State government's work comp rates soar by 34 percent

HELENA - State government agencies face an average 34 percent jump in their workers' compensation insurance premiums July 1, leaving most departments looking for ways to pay the unexpected increase.

Twenty agencies did not budget enough money for the coming rate increase, while the budgets of 14 others include more than enough money to cover the added cost.

The biggest shortages are the Department of Fish, Wildlife and Parks, $157,751; Public Health and Human Services, $109,226; Military Affairs, $104,061; Environmental Quality, $97,516; Corrections, $94,699; and Labor and Industry, $70,276, based on figures provided by the governor's budget office and the Montana State Fund.

The State Fund, which provides insurance against on-the-job accidents for state agencies, also insures about 25,000 private employers in the state.

Lawrence Hubbard, State Fund president and chief executive officer, said the total state premium for the year starting July 1 will be $11.1 million, an increase $2.8 million from the current level.

The budget office indicated agency budgets contained money for an increase of about $2 million.

Chuck Swysgood, budget director for Gov. Judy Martz, said those agencies that came up short have few options. ''Most of the time they have to fund unexpected costs from existing budgets,'' he said.

For some departments, that could mean leaving more jobs unfilled or waiting longer to replace employees that leave. Others may have to transfer money from other parts of their budgets to pay the bill.

Karen Revious, head of centralized services for the Department of Military Affairs, said the agency may have to take money from maintenance projects.

Ken Pekoc, spokesman for Public Health and Human Services, said the state's largest department has not determined what it will do.

But, he added, ''any increased costs add to our operational expense and that takes money away from other potential services.''

Joe Williams, corrections budget chief, said he'll find the money somewhere.

''You have to start slicing out operation expenses, supplies, materials,'' he said. ''You cut back wherever you can, make everything stretch a little farther.''

The rate increases vary from a 182 percent jump for the Department of Environmental Quality to a 13 percent decline for the Office of Public Instruction.

Hubbard said the changes reflect the insurer's estimate of expected claims for accidents next year among individual departments for different classifications of workers. Rapidly rising medical costs are the major cause of increasing rates, he said.

''Actual costs of claims tells us we need X amount of money to pay for expected claims,'' he explained.

Hubbard said the State Fund may be able to help those agencies that have a hard time coming up with money to cover the increased rates by deferring a portion of their payment for a time.

He said the size of the overall state increase was driven largely by the rates for three of the state's biggest agencies. Public Health and Human Services will have 34.4 percent increase, Transportation's rate goes up 35 percent and Corrections will have a nearly 29 percent increase.

Those three departments, because of their large number of employees, account for two-thirds of the state's total premium, he said.

A relatively new factor in rates is something called ''terrorism load,'' which added about $86,000 to the state's premium.

A federal law enacted last fall, called the Federal Terrorism Insurance Act, requires workers' compensation insurers to collect an additional 2 cents for every $100 of payroll to build a pool for coverage of claims arising from catastrophic acts of foreign terrorism.

News of the increase in state government's rates comes about a month after the State Fund announced a 12 percent average increase for its private employer customers.