28 TAC §§251.501, 251.503, 251.505, 251.507, 251.509, 251.511, 251.513, 251.515, 251.517, 251.519
The State Office of Risk Management, (the Office), proposes
a new Subchapter E, §§251.501, 251.503, 251.505, 251.507, 251.509,
251.511, 251.513, 251.515, 251.517, and 251.519 governing the establishment
of an allocation program for state agency workers' compensation and risk management
costs (Allocation Program) and addressing the manner in which the cost of
workers' compensation and risk management programs will be assessed to covered
agencies.
The 77th Texas Legislature recently enacted House Bill 2976 which amended §
412.012 of the Labor Code and added new §§412.0121, 412.0122, 412.0123,
and 412.0124 to the Texas Labor Code, Chapter 412. The Office proposes the
new subchapter to implement new §412.0123, define terms used in new §412.0123,
and establish the processes involved in allocating the costs of the program
.
Section 251.501 specifies that the purpose of the rules is to implement
the Allocation Program as required by Texas Labor Code, Chapter 412, §412.0123.
Section 251.503 defines terms used in the subchapter.
Section 251.505 sets forth the procedures the Office will use in determining
the amount of expected losses and the amount that will be collected from all
participating agencies.
Section 251.507 sets forth the factors and the formula that will be used
to determine each participating agency's proportionate cost for paying for
workers' compensation coverage. Staff is proposing a relative weighting and
formula designed to fairly allocate the cost of risk which would establish
the default value for the 2002 assessment.
Section 251.509 makes provision for participation in the workers' compensation
program for agencies either omitted from the assessment process or newly created
, establishes special circumstance calculations, and defines the scope of
assessments and liability for such agencies.
Section 251.511 establishes the requirements for reports provided to, and
by, the Office relating to the collection of workers' compensation assessments.
Section 251.513 establishes deadlines for payments to be received by the
Office for agency assessments and permits an optional deadline for assessments
paid from funds not held in the state treasury.
Section 251.515 sets forth the procedure by which program participants
may request the Board of Directors of the Office consider new factors or modify
the weighting of relevant factors in the assessment process.
Section 251.517 allows participating agencies to unitize elements of their
organization for the purposes of internally allocating the cost of the agency's
worker's compensation coverage.
Section 251.519 establishes the procedure for the re-appropriation of the
existing claim fund to make the initial allocation revenue-neutral for program
participants.
Jonathan D. Bow, General Counsel, has determined that for the first year
of the first five years the proposed sections will be in effect, there will
be no fiscal impact to state and local governments as a result of the enforcement
or administration of the proposed rules. State agencies may see reduced or
increased costs in subsequent years based on each agency's relative injuries
and workers' compensation losses. Any additional costs for agencies to comply
with the proposed subchapter result from the legislative enactment of §412.0123
and not from the proposed subchapter. The proposed subchapter is only applicable
to state agencies and there will be no effect on large, small or micro-businesses.
There is no impact on local employment or the local economy as a result of
the proposal.
Mr. Bow has determined that for each year of the first five years the proposed
sections are in effect, the anticipated public benefit is that the Allocation
Program will provide adequate funding for losses due to injuries to state
employees and provide effective incentives to system participants to reduce
injuries and losses to state workers to the benefit of taxpayers.
To be considered, written comments on the proposal must be received no
later than 5 p.m. thirty days after date of publication. Comments should be
delivered to Jonathan D. Bow, General Counsel, State Office of Risk Management,
300 W 15th St., 6th Floor, Austin, TX 78701, or P.O. Box 13777, Austin, TX
78711-3777.
Any requests for a public hearing should be submitted separately to the
General Counsel.
The subchapter is proposed under the authority granted by Texas
Labor Code, Chapter 412, 412.031. Section 412.031 provides the Board may adopt
rules necessary to implement the state's Workers' Compensation and Risk Management
programs.
The following statutes are affected by the proposed new subchapter: Texas
Labor Code, Chapter 412, §§412.012, 412.0121, and 412.053.
§251.501.Purpose.
The purpose of this subchapter is to:
(1)
equitably distribute the cost of funding workers' compensation
losses, the cost of administering claims, and the cost of providing loss control
services to participating state agencies;
(2)
encourage the development and implementation of risk management
programs and practices designed to minimize occupational injuries and illnesses;
protect state property; and provide appropriate safety and health training
for all state employees;
(3)
pool large and small risks to enable catastrophic loss(es)
to be spread throughout all participating state agencies; and
(4)
encourage compliance with State Office of Risk Management
regulations, and the policies and programs recommended in Risk Management
For Texas State Agencies within the following areas of risk: property exposures;
workers' compensation exposures; and liability exposures.
§251.503.Definitions.
The following words and terms, when used in this subchapter, shall
have the following meanings:
(1)
Payroll--The total dollars paid for gross salary for all
covered Full-Time Equivalents (FTEs), as reported by covered agencies.
(2)
Injury Frequency Rate (IFR)--The number of accepted claims,
as reported by the State Office of Risk Management (the Office), per 100 covered
FTEs.
(3)
Claims Cost--The net amount of payments made on claims,
minus subrogation and restitution costs, as reported by the Office.
(4)
Covered Agency--A department, board, commission, or institution
of this state with workers' compensation coverage under Chapter 501 of the
Texas Labor Code (Labor Code).
(5)
Covered FTE--An FTE covered under workers' compensation
coverage under Chapter 501 of the Labor Code.
(6)
Plan Year--The state fiscal year beginning on September
1 and ending on August 31 the following year.
(7)
Risk Management For Texas State
Agencies
--Risk management guidelines published by the Office for implementation
and use by covered state agencies.
§251.505.Total assessment.
(a)
Each plan year the Office will calculate the total amount
to be collected from covered agencies to pay the aggregate costs of:
(1)
workers' compensation losses; and
(2)
the Office's risk management program.
(b)
The office will commission an actuarial study each plan
year for the purpose of projecting the total amount of workers' compensation
losses which will be paid in the following plan year. The board of the State
Office of Risk Management (the Board) will set the amount to be collected
based on the actuarial study, with the goal of collecting an amount sufficient
to pay the expected losses.
(c)
The total assessment will be the total of:
(1)
the projected workers' compensation costs for the following
plan year;
(2)
any amount which the Office has borrowed in the previous
plan year for paying workers' compensation costs or any carryover of funds
from the previous plan year (expressed as a negative amount); and
(3)
the cost of the Office's risk management program.
§251.507.Calculating the allocation of the total assessment.
(a)
The total assessment will be divided among participating
agencies based on each agency's:
(1)
payroll as a percentage of all participating agencies'
payroll;
(2)
injury frequency rate as a percentage of the total of all
participating agencies' injury frequency rates;
(3)
claim costs as a percentage of all claims payments made
on behalf of participating agencies; and
(4)
such other relevant factors as the Board may determine.
(b)
The Office will use a weighted three-year rolling average
to calculate payroll and injury frequency rate for each covered agency. In
the weighted average the most recent completed plan year will constitute 50%
of the total for that factor, the next most recent plan year will be given
33% of the total, and the earliest plan year will be given 17% of the total
for the factor.
(c)
The Office will use a simple three-year rolling average
to calculate claim costs for each covered agency.
(d)
Subject to modification by the Board pursuant to §251.515
of this subchapter, the factors used in the calculation shall be weighted
as follows:
(1)
Payroll--20%;
(2)
Injury frequency rate--40%;
(3)
Claims cost--40%.
§251.509.Omitted or newly created agencies.
(a)
In the event that a covered agency is omitted from the
annual assessment for any plan year, that agency will promptly:
(1)
remit to the Office an assessed amount based on projected
payroll, as reported by the agency; and
(2)
reimburse the Office for all covered losses incurred in
that plan year in excess of the assessed amount.
(b)
Notwithstanding §251.507(b) of this subchapter:
(1)
if an agency has existed for only the two most recent plan
years of the weighted three-year rolling average period, then the most recent
completed plan year shall constitute 60% of the total for the weighted factors
and the next most recent plan year shall constitute 40% of the total for the
weighted factors;
(2)
if an agency has existed for only the most recent plan
year of the weighted three-year rolling average period, then the most recent
completed plan year shall constitute 100% of the total for the weighted factors;
and
(3)
the assessment for an agency that was not in existence
during any of the plan years of the weighted three-year rolling average period
shall be calculated using that agency's current or projected payroll, as reported
by the agency, and the agency's actual claims costs, if any.
§251.511.Required reports.
(a)
In addition to other reports required under this chapter,
each covered agency shall report to the Office not later than February 1 of
each plan year their total payroll and the number of covered FTEs, by funding
source for the prior plan year. The report shall be made in the form and manner
required by the Office.
(b)
In addition to other reports provided by the Office to
covered state agencies, the Office will report to each covered agency not
later than March 1 of each plan year the agency's injury frequency rate and
claims cost for the three most recent plan years. The Office may satisfy this
requirement by posting the information required on its web site.
(c)
The reports required by this section may be amended, supplemented
or corrected at any time prior to June 1 of the plan year. The calculation
of assessments to agencies will be made using the data contained in these
reports as of June 1 of each year.
§251.513.Date of payment for assessments.
(a)
Each covered agency's assessment payment must be received
by the Office not later than September 1 of each plan year except as otherwise
provided by this rule.
(b)
Upon approval of the Office, the portion of an agency's
assessment which will be paid from funds not held in the state treasury may
be paid in two installments. An agency authorized by the Office to exercise
this option must pay at least 50% of the agency's total assessment by September
1 of the plan year with the balance of the assessment due not later than January
15 of the plan year.
§251.515.Changes in the factors or weighting used in the assessment.
(a)
The Board may modify the factors and/or relative weights
set forth in §251.507 of this subchapter in open meeting and after notice
as provided by the Open Meetings Act.
(b)
Any person may request that the Board make specific changes
to modify the factors and/or relative weights used in calculating agency assessments.
Specific requests for changes must be delivered to the General Counsel for
the Office by June 1 of any plan year to be considered for adoption in the
following plan year.
(c)
Any modification of the factors and/or weights used in
calculating agency assessments will be made in accordance with the statement
of purpose contained in §251.501 of this subchapter.
(d)
The Office shall publish on its website the effective factors
and/or weights to be used in calculating agency assessments on or before the
15th day following any modifications made by the Board pursuant to subsection
(a) of this section.
§251.517.Unitization of agency assessments.
An agency may allocate the assessment authorized in these rules internally
to promote the purposes set forth in §251.501. In allocating costs internally
an agency is not bound to use the same factors and weighting established in
these rules. The Office will provide data, to the extent that it is available,
to assist agencies in properly allocating costs to the internal units designated
by the agency.
§251.519.Distribution of existing claim fund appropriation.
(a)
The Office will make recommendations to the Comptroller
of Public Accounts regarding the distribution of funds appropriated to the
Office on a one-time basis for FY2002 and FY2003. Funds distributed to participating
agencies will become a part of the base-line appropriation for the agency
receiving them. Agencies will receive an appropriation of the same amount
in FY2003 that was calculated for that agency in FY2002.
(b)
The amount distributed to each agency will be calculated
to make the assessment "revenue neutral" as it impacts general revenue funds
held in the state treasury.
(c)
The Office will recommend an amount be distributed to an
agency calculated by subtracting from the agency's assessment an amount equal
to 25% of the agency's paid workers' compensation losses for FY2000 and the
expected Risk Management contract amount which would have been charged without
the change in funding methods. That total will be multiplied by the percentage
of salary expenditures for FY2000 funded by general revenue to determine the
expected additional general revenue appropriation necessary to maintain a
revenue neutral status for general revenue funds in FY2002.
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State, on June 21, 2001.
TRD-200103511
Jonathan D. Bow
General Counsel
State Office of Risk Management
Earliest possible date of adoption: August 5, 2001
For further information, please call: (512) 936-1502