGE OF 25 CENTS FOR EACH EMPLOYEE
0.00
1. Number of Employees: . . . . . . . . . . . . . . . . . . . . . . . . .
2. Per Capita Charge: . . . . . . . . . . . . . . . . . . . . . . . . . . . . x 25
$ 0.00
C. ANNUAL LICENSE FEE TOTAL: . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.00
IV. SUBSEQUENT INJURY BENEFITS TRUST FUND
A.PAID INDEMNITY AMOUNT ON ALL CLAIMS IN BASE YEAR REPORTED $ 1,358,392.00
ON SELF INSURER'S ANNUAL REPORT(Line 4,Page 2): .
B.INJURY BENEFITS TRUST FUND FACTOR(Multiplier): . . . . . . . . . . . x .001586
C. INJURY BENEFITS TRUST FUND DUE: . . . . . . . . . . . . . . . . . . . . . . . . $ 2,154.41
V.UNINSURED EMPLOYER BENEFITS TRUST FUND
A.PAID INDEMNITY AMOUNT ON ALL CLAIMS IN BASE YEAR REPORTED $ 1,358,392.00
ON SELF INSURER'S ANNUAL REPORT(Line 4,Page 2): . . 003572
B. EMPLOYER BENEFITS TRUST FUND FACTOR(Multiplier): . . . . . . . . . . . . x
C.EMPLOYER BENEFITS TRUST FUND DUE: . . . . . . $ 4,852.18
TOTAL ASSESSMENTS DUE (Line IC,IIC,IHC,IVC,VC). . . . . . $ 36,557.04
EPAY THIS AMOUNT: $ 36,557.04
PAYMENT DUE ON OR BEFORE: February 13,2006
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 OF CAIRORN41 ARNOLD SC MIAMENEGGEP, GLwaw r
DEPARThIENr OF EA)USIRiAL RELA'nCNS
OFFICE OF THE DUTCOR
P.O.Box 420603
San Fraw sm CA 94142
(510)286-7100
DATE: November 4, 2005
TO: California Self-Insured Employer
FROM: John Iv1°: Ite, r1 Director,Department of Industrial Relations
SUBJECT: Fiscal Year 2005/06 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 Bill 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 $193.661,250 0.017982
62.5 Revolving Fund Assessment(WCARF)
Labor Code § Uninsured Employers Benefits Trust Fund $44,009,333 0.003572
62.5 Assessment(UEBTF)
Labor Code§ Subsequent Injuries Benefits Trust Fund $14,575,583 0.001586
615 Assessment (SIBTF)
Labor Code § Workers' Compensation Fraud Account $37,672,254 0.003772
62.6 Assessment (FRAUD)
2006 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 Mark Johnson, Manager at (916) 483-3392 extension
3006 or Tina Freese, Analyst at (916)483-3392 extension 3007 in the Self-Insurance Plans office
in Sacramento.
Enclosure
California Department of Industrial Relations
2005-2006 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 iota]amounts of the
Workes Compensation Administration RevoWing 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.
Step 1: Determine Total Assessments Required for 2006-2006
(1.1) Wotkars'Compensation Administration Revolving Fund Assessment(Labor Code§62.5) $130,119,302
TOM nesassmraRagored.._..... ................ S193,661,250
Fund Balance.................................._. ($71.454,M)
DM a SIP Nos 0.rwflt p ....................-. S7,912.052
i1W,ifa,W2
(1.2) Uninsured Employers Benefits Trust Fund Assessment(Labor Code§62.5).................. $25,770,702
TWIAeteument Required.. . . . _............... 541,009,333
Fund Balance.. .............................. .. ($1e,272,000)
DM S SIP 0405 Dmadledion............... $33,369
SUIT7017M
1.3 Subsequent Injuries Benefits Trust Fund Assessment(Labor Code§62.5).................... $11,405,461
ToW Asa mM Required....._ . .......... S14,575,5e3
FurvJBalace .... ...... ......... .. (53,ZW,000)
DwCt SIP 04050vercolladims... .... .. ..... f5B,87e
i11,to6,4a1
1A Workers'Compensafion Fraud Account Assessment(Labor Code§62.6)..................... $27,570,082
The aaiors'wmpans&Wn Dadecmunlac wnvnik saabA'sMdby1M Diprtnhf„r dlrstpanro,Fraud Camrtisvon.
TINY AsaesaneY Roqulrod.......................... $37.672,254
Furl Balance................................. . (520,231,147)
DWC S SIP 0405 Ovawliecfla .......... .. ... $10,12e,975
su.mlm
Step 2: Determine Payroll Amounts
(2.1) Total payroll for insured employers................................................................ 6371,314,720,047
Source CYildnie Nbreers'CompensYwn Insuenw Rebrp Bureau(WCIRB)polryyeer2002
(2.2) Payroll for sett-insured employers................................................................. $147,174,655,966 1
Q.2.1 2003-04 Fiscal Year for Pubic Sector•................ s70,195,ees,82e
(Y.2.2)2004 for Private Sector..................................... 576,478,Se0,1M
'�g16!'pprlmml o/IndusinY RYYions Oltw olSWJnsuanoe Hans(eavudos SfeleWGlAamie)
(2.3) Payroll for State of California(including SCIFr................................................ $111,512,722,532
^,.1:py�' (DuprtmeMWRrsonnNAdmr,isfrwwn,FiS Yee.2 05)
(2.4) Total payroll for self-insured employers.......................................................... $159.094.446,302 2
(2.5)Total combined payroll................................................................................ $53D,409.166,349 3
(Insured and salf4naured employers)
FY 05-06 METHODOLOGY-As Pape 1 of 5 11142005
California Department of industrial Relations
2005-2006 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 Sedan(2.1) _ $371,314 720 047
Total Combined Payroll Methodology Section 2.5 70.01•
Y o9Y ( ) 5530,4D9,166,349
(3.2) Self-Insured Employers:
Self-Insured Employer Payroll Methodology Section(2.4) $159 094 446 302 . 29.99%
Total Combined Payroll Methodology Section(2.5) $530,409,166,349
r 29 Payrollfcr3W4nwrad Emolw•n=Eof MsaodoloyV Socfion=.1)antl 14. W IWV So 22M
2 MA Toral Payroll for eMrdnwrM EnVovora=E of MOlfndol OV Socam r2.2)"Mtl Piogr Ssdon(2J)
o ra n TWI C.,mWood Payroll =E O Malhod gV Ssmon RI)-m Mo oloui Sa ion CL4)
Step 4: Determine the Total Assessments for Insured and Self-Insured
Employers
Workers' Cam nsation Administration Revolving Fund Assessment
Calculation for Insured Employers:
►(WCARF Assassmsrrg X 70.01% = $130,119,302 X 70.01% ........................... $91,096,523
► INCREASED by credos due individual insurers which undercollected against previous
advances[CCR§156091-................................................................................................. $4,639,250
►DECREASED by Insurer overcollection 0405[pursuant to CCR §15606(f)].................................. ($6,805,019)
(4.1) Resulfing Final Insured Employers Workers'Compensation User Funding AssessmenL.............. $88,930,764
Calculation for Self-Insured Employers:
► (WCARFAssses mi X 29.99% = $130,119,302 X 29.99% ...................... $39,022,779
► DECREASED by the Self-Insurer overcollection from prior year.................................................. ($1,107,033
(4.2) Resuftin0 Final Satf-Insured Employers Workers'Compensation User Funding Assessment........ $37,915,746
Uninsured Em to ers Benefits Trust UEST Fund Assessment
Calculation for Insurod Employers:
► (UESTF Assessment)X 70.01% - $26,770,702 X 70.01% ............................... $18,042,069
► INCREASED by the Insurer undercollection for 0405 [pursuant lu CCR §15606(t))....................... $304,334
(4.3) Resulfing Final Insured Employers UEBT Fund Assessment.................................................. $18,346,403
Calculation for Self-Insured Employers:
► (UEBTF Assasamard) X 29.99% - $26.770.702 X 29.99% ............................... $7,728,634
► DECREASED by the Self-Insurer overcollection from prior year.............--................................. (L! 846
(4.4) Resulting Final Self-Insured Employers UEBT Fund Assessment............................................ $7,531,788
FY'05-06 METHODOLOGY-.xis Pape 2 of 5 111412005
California Department of Industrial Relations
2005-20DS Workers'Compensation Administration Revolving Fund Assessment,
Uninsured Employers Benefits Trust Fund Assessment,
Subsequent Injuries Benefits Trust Fund Assessment and
Workers'Compensation Fraud Account Assessment
Subsequent Muries Benefits Trust SIBT Fund Assessment
Calculation for Insured Employers:
►(SIBTF Assess msnt) X 70.01% = $11,406,461 X 70.01% .............................. $7,984,963
► INCREASED by the Insurer undercollection for B405 [pursuant to CCR §15606(o)....................... $51,967
(4.5) Resulting Final Insured Employers SIBT Fund Assessment...... ..........---....... .................... $8,036,930
Calculation for Self-Insured Employers:
► (SIBTF Assessmant) X 29.99% = $11.406,461 X 29.99% ............................... $3,420,498
► DECREASED by the Self-Insurer overcollection from prior year.....................................-..... ($76,488
(4.6) Resulting Final Self-Insured Employers SIBT Fund Assessment.......................... .................. $3,344,010
Workers'Compensation Fraud Account Assessment
Calculation for Insured Employers:
)0- (Fraud Aassasmeat) X 70.01% _ $27,570,082 X 70,01% ................... $19,301,814
► INCREASED by credits due individual insurers which undercollected against previous
advances[pursuant to CCR § 15609].............................................. .................................... $9,582,946
► DECREASED by the insurer ovemollection D405[pursuant to CCR § 15606(f))............................. ($9,813,605)
(4.7) Resulting Final Insured Employers Workers'Compensation Fraud Account Assessment.. $19,071,155
Calculation for Self-Insured Employers:
►(Fraud Assessment) X 29.99% = $27,570,082 X 29.99% $8,268,268
► INCREASED by the Self-Insurer undecolleuton from prior year.............................................. ($315,370
(4.8) Resulting Final Sell-Insured Employers Workers'Compensation Fraud Account Assessment........ $7,952,898
Step 5: Calculate the Assessments Factors
Workers' compensation Administration Revolving Fund Assessment Factor
(5.1) Calculation for Insured Employer*:
Total Insured Employers Assessment $88.930.754 = 0.003935
Total Direct Workers'Compensation- $22,600,000,000
•EsSmeled Pmmium(Burnt: t11;IRB�sSmab Ar 2035 Policy Yaad
(5.2) Calculation for Self4murod Employers:
Total Self-Insured Employer Assessment = $37,915,746 = 0.017982
Total Amt.of Workers'Comp.Indemnity Pd" $2.108,633.089
'•s P Lspt o'lrid[ulArfPMaf�pne.Oficr o/Selllnwra[xn RanslZ'a�1a11mWlWY Srstions(52111a f523)J:
M
2dd3A4 PuNic Seelor... ......._......................_... $948,997,181
2D04 PrMa Sactrr---..................... ................. $977,997,117
2004.05 Shva ar callmmta^'....................................... $181,538,791
.-So ggf.Orpadm I c Parso AEmlmsb"w
FY 05-DB METHODOLOGY-xis Page 3 of 5 11/42005
California Department of Industrial Relations
2005-2006 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 Employers Benefits Trust UEBT Fund Assessment Factor
(b: Calculation for insured Employars:
Total Insured Employers Assessment $18,M6.403 - 0.000812
Total Direct Workers'Compensation• $22,600,000,000
'EsbmaNdPmnum(S—: tMfiaaebmateeo-2005Poky Y.ad
(SA) Calculation for Self-Iround Employers:
Total SeR-Insured Employer Assessment _ 7 531 78 = 0.003572
Total Amt.of Workers'Comp.indemnity Pit" $2.108.533.089
—SdU r.EN DOPI n(IMusttia+>b7rGons,Office aS@aamorance f1as[rotAWt*dlaay Soctms(51.1)to(54.3)/.
{54.T 2003-0 P,"CSechrr................................................ $948,997,191
(S.4. 2004 Private Sector........................................--...... $977,997,117
f54aJ 2004A6 State or G411hrr1tia"'....................................... $181,538,791
^G/1//w'k:Lypyln.end wa4naa,NAaninaaaem
[_Subsequent In uries Benefits Trust SIST Fund Assessment Factor
5.b Calculaoon for Insured Employers:
Total Insured Employers Assessment = 8 0 9 = 0.000356
Total Direct Workers'Compensation* $22,600,000,000
'Esemafed Premivm(Sourca: nCIRB affimafe to,200s»y YMd
(5.8) Calcuation for Se84nsured Employers:
Total$0Insured Employer Assessment = $3,344,010 - 0.001586
Total Amt.of Workers'Comp.Indemnity Pd." 52,108,533,089
,SQ,t1$Gg Lkp'.ollntluslnM/tYatiWq 0t6ce of SMansorarop PNm(r of Nelhol Ogy Se CoWS(561)10(56.3)1.�
9.a_r1 200X04 Pubrx Sector.............................................. $11,18,997,181
a.a.2) 204 Plivats Sailor........................................ ......... $977,997,117
($.as1 2g04-05State ofCafihmia--...................................... $f81,539,79f
"'a5�'$.0.pdmaM ollirmrvlNAMYnefrafion
Workers'Comigensation Fraud Account Assessment Factor
b.7) C9kutadon for inland Pmploye ra:
Total Insured Employer Surchame _ $19,071,155 = 0.0008"
Total Direct Workers'Compensation' 522.600,000,000
'E#imNeCRanium(Swrca: MC/RB asam#a/or2005 fbF.y Yw)
HECalculation for Self-Insured Employers:
Total Self-Insured Employer Surcharge _ $7,952,898 = 0.003772
Total Amt.of Workers'Comp.Indemnity Pd." $2.108,533,089
—IQVRQ9Deq WIr 41r11riN ReNrax,s.Df6n aSM'Jnsmance PNm/r dAwnoawar SaWces(5e.0 ro f5e.311
Le.1 2003-04 POW Sector............................................... 8948,997,181
5.8. 2004 FrWara Sailor.................................................. $977,997.117
(6.tA) 200405 State ofCaFfomia^.............._....................... $181,532,791
-'-crvmrc:iM�Rrtrn!of Rnsw•wl Rrlminigr+rim
Fir 06-06 METHODOLOGY-xis Pape 4 of 5 11M2005
California Department of Industrial Relations
2005.2006 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
N-s-ml Individual Insured Employers:
Assessment Factor 1 0.003935 ] X Employer's Expected Assessable Premium'
(6.2) Calwletion for Individual Self-Insured Employers.
Assessment Factor 1 0.017932 ] X Total Indemnity Paid by the Employer
Step 7: Determine Individual Employers Uninsured Employers Benefits
Trust(DEBT) Funding Assessment
7.1 Individual Insured Employers:
Assessment Factor 1 0.000812 ] X Employer's Expected Assessable Premium'
(7.2) Calwla lon for Individual Self-Insured Employers:
Assessment Factor 1 0.003572 ] X Total Indemnity Paid by the Employer
Step 8: Determine Individual Employers Subsequent Injuries Benefit Trust
(SIBT) Funding Assessment
s.1 Individual Insured Employers:
Assessment Factor 1 0.000356 ] X Employers Expected Assessable Premium'
(6.2 Calwlation for Individual Self-Insured Employers:
Assessment Factor 1 o.0015sti ] X Total Indemnity Paid by the Employer
Step 9: Determine Individual Employers Workers' Compensation
Fraud Account Assessment
Individual Insured Employers:
Assessment Factor I 0.000844 ] X Employers Expected Assessable Premium'
HECalculation for Individual Self-Insured Employers:
Assessment Factor 1 0.003772 ] X Total Indemnity Paid by the Employer
'Assessable Premium
The premium the insured is charged after all rating adjustments(expectance rating, schedule raling,premium discounts,
expense constants,retrospective rating,etc.)except for adjustments resulting liom the application of deductible plans
or the return policyholder dividends.
FY 05-06 METHODOLOGY-.xis Page 5 of 5 11/42005