71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 4256
House Bill 3980
Sponsored by Representative BATES
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Establishes Examination and Accountability Commission to review
Industrial Accident Fund. Directs transfer of moneys from
Industrial Accident Fund to Workers' Benefit Fund and to
Examination and Accountability Commission Fund. Creates
Examination and Accountability Commission Fund. Provides that
expenses of commission be paid from moneys appropriated for
expenses of State Treasurer.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to the Industrial Accident Fund; creating new
provisions; amending ORS 656.526 and 656.605; and declaring an
emergency.
Whereas the Legislative Assembly finds that the Industrial
Accident Fund is a trust fund that, subject to constitutional
constraints, may be used in a manner most beneficial to all
citizens of Oregon; and
Whereas the Legislative Assembly further finds that the
Industrial Accident Fund contains moneys, and generates moneys,
in excess of the actuarial or fiscal needs of the Industrial
Accident Fund and the State Accident Insurance Fund Corporation;
and
Whereas the Legislative Assembly desires to scrutinize and
examine the Industrial Accident Fund for purposes of
accountability; and
Whereas the Legislative Assembly intends to provide for a more
equitable use of excess funds in the Industrial Accident Fund by
reducing or eliminating the tax imposed on all Oregon employers
and workers by ORS 656.506; now, therefore,
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + (1) The Examination and Accountability
Commission is established.
(2) The commission shall consist of six members, as follows:
(a) The State Treasurer, who shall be the chairperson of the
commission.
(b) The Secretary of State.
(c) The Director of the Department of Consumer and Business
Services, who shall be a nonvoting member of the commission.
(d) Three public members appointed by the Governor. The
appointment of the public members shall be subject to
confirmation by the Senate in the manner prescribed in ORS
171.562 and 171.565. One public member must represent the
interests of subject workers. One public member must represent
the interests of subject employers. One public member must be a
certified public accountant. A person is not eligible to serve as
a public member of the commission if the person has been an
officer or director of the State Accident Insurance Fund
Corporation or of a private insurer within four years prior to
the date of appointment to the commission.
(3) The public members of the commission shall serve for terms
of four years. A member is eligible for reappointment.
(4) A public member of the commission is entitled to
compensation and expenses as provided in ORS 292.495.
(5) Administrative expenses of the commission shall be paid by
the State Treasurer from moneys appropriated for administrative
expenses of the treasurer. + }
SECTION 2. { + Notwithstanding the term of office specified in
section 1 of this 2001 Act, of the public members first appointed
to the Examination and Accountability Commission under section 1
of this 2001 Act:
(1) One member shall serve for a term of one year;
(2) One member shall serve for a term of two years; and
(3) One member shall serve for a term of three years. + }
SECTION 3. { + (1) The Examination and Accountability
Commission Fund is established in the State Treasury, separate
and distinct from the General Fund.
(2) The Examination and Accountability Commission Fund shall
consist of:
(a) Moneys transferred from the Industrial Accident Fund
pursuant to section 4 of this 2001 Act; and
(b) Interest and other earnings on moneys in the fund. + }
SECTION 4. { + (1) The board of directors of the State
Accident Insurance Fund Corporation shall determine and report to
the Examination and Accountability Commission by March 1 of each
year:
(a) The total amount of assets in the Industrial Accident Fund
as of December 31 of the prior year;
(b) The reserves and surplus that are actuarially necessary
according to recognized insurance principles as described in ORS
656.634 (2);
(c) Any surplus subject to legislative disposition as described
in ORS 656.634 (2); and
(d) The total amount of investment gain generated by the
Industrial Accident Fund during the prior year ending on December
31.
(2) The Director of the Department of Consumer and Business
Services shall report to the Examination and Accountability
Commission, by March 1 of each year, the total amount of
assessments necessary to meet the needs of the Workers' Benefit
Fund that year as determined by the director pursuant to ORS
656.506.
(3) Within 60 days of receipt of the reports provided under
subsections (1) and (2) of this section, the Examination and
Accountability Commission shall direct the State Treasurer to
transfer from the Industrial Accident Fund to the Examination and
Accountability Commission Fund established by section 3 of this
2001 Act an amount equal to the reported investment gain or the
reported surplus subject to legislative disposition as described
in ORS 656.634 (2), whichever is less, reduced first by an
allowance for potential dividend payments as described in
subsection (4) of this section, and reduced thereafter by an
allowance for payment to the Workers' Benefit Fund as described
in subsection (5) of this section.
(4) Prior to the transfer of moneys to the Examination and
Accountability Commission Fund established by section 3 of this
2001 Act, the Examination and Accountability Commission shall
provide an allowance for potential payment of dividends by the
State Accident Insurance Fund Corporation as authorized by ORS
656.526. The allowance for potential payment of dividends shall
be the greater of:
(a) An amount equal to the difference between 150 percent of
the State Accident Insurance Fund Corporation's net earned
premiums during the prior calendar year and the sum of the State
Accident Insurance Fund Corporation's net losses and expenses
incurred during the prior calendar year; or
(b) An amount equal to the dividend ratio multiplied by the
State Accident Insurance Fund Corporation's net earned premiums
during the prior calendar year. For purposes of this paragraph, '
dividend ratio' means the combined Oregon dividends declared
divided by the combined Oregon direct earned premiums during the
two prior calendar years of the five private workers'
compensation insurers with the largest Oregon direct earned
premiums during that two-year period.
(5) After any allowance for potential dividend payments as
provided in subsection (4) of this section, and prior to the
transfer of moneys to the Examination and Accountability
Commission Fund as provided in subsection (3) of this section,
the Examination and Accountability Commission shall direct the
State Treasurer to transfer from the Industrial Accident Fund to
the Workers' Benefit Fund an amount equal to the total assessment
reported by the director pursuant to subsection (2) of this
section, or as much of the assessment as available funds will
permit.
(6) The balance of the Examination and Accountability
Commission Fund remaining after the reductions specified in this
section shall be subject to the right of the State of Oregon to
legislatively direct the disposition of the fund. + }
SECTION 5. { + (1)(a) The Examination and Accountability
Commission shall provide for an annual review of the Industrial
Accident Fund by a qualified independent actuarial firm and shall
require a report from the firm.
(b) The independent actuarial firm conducting the review
required by paragraph (a) of this subsection shall be familiar
with the accounting standards applicable to the reserves under
review, shall meet all appropriate standards of practice
established by the Casualty Actuarial Society shall employ a
staff that includes no fewer than three people who have attained
fellowship in the Casualty Actuarial Society and shall maintain
limits of errors and omission insurance as prescribed by the
commission.
(c) The commission shall determine the scope of the review
required by paragraph (a) of this subsection, which shall
include, but is not limited to:
(A) A review of the sources and uses of the moneys in the
Industrial Accident Fund;
(B) A reconciliation of changes in actuarial assumptions and
reserve values from the prior year;
(C) An examination of the development of claim reserve
inadequacies or redundancies over time;
(D) An assessment of the future financial viability of the
Industrial Accident Fund; and
(E) An evaluation of losses and loss adjustment expense
reserves discounted by a rate equal to the United States Treasury
30-year bond rate plus two percent and any other rate specified
by the commission.
(d) The State Accident Insurance Fund Corporation shall
cooperate with the actuarial firm in all respects and shall
permit the firm full access to all information the firm deems
necessary for a true and complete review. Information provided to
the actuarial firm conducting the annual review is subject to the
same limitations on public inspections as required for the
records of the State Accident Insurance Fund Corporation by ORS
656.702.
(2) The Examination and Accountability Commission shall issue
an annual report to the Governor and to the Legislative Assembly
on the status of the Industrial Accident Fund, including the
results of the review, and the amount of moneys transferred to
the Workers' Benefit Fund and the Examination and Accountability
Commission Fund established by section 3 of this 2001 Act.
Notwithstanding any other provision of law, the records of the
commission and the report of the independent actuarial firm shall
be available for public inspection. + }
SECTION 6. ORS 656.526 is amended to read:
656.526. (1) Periodically, the State Accident Insurance Fund
Corporation shall determine the total liability existing against
the Industrial Accident Fund.
(2) If, after the determination required by subsection (1) of
this section, the State Accident Insurance Fund Corporation finds
the Industrial Accident Fund, aside from the reserves { + and
surplus + } deemed actuarially necessary according to recognized
insurance principles, contains { - a - } { + an
additional + } surplus { + subject to legislative disposition as
described in ORS 656.634 (2) + }, the State Accident Insurance
Fund Corporation in its discretion may, after providing for any
payments to the state, taxes or other dispositions of surplus
provided by law, declare a dividend { + from such additional
surplus + } to be paid to, or credited to the accounts of,
employers who were insured by the State Accident Insurance Fund
Corporation during all or part of the period for which the
dividend is declared. { + The total amount of dividends paid or
proposed to be paid in a calendar year may not exceed the amounts
described in section 4 (4) of this 2001 Act unless otherwise
authorized by the Legislative Assembly or judicial order. + } Any
dividend so declared shall give due consideration to the solvency
of the Industrial Accident Fund, not be unfairly discriminatory
and not be promised in advance of such declaration.
(3) An employer in default when the dividend is declared shall
not be eligible to receive payment or the credit provided by
subsection (2) of this section.
SECTION 7. ORS 656.605 is amended to read:
656.605. (1) The Workers' Benefit Fund is created in the State
Treasury, separate and distinct from the General Fund. Moneys in
the fund shall be invested in the same manner as other state
moneys and investment earnings shall be credited to the fund. The
fund shall consist of the following:
(a) Moneys received pursuant to ORS 656.506.
(b) Moneys recovered under ORS 656.054.
(c) Fines and penalties recovered under ORS 656.735.
(d) All moneys received by the Director of the Department of
Consumer and Business Services pursuant to law or from any other
source for purposes for which the fund may be expended.
{ + (e) Moneys received pursuant to section 4 of this 2001
Act. + }
(2) Moneys in the Workers' Benefit Fund may be expended for the
following purposes:
(a) Expenses of programs under ORS 656.506, 656.622, 656.625,
656.628 and 656.630.
(b) Proceedings against noncomplying employers pursuant to ORS
656.054 and 656.735.
(c) Expenses of vocational assistance on claims, the cost of
which was imposed pursuant to section 15, chapter 600, Oregon
Laws 1985.
(3) Subject to the following provisions, all moneys in the fund
are appropriated continuously to the Director of the Department
of Consumer and Business Services to carry out the activities for
which the fund may be expended:
(a) Moneys received pursuant to ORS 656.054 and 656.735 and
transfers made pursuant to ORS 705.148 may be expended only to
carry out the provisions of ORS 656.054 and 656.735 and section
15, chapter 600, Oregon Laws 1985.
(b) Moneys received pursuant to ORS 656.506 and the transfers
of unexpended and unobligated moneys in the Retroactive Reserve,
Reemployment Assistance Reserve, Reopened Claims Reserve and
Handicapped Workers Reserve referred to in ORS 656.506, 656.622,
656.625 and 656.628 (All 1993 Edition) may be expended only to
carry out the programs referred to in ORS 656.506, 656.622,
656.625, 656.628 and 656.630.
(4) Notwithstanding any other provision of this chapter, if the
director determines at any time that there are insufficient
moneys in the Workers' Benefit Fund to pay the expenses of
programs for which expenditure of the fund is authorized, the
director may reduce the level of benefits payable accordingly.
SECTION 8. { + Sections 1 to 5 of this 2001 Act are added to
and made a part of ORS chapter 656. + }
SECTION 9. { + This 2001 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2001 Act takes effect on its
passage. + }
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