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December 21, 1998                                                                        

Locke boosts workers' comp refund for employers to $200 million

OLYMPIA - Gov. Gary Locke today announced that Washington employers will receive an additional $50 million workers' compensation tax refund in 1999, bringing the total to $200 million.

Locke said employers would begin receiving refund checks the week of Jan. 25. The governor in September announced a $150 million refund to employers because of an investment windfall in the state's workers' compensation system.

Recent improvements in the stock market allow for the additional $50 million refund, Locke said.

"This is good news on top of great news," Locke said. "We can give even more money back to employers while still maintaining a strong workers' compensation system to protect injured workers in our state."

The dividend is the first in the history of the state's workers' compensation system, which is managed by the Department of Labor & Industries.

The refund will come at the same time that premium rates for workers' compensation will drop by $19 million, Locke said. This raises the overall savings in 1999 to $219 million.

The refund and lower rates for 1999 are the result of continued excellent returns on market investments during fiscal year 1998.

About 130,000 employers will share in the refund. Each employer will receive 32.3 percent of premium paid to the Accident Fund for insurance coverage between July 1, 1997 and June 30, 1998. Only employers pay into the Accident Fund, one of several funds that make up the workers' compensation system.

Premiums to the Accident Fund provide benefits for injured workers, such as wages for lost time from work and disability awards.

Only employers who do not owe money to Labor & Industries or another state or federal agency will receive the full refund. Employers due less than a $10 refund will get a credit to their accounts.

The refund and lower premium rates for 1999 continue a trend. L&I reduced premiums by $50 million in 1998, had no general increase in 1997 and sliced payments by $300 million in 1996. There also was no rate increase in 1995.

The workers' compensation system in Washington, referred to as the State Fund, covers almost 1.6 million employees. The system pays for lost wages, medical bills, disability benefits and pensions when workers are hurt or become ill on the job.

The system recently underwent a performance audit by a team headed by Michigan State University Professor Edward Welch. The audit's major finding was that Washington's system is in the top quarter of states in terms of benefit amounts and in the bottom quarter in terms of costs.


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