BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
773 (Florez)
Hearing Date: 5/28/2009 Amended: 5/19/2009
Consultant: Bob Franzoia Policy Vote: Labor 4-1
_________________________________________________________________
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BILL SUMMARY: SB 773 would provide for increased permanent
partial disability benefits for injuries occurring on or after
Jan 1, 2010 and would revise the formula for computing permanent
disability payments for injuries causing permanent disability
increasing, for example, the number of weeks for which two
thirds of average weekly earnings allowed for each one percent
of permanent disability from one week (three weeks to four
weeks) to five weeks (16 weeks to 21 weeks).
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Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11 2011-12 Fund
Adjustment of permanent$5,000, increasing up to $75,000 to
General/
partial disability benefits $90,000 by 2014-15 and to
$100,000 in Special*
paid to injured employees future years; additional
administrative
costs ongoing
* Service Revolving Fund, other special funds
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STAFF COMMENTS: SUSPENSE FILE.
This bill would increase the current number of payable benefit
weeks for each percentage point of permanent disability by
approximately one third, while also increasing the current
permanent disability rates for dates of injury on and after
January 1, 2010. Preliminary information indicates the
combination of these two changes will more than double the
permanent disability indemnity benefit to injured employees with
dates of injury on or after January 1, 2010 compared to the
current indemnity table.
According to one report, workers' compensation reforms resulted
in permanent disability benefits to injured workers falling
approximately 50 percent. Preliminary information for state
employees suggests the benefits fell by a lesser amount. The
following table shows how California's current permanent
disability benefits compare to other states:
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| |Thumb |Leg at Hip |One Eye |Foot |
|------------+------------+------------+------------+------------|
|California |$21,000 |$61,435 |$17,714 |$28,820 |
|------------+------------+------------+------------+------------|
|Arizona |$19,800 |$66,000 |$39,600 |$52,800 |
|------------+------------+------------+------------+------------|
|Oregon |$91,769 |$160,000 |$125,934 |$149,423 |
|------------+------------+------------+------------+------------|
|New York |$30,000 |$115,000 |$64,000 |$82,000 |
|------------+------------+------------+------------+------------|
|Illinois |$73,639 |$289,297 |$168,318 |$163,058 |
|------------+------------+------------+------------+------------|
|National |$39,014 |$114,522 |$74,558 |$80,977 |
|Average | | | | |
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US Chamber of Commerce, Analysis of Workers' Compensation Laws
Page 2
SB 773 (Florez)
At this time, the Administrative Director of the Division of
Workers' Compensation is working on revising the current
permanent disability rating schedule using empirical data to
update the current diminished future earning capacity adjustment
factors.
State employee workers' compensation costs in 2007-08 were
approximately $460 million, split an estimated 55 percent
General Funds and 45 percent Special Funds. Of that amount,
approximately $93 million was for permanent disability benefits.
By doubling the amount of permanent disability (but not the
calculation of the percentage of permanent disability), this
bill may increase state workers' compensation costs by that
amount and potentially up to $100 million annually.
This bill is similar to SB 815 (Perata) 2006, SB 936 (Perata)
2007 and SB 1717 (Perata) 2008 which were vetoed by the
Governor. The 2008 veto message stated:
The workers' compensation reforms I enacted in 2004 have worked.
Costs to employers have decreased and return to work rates for
injured workers have increased. Our work, however, is not done.
Medical costs in the workers' compensation system are climbing,
leading the Workers' Compensation Insurance Rating Bureau to
recommend a 16 percent increase in premiums starting next year.
Given this fact, we must proceed cautiously before adding any
other costs to the system. As such, the billion dollar benefit
increase proposed by this bill cannot be justified at this time.