COBI 2015 - Employers Reinsurance Fund

Overview
Issues
Performance
Background
Financials

Sources Uses

FY 2016 Appropriation

The Employers Reinsurance Fund (ERF) pays certain workers (and their dependents) compensation benefits from work accidents that occurred prior to July 1994. Administrative costs may be paid from the Fund, but unrelated expenses are not allowed. For many years, the Fund acted as a reinsurer to the commercial insurance market, (1) for claimants that exceed a specific period of benefits with the private insurer, or (2) to pay the liability for pre-existing impairment of workers rendered disabled by an industrial accident. Payments on claims prior to July 1994 continue to be paid.

Funding History

Appropriation Overview

During the 2015 General Session, the Legislature appropriated for Fiscal Year 2016, $4,275,800 from all sources for Employers Reinsurance Fund. This is a 54.1 percent increase from Fiscal Year 2015 revised estimated amounts from all sources.

Premium Rates for the Employers' Reinsurance Fund

Premium rates for the Employers' Reinsurance Fund, which pays certain workers (and their dependents) compensation benefits from work accidents that occurred prior to July 1994.

Statute

UCA 34A-2-702 creates and authorizes ERF.

UCA 34A-2-703 outlines liability and payments from ERF in the event an employee incurs an additional impairment that is completely disabling.

Revenues come from (1) a surcharge on employers' Workers' Compensation premiums collected by the State Tax Commission, (2) an assessment to self-insured employers, and (3) interest earned on collections (collections are invested with the State Treasurer).

The Labor Commission works closely with actuaries and the Workers Compensation Advisory Council each year to set the premium rates for the ERF. The Council has recommended a 3.0% rate for CY 2015. The rate becomes effective January 1, 2015. This is an increase from the previous rate of 2.9%, to improve the likelihood of full funding by the legislatively mandated deadline.

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Appropriation History by

Programs	FY11 Actual	FY12 Actual	FY13 Actual	FY14 Actual	FY15 Approp	FY15 Change	FY15 Revised	FY16 Change	FY16 Approp
Employers Reinsurance Fund	21,945,000	20,036,300	18,694,300	279,100	18,875,800	(16,101,400)	2,774,400	1,501,400	4,275,800
Total	$21,945,000	$20,036,300	$18,694,300	$279,100	$18,875,800	($16,101,400)	$2,774,400	$1,501,400	$4,275,800

Sources of Finance	FY11 Actual	FY12 Actual	FY13 Actual	FY14 Actual	FY15 Approp	FY15 Change	FY15 Revised	FY16 Change	FY16 Approp
Interest Income	834,500	1,063,400	975,000	674,200	1,000,000	540,000	1,540,000	1,360,000	2,900,000
Dedicated Credits - Investments	313,200	(62,800)	(134,700)	227,100	0	250,000	250,000	0	250,000
Premium Tax Collections	13,923,000	12,698,300	13,217,800	14,509,900	13,250,000	2,621,000	15,871,000	1,069,000	16,940,000
Premium Tax Payments	(1,124,000)	(414,000)	345,000	0	350,000	(350,000)	0	0	0
Change in Claim Reserves	(8,611,700)	14,034,300	1,229,300	1,769,200	1,500,000	(1,500,000)	0	0	0
Beginning Fund Balance	(56,916,000)	(73,526,000)	(66,242,400)	(69,304,300)	(69,304,300)	16,901,300	(52,403,000)	14,886,600	(37,516,400)
Ending Fund Balance	73,526,000	66,243,100	69,304,300	52,403,000	72,080,100	(34,563,700)	37,516,400	(15,814,200)	21,702,200
Total	$21,945,000	$20,036,300	$18,694,300	$279,100	$18,875,800	($16,101,400)	$2,774,400	$1,501,400	$4,275,800

Categories of Expenditure	FY11 Actual	FY12 Actual	FY13 Actual	FY14 Actual	FY15 Approp	FY15 Change	FY15 Revised	FY16 Change	FY16 Approp
Current Expense	323,000	334,100	199,900	205,100	200,400	0	200,400	0	200,400
DP Current Expense	200	300	500	400	400	0	400	0	400
Other Charges/Pass Thru	21,554,800	19,628,300	18,420,300	0	18,600,000	(16,100,000)	2,500,000	1,500,000	4,000,000
Transfers	67,000	73,600	73,600	73,600	75,000	(1,400)	73,600	1,400	75,000
Total	$21,945,000	$20,036,300	$18,694,300	$279,100	$18,875,800	($16,101,400)	$2,774,400	$1,501,400	$4,275,800

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Other Indicators	FY11 Actual	FY12 Actual	FY13 Actual	FY14 Actual	FY15 Approp	FY15 Change	FY15 Revised	FY16 Change	FY16 Approp
Change in Fund Balance	(16,609,500)	7,282,900	(3,061,900)	0	(2,775,800)	2,775,800	0	0	0

COBI contains unaudited data as presented to the Legislature by state agencies at the time of publication. For audited financial data see the State of Utah's Comprehensive Annual Financial Reports.