Nevans Responds to DePaolo Editorial on Assessment Increases

Thursday, December 3, 2009 | 0

Editor's Note: This letter was written in response to a Nov. 30 editorial by WorkCompCentral Chief Executive Officer David DePaolo.

By Carrie Nevans

User funding provides a fully vetted, stable funding source for Department of Industrial Relations (DIR) programs, which help ensure employers in California have a level playing field on which to do business. There has never been a more important time to be sure that California’s legitimate, law abiding employers are not undercut by scofflaws who do not provide workers’ compensation insurance, create effective health and safety programs or pay benefits to their injured workers.

Mr. DePaolo’s assertion that user funding constitutes taxation without representation is patently false. The Legislature, which is elected by the people and represents the people, creates, reviews and approves the state budget—including the DIR budget. Being user-funded doesn’t mean nobody is scrutinizing the budget—it simply means the DIR’s budget money is in an account that is separate from the General Fund.

Any proposed changes to DIR’s baseline budget (the budget amounts already approved by the Legislature) are reviewed in a very public process: First, all proposals are reviewed by the Department of Finance before they are incorporated into the governor’s proposed budget each January. Upon release of the January budget, the proposals are likewise reviewed by the Legislative Analyst’s Office, which provides advice and recommendations to the Legislature. The Senate and Assembly each have budget committee meetings, during which the budget proposals are scrutinized. Department staff is called in to these committee meetings to answer questions and provide information about budget changes. Public testimony is received by the Legislature during budget hearings as well. Ultimately, a final bill is crafted through joint committee meetings and sent to the governor for final approval.

Nothing is hidden here: The governor’s proposed budget is a public document, the Assembly and Senate proposed bills are public—even the committee meetings are public.

It is important to note that the Workers’ Compensation Administration Revolving Fund (WCARF) assessments have fluctuated up and down since 2005 to reflect budget needs: there was a 2% decrease in WCARF assessments between 2005 and 2006, a 21% increase between 2006 and 2007, a 15% decrease between 2007 and 2008 and a 20% increase between 2008 and 2009.

Additionally, while overall workers’ compensation claims frequency has decreased—and that’s a positive result of workers’ compensation reforms enacted by the Schwarzenegger Administration—the tail of disputed cases, and all the attendant liens, being heard before the Workers’ Compensation Appeals Board represents the bulk of the DWC’s workload. Even with reforms, an average of 20% of all claims are still disputed, so until the decrease in claim frequency results in a decrease in the number of disputed cases being opened—likely a few years off—the division will still be adjudicating a large number of cases annually.

User funding is an investment in the present and the future. In the present, DIR is able to level the playing field for legitimate employers through effective enforcement and education—a vital process for the state’s economic well-being. And it allows the department to modernize and build sustainable systems and create efficiencies for California’s future.

Carrie Nevans, is acting administrative director of the California Division of Workers’ Compensation.