COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3231-03
Bill No.: SCS for SB 856
Subject: Business and Commerce; Employees-Employers; Labor and Management; Workers Compensation; Religion; Evidence; Labor and Industrial Relations Dept.
Type: Original
Date: February 16, 2004
FISCAL SUMMARY
FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
General Revenue | $0 to Unknown | $0 to Unknown | $0 to Unknown |
Total Estimated
Net Effect on General Revenue Fund |
$0 to Unknown | $0 to Unknown | $0 to Unknown |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 8 pages.
FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
Second Injury Fund | $258,836 | $739,531 | $999,131 |
Conservation Commission Fund | $0 to Unknown | $0 to Unknown | $0 to Unknown |
Highway Fund | $0 to Unknown | $0 to Unknown | $0 to Unknown |
Various State Funds |
$0 to Unknown | $0 to Unknown | $0 to Unknown |
Total Estimated
Net Effect on Other State Funds |
$258,836 to Unknown | $739,531 to Unknown | $999,131 to Unknown |
FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
Local Government | $0 to Unknown | $0 to Unknown | $0 to Unknown |
ASSUMPTION
Officials from the Office of Administration, Division of Budget and Planning assume the proposal would have no impact on their organizations.
In response to a previous version of this proposal, officials from the University of Missouri assumed this proposal would have no impact on their organizations.
Officials from the Department of Labor and Industrial Relations, Division of Workers' Compensation (Division) anticipates that the combination of various changes reducing compensable injuries will combine to provide a minimal reduction in benefits, or cost savings, to the Second Injury Fund during the period covered by this fiscal note.
Based on cases disposed of in FY 2001, FY 2002, and FY 2003, the overall average case disposition time equaled 2.91 years for Second Injury Fund cases. These averages ranged from a low of 2.84 years in FY 2003 to a high of 3.00 years in FY 2001.
Since the changes in this proposal will only affect injury dates occurring on, or after, August 28, 2004, it will take several years for the full impact of this proposal to be fully reflected in a cost savings to the Second Injury Fund.
The Division made an assumption that, in its entirety, this legislation will reduce total compensable cases by 3 percent. Based on the last three fiscal years, the average number of Second Injury Fund cases resolved with an award being issued equaled 11,355. A 3 percent reduction in this number equals 11,014. Again, based on Division data, 20.30 percent of all cases are resolved one year from the injury date, an additional 37.70 percent within two years, and another additional 20.35% within three years. Since the onset of each year will initiate different first year cases, second year cases that were once first year cases, and so on, the preceding percentage amount for a given year is added to the current percentage amount, to determine the case resolution numbers. Data from the three preceding years was used to determine the average cost per resolved case.
ASSUMPTION (continued)
The final calculation, with its corresponding cost reduction to the Second Injury Fund is, therefore, as follows:
FY 2005: 11,355 (total average current cases with benefits) X 3% (total % of cases with benefits under new law) = 341 (total projected cases with benefits) X 20.30% (total % projected cases resolved under new law) = 69 (total cases resolved under new law) X $3,743 (average cost per case) = $258,835.75 total cost savings.
FY 2006: 11,355 (total average current cases with benefits) X 3% (total % of cases with benefits under new law) = 341 (total projected cases with benefits) X 58% (total % projected cases resolved under new law) = 198 (total cases resolved under new law) X $3,743 (average cost per case) = $739,530.71 total cost savings.
FY 2007: 11,355 (total average current cases with benefits) X 3% (total % of cases with benefits under new law) = 341 (total projected cases with benefits) X 78.36% (total % projected cases resolved under new law) = 267 (total cases resolved under new law) X $3,743 (average cost per case) = $999,131.49 total cost savings.
In response to a previous version of the proposal, officials from the Office of Administration, Division of Risk Management assumed the proposal would generate unknown savings for the General Revenue Fund from the reduction in Workers' Compensation program insurance and costs.
Oversight assumes there would also be unknown savings to other state funds, and to local governments for employees' Workers' Compensation coverage. Oversight has shown a range of $0 to Unknown in cost savings for this proposal.
FISCAL IMPACT - State Government | FY 2005
(10 Mo.) |
FY 2006 | FY 2007 |
GENERAL REVENUE | |||
Savings - Office of Administration | |||
Potential Reduction in Claims Paid |
$0 to
Unknown |
$0 to
Unknown |
$0 to
Unknown |
ESTIMATED NET EFFECT ON GENERAL REVENUE |
$0 to Unknown |
$0 to Unknown |
$0 to Unknown |
SECOND INJURY FUND | |||
Savings - Division of Workers' Compensation | |||
Reduction in Claims Paid | $258,836 | $739,531 | $999,131 |
ESTIMATED NET EFFECT ON
SECOND INJURY FUND |
$258,836 |
$739,531 |
$999,131 |
CONSERVATION COMMISSION FUND | |||
Savings - Department of Conservation | |||
Potential Reduction in Claims Paid |
$0 to
Unknown |
$0 to
Unknown |
$0 to
Unknown |
ESTIMATED NET EFFECT ON CONSERVATION COMMISSION FUND |
$0 to Unknown |
$0 to Unknown |
$0 to Unknown |
FISCAL IMPACT - State Government | FY 2005
(10 Mo.) |
FY 2006 | FY 2007 |
HIGHWAY FUND | |||
Savings - Department of Transportation | |||
Potential Reduction in Claims Paid |
$0 to
Unknown |
$0 to
Unknown |
$0 to
Unknown |
ESTIMATED NET EFFECT ON HIGHWAY FUND |
$0 to Unknown |
$0 to Unknown |
$0 to Unknown |
VARIOUS STATE FUNDS | |||
Savings - Various Agencies | |||
Potential Reduction in Claims Paid |
$0 to
Unknown |
$0 to
Unknown |
$0 to
Unknown |
ESTIMATED NET EFFECT ON VARIOUS STATE FUNDS |
$0 to Unknown |
$0 to Unknown |
$0 to Unknown |
FISCAL IMPACT - Local Government | FY 2005
(10 Mo.) |
FY 2006 | FY 2007 |
VARIOUS LOCAL FUNDS | |||
Savings - Various Local Governments | |||
Reduction in Potential Workers'
Compensation Claims |
$0 to
Unknown |
$0 to
Unknown |
$0 to
Unknown |
ESTIMATED NET EFFECT ON VARIOUS LOCAL FUNDS |
$0 to Unknown |
$0 to Unknown |
$0 to Unknown |
FISCAL IMPACT - Small Business
This proposal could impact small businesses if there are reductions in the amount of Workers' Compensation benefits paid as a result of passage of this proposal.
DESCRIPTION
This proposal would revise several provisions of the state Workers' Compensation law:
DESCRIPTION (continued)
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Labor and Industrial Relations
Office of Administration
Division of Risk Management
Division of Budget and Planning
University of Missouri
Mickey Wilson, CPA
Director
February 16, 2004