Legislators working through Special Session agenda

Legislators working through Special Session agenda

When the Governor put out the call for a special session this week one of the issues listed as a need to address was “The need to end the Death and Permanent Total Disability Trust Fund to avoid unfunded future liabilities and an increase in premium tax.”

This fund was established by the Arkansas legislature in 1973. It is funded by a 3% tax paid by employers on workers’ compensation premiums. This tax is paid by insured companies and self-insured companies.

Employers are the only tax payers that provide revenue for the fund and the insurance department provides rating information to self-insured companies, who then calculate what their premium costs would be if insured and remit the 3% of that amount to the Workers’ Comp Commission. It is important to point out that this is special revenue, not general revenue to the state. It assumes the cost of worker’s compensation claims after businesses pay the first $204,000.

Workers compensation is the oldest insurance program in the United States. With the rapid growth of industrial jobs in the early twentieth century, workplace injuries became more common. A system was needed to deal with these injuries and to compensate the workers who suffered from them.

Arkansas is the last state in the nation to have an existing trust fund to help cover cost. The fund currently has a $130 million liability. The expected growth of the liability is one reason this legislation is being introduced.

Sponsors of the bill have taken into consideration the impact to the business community.

The bill that is now before us will allow the fund to continue to pay claims above the employers’ retention amount until June 30, 2019. It would also limit the premium tax to 1.5% once the claims are paid.

The Fund has enough resources to pay existing claims for about ten years. Stopping new claims to the Fund is needed because it is underfunded. This legislation passed the Insurance and Commerce committee on Thursday.

This is just one of 14 bills being addressed in this special session. We are also considering a highway funding bill that will allow the state to match federal dollars for highways. A bill to merge East Arkansas Community College and Crowley’s ridge technical Institute failed in the House Education committee. I will continue to update you on the other big issues we will be addressing.

From State Representative Deborah Ferguson