HOUSE BILL REPORT
SB 5084
As Reported by House Committee On:
Labor & Workplace Standards
Appropriations
Title: An act relating to creating a separate fund for the purposes of self-insured pensions and assessments.
Brief Description: Creating a separate fund for the purposes of self-insured pensions and assessments.
Sponsors: Senators Braun, Keiser and Mullet; by request of Department of Labor & Industries.
Brief History:
Committee Activity:
Labor & Workplace Standards: 3/22/23, 3/28/23 [DP];
Appropriations: 4/1/23, 4/4/23 [DP].
Brief Summary of Bill
  • Creates the Self-Insurance Reserve Fund for payments from self-insured employers related to workers' compensation pensions and from the Overpayments Reimbursement Fund.
  • Allows the State Investment Board to invest any excess amounts in the Self-Insurance Reserve Fund.
  • Provides that the Second Injury Fund will retain its proportionate share of earnings in the fund held by the State Treasurer's Office.
HOUSE COMMITTEE ON LABOR & WORKPLACE STANDARDS
Majority Report: Do pass.Signed by 9 members:Representatives Berry, Chair; Fosse, Vice Chair; Robertson, Ranking Minority Member; Schmidt, Assistant Ranking Minority Member; Bronoske, Connors, Doglio, Ormsby and Ortiz-Self.
Staff: Trudes Tango (786-7384).
Background:

Under the state's industrial insurance laws, workers who, in the course of employment, are injured or disabled from an occupational disease are entitled to benefits.  Workers may receive medical, temporary time-loss, and vocational rehabilitation benefits.  In addition, a worker who suffers specified catastrophic injuries or other conditions permanently incapacitating the worker from any gainful employment is entitled to permanent total disability, which is often referred to as total permanent disability or pension benefits.

 

Self-Insured Employers.

Employers must insure through the State Fund administered by the Department of Labor and Industries (Department) or may self-insure if qualified.  To be certified by the Department as a self-insurer, an employer must have sufficient financial ability to ensure prompt payment of compensation to its injured workers and must meet other requirements.

 

Self-insured employers are responsible for paying to the Department certain assessments into the following funds:

  • the Insolvency Trust Fund, for claim expenditures of self-insured employers who have defaulted and exhausted their surety resources;
  • the Supplemental Pension Fund, for cost-of-living adjustments;
  • the Overpayment Reimbursement Fund, for reimbursements to self-insured employers for claims paid during appeals, where the employer prevails and has not recovered; and
  • the Second Injury Fund, for relief of pension claims that are granted second-injury relief.

 

Second Injury Relief.

When an industrial injury results in death or a pension is awarded, a self-insured employer must pay into the Pension Reserve Fund for the costs of the injury.  However, when death or total permanent disability is partially caused by a prior injury, pension costs resulting from the prior injury are paid by the Second Injury Fund.

 

Fund Transfers and Audits.

The Director of the Department may make periodic temporary interfund transfers between the Reserve and Supplemental Pension Funds as needed.  The Department must prepare financial statements on the various funds, and the State Auditor must conduct annual audits of the State Fund.
Summary of Bill:

Self-Insurance Reserve Fund.

The Self-Insurance Reserve Fund is created in the Office of the State Treasurer.  Payments related to pensions and from the Overpayment Reimbursement Fund are paid into the Self-Insurance Reserve Fund, rather than into the Pension Reserve Fund.  Interest earned on the Self-Insurance Reserve Fund becomes part of the fund.  The authority to make transfers between funds is extended to the Self-Insurance Reserve Fund.  The Department must provide for audits of the Self-Insurance Reserve Fund and prepare financial statements.

 

If the State Investment Board determines there are funds in excess of the amounts needed to meet the Self-Insurance Reserve Fund's current expenditures, the Board may invest the excess funds.

 

Second Injury Fund.

The Second Injury Fund is added to the list of funds that retain their own earned interest.
Appropriation: None.
Fiscal Note: Available.
Effective Date: Section 2 of the bill contains an emergency clause and takes effect on July 1, 2023. The remainder of the bill contains multiple effective dates. Please see the bill.
Staff Summary of Public Testimony:

(In support)  This is a straightforward agency request bill that will increase transparency and volatility for self-insured employers across the state.  Currently, self-insured employer assessments are held in the same fund as State Fund employers, and this bill would separate those assessments out for more transparency.  The Second Injury Fund will be able to retain interest earned on the balance instead of having that interest going to the State General Fund, and the State Investment Board will be able to invest excess funds.

 

(Opposed) None.
Persons Testifying: Senator John Braun, prime sponsor; and Tammy Fellin, Department of Labor and Industries.
Persons Signed In To Testify But Not Testifying: None.
HOUSE COMMITTEE ON APPROPRIATIONS
Majority Report: Do pass.Signed by 31 members:Representatives Ormsby, Chair; Bergquist, Vice Chair; Gregerson, Vice Chair; Macri, Vice Chair; Stokesbary, Ranking Minority Member; Chambers, Assistant Ranking Minority Member; Corry, Assistant Ranking Minority Member; Berg, Chandler, Chopp, Connors, Couture, Davis, Dye, Fitzgibbon, Hansen, Harris, Lekanoff, Pollet, Riccelli, Rude, Ryu, Sandlin, Schmick, Senn, Simmons, Slatter, Springer, Steele, Stonier and Tharinger.
Staff: Emily Stephens (786-7157).
Summary of Recommendation of Committee On Appropriations Compared to Recommendation of Committee On Labor & Workplace Standards:

No new changes were recommended.
Appropriation: None.
Fiscal Note: Available.
Effective Date: Section 2 of the bill contains an emergency clause and takes effect on July 1, 2023. The remainder of the bill contains multiple effective dates. Please see the bill.
Staff Summary of Public Testimony:

(In support) This bill will reduce volatility in assessments for self-insured employers.  The bill increases transparency by separating funds so that the Department of Labor and Industries can report on them in financial reports separately.  The new funds would be invested by the State Investment Board and would reduce annual assessments for self-insured employers.

 

(Opposed) None.
Persons Testifying: Tammy Fellin, Department of Labor and Industries.
Persons Signed In To Testify But Not Testifying: None.