BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 211 (Cedillo)
Hearing Date: 7/11/2011 Amended: As Introduced
Consultant: Bob Franzoia Policy Vote: L&IR 4-1
_________________________________________________________________
____
BILL SUMMARY: AB 211 would provide, for injuries that cause
permanent partial disability and occur on or after January 1,
2012, for a supplemental job displacement benefit (SJDB) in the
form of a voucher for up to $6,000 to cover various reeducation
and skill enhancement expenses which would expire two years
after the date the voucher is furnished to the employee or five
years after the date of injury, whichever is later. This bill
would exempt employers who make an offer of reemployment or
continued employment from providing vouchers. This bill would
require the Administrative Director of the Divisions of Workers'
Compensation within the Department of Industrial Relations to
adopt regulations implementing the program.
_________________________________________________________________
____
Fiscal Impact (in thousands)
Major Provisions 2011-12 2012-13 2013-14 Fund
Fixed benefit payment Unknown, increase or decrease in
benefitGeneral/
level payments over current tiered
levelsSpecial
Regulations One time minor, absorbable cost General
* In 2005-06, $12 in SJDBs were paid to state employees
In 2006-07, $135 in SJDBs were paid to state employees
In 2007-08, $291 in SJDBs were paid to state employees
In 2008-09, $276 in SJDBs were paid to state employees
In 2009-10, $358 (30 percent increase) in SJDBs were paid to
state employees
_________________________________________________________________
____
STAFF COMMENTS: This bill may meet the criteria for referral to
the Suspense File.
On January 1, 2004, employees became eligible for SJDBs. The
AB 211 (Cedillo)
Page 1
regulations for SJDBs were finalized June 2005 and became
effective August 2005. The current SJDB schedule would apply
only to injuries that occurred before January 1, 2010 and would
be replaced by a single SJDB voucher amount. Employees who are
permanently unable to do their job, and whose employer does not
offer other work, may qualify for SJDBs.
As noted above, the state paid $358,396 in SJDBs in 2009-10.
Generally, from the time of injury there is a year of
rehabilitation and then a medical determination of the percent
of disability. How the amount paid in SJDBs to state employees
would change as a result of this bill, which provides a lower
maximum but eliminates the nexus between percentage of permanent
partial disability and amount of SJDB, is unknown. The state
appropriates general and special funds (estimated 55-45 percent
split) to pay for its any increase in benefits. Total paid
costs in 2009-10 were $503 million (a 9.2 percent increase).
Data necessary to determine whether eliminating the tiered rates
and implementing one rate would increase or decrease annual
costs of SJDBs for private or public sector employees remains
elusive. For example, some State Compensation Insurance Fund
information on SJDBs paid to state employees of numerous state
agencies between 2004 and 2009 suggests the average SJDB is
$2,159 ($889,427/412). A calculation of SJDB costs using
Workers' Compensation Insurance Rating Bureau data (insurance
industry data) suggests the average SJDB is just a few percent
less than $6,000.
Neither of the data sets reflects expected payment amounts that
should be occurring in the tiered rates of $4,000, $6,000,
$8,000, and $10,000. For example, one Department of
Transportation claim paid $10,000, a claim amount expected for a
permanent partial disability award between 50 and 99 percent
while four other claims totaled $4,701.50 for an average claim
of $1,175. This proposal may overpay at the lower percentages
for permanent partial disability, where there are generally more
(and smaller) claims, and underpay at the higher percentages for
permanent partial disability, where there are fewer claims.
The observed ranges in the industry data has the same problem
which may indicate the data reflects cases settled and
discounted or other expenses being subtracted from the claim or
a lack of completeness with the data. Additionally, it is
AB 211 (Cedillo)
Page 2
possible the a comparison of work place injuries and resulting
workers' compensation claim payments between private and public
sector employees are not directly comparable and cannot be
considered when determining the fiscal impact of this bill.