BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB 1145 (Cedillo) - Workers' compensation: permanent disability
benefits.
Amended: January 4, 2012 Policy Vote: L&IR 5-1
Urgency: No Mandate: No
Hearing Date: August 16, 2012 Consultant:
Bob Franzoia
SUSPENSE FILE.
Bill Summary: AB 1145 would provide, for injuries that cause
permanent partial disability and occur on or after January 1,
2013, 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.
Fiscal Impact: Unknown potentially significant increase or
decrease in benefit level payments over current tiered levels
from the General Fund and special funds ongoing.
One time, minor absorbable cost to adopt regulations
First payments of up to $6,000 beginning after January 1, 2013
and generally when the employee is able to return to work doing
modified duties and within two years of the injury.
In 2005-06, $12,000 in SJDBs were paid to state employees
In 2006-07, $135,000 in SJDBs were paid to state employees
In 2007-08, $291,000 in SJDBs were paid to state employees
In 2008-09, $276,000 in SJDBs were paid to state employees
In 2009-10, $358,000 (30 percent increase) in SJDBs were paid to
state employees
2010-11 pending
Background: On January 1, 2004, employees became eligible for
SJDBs. The current SJDB schedule would apply only to injuries
that occurred before January 1, 2013 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. The benefit comes in the form of a
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non-transferable voucher that can be used to pay for educational
retraining or skill enhancement, or both, at state-approved or
state-accredited schools. The voucher covers school tuition,
fees, books and expenses required by the school for training.
No more than 10 percent of the value of the voucher can be used
for vocational and return to work counseling.
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.
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. Additionally,
it is 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.
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
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Industrial Relations to adopt regulations implementing the
program.
Related Legislation: This bill is similar to AB 211 (Cedillo)
2011 which was vetoed by the Governor with the following
message:
This bill represents an effort to improve benefits for workers
by providing vouchers for those who need additional training in
order to return to employment after permanently disabling
injuries. I am, however, reluctant to enact piecemeal changes to
the Workers' Compensation system in the absence of more
comprehensive reform that addresses both the cost and benefits
under the system.