Despite the fact that the Office of Workers’ Compensation Administration (OWCA), AFL-CIO, and other concerned parties submitted comments or testified against the motion at the meeting of the Ad Hoc Dedicated Fund Review Subcommittee of Joint Budget on Wednesday, April 4th, 2018, the subcommittee is sticking by its recommendation to reclassify the OWCA statutory dedicated fund as self-generated fees and revenue.
Julie Cherry, representing the AFL-CIO, testified before the subcommittee during the last five minutes of the meeting on Wednesday, saying that her organization opposes the reclassification, because it sends the wrong message to all stakeholders in the system.
Cherry explained the basics of the OWCA fund to the subcommittee as basically a tax on insurers. “They agreed to assess themselves some years ago to pay for the operational expenses of the Office of Workers’ Compensation Administration,” she said. “Those fees are assessed every year based on the book of business and benefits paid out, and if there are leftover funds they go back to the insurer community in the forms of credits or lower assessments the next year. The majority of those funds go toward salaries – judges, the medical director, medical services, and so forth.”
Doubling down on the fact that she is representing the injured workers served by the agency, Cherry went on to say it is “bad business” to reclassify the fund. “Business is paying the assessments for a very particular purpose. It would be [akin to] if I was a taxpayer and I pay a millage for fire protection and then my governing authority decides to spend it on libraries. I might love libraries, but I’m paying the money to go to fire protection and I want that money to come back,” Cherry said. “I know it is the intent of the committee to still protect the funds, but they are protected as they are and we’d like them to stay that way.”
Louisiana State Senator Sharon Hewitt (R-Chalmette), whose web page currently includes a brief “topic of interest” post about her work this Session to eliminate nearly all special funds and dedications via SB 226, acts as Co-Chair of the subcommittee and responded to Cherry’s remarks by saying that while she understands the concerns, she needs to create continuity for the Treasury so that everything that “looks like a fee or self-generated revenue” is placed in that category. Hewitt also stated in response to a question from fellow member Senator Norby Chabert (R-Houma) that she is committed to ensuring that the legislation is written to ensure that any leftover funds can be rolled forward rather than redistributed to the general fund and thus lost to the assessed community.
Senator Hewitt’s Co-Chair, Representative Rick Edmonds (R-Baton Rouge) echoed Hewitt’s remarks, emphasizing that the OWCA fund is particularly consistent with the subcommittee’s task to re-classify.
OWCA Director Sheral Kellar, who was not able to speak at the subcommittee meeting on Wednesday, announced earlier this week that she had been informed of the subcommittee’s recent motion to the Senate Finance Committee to re-classify the OWCA assessment (see complete statement from Kellar below). She explained in that statement that the difference is significant because if the fund is classified as fees and self-generated revenue, it can be “swept by the legislature at any time to fill a budget hole.” Director Kellar did not have any additional comments on the subcommittee’s recommendation to re-classify the fund after the meeting, but she said that the OWCA is keeping a close eye on the issue.
Statement from OWCA Director Sheral Kellar dated 4/2/18:
“Recently, an ad hoc legislative finance committee made a motion to the Senate Finance Committee to re-classify the OWCA assessment as fees and self-generated revenue rather than as a statutory dedicated fund. The difference is that if the fund is classified as fees and self-generated revenue it can be swept by the legislature at any time to fill a budget hole. If it is classified as a statutory dedicated fund the funds can only be used for the purpose intended – the operation and administration of the Office of Workers’ Compensation Administration.
This is a really important difference. The implications of re-classifying the fund as fees and self-generated revenue would negatively affect injured employees, employers, insurers, self-insured funds and group self-insured funds. Because of public policy concerns, I am providing this public information to you and to anyone else you want to forward this information to.
If you want the OWCA Assessment to be used for the purpose intended, you should probably address your concerns to members of the Ad Hoc Dedicated Fund Review Subcommittee of Joint Budget, either personally or at its next regularly scheduled meeting. The committee is meeting Wednesday, April 4, 2018 at 8:00 a.m. in Room E to finalize its recommendation. The committee’s report will be submitted to the Joint Legislative Committee on the Budget for approval as set forth in R.S. 49:308.5.
If you need anything further from me, please let me know.