Governor proposes $1 billion in workers’ compensation premium rebates to employers

8/13/2014
BY JIM PROVANCE
BLADE COLUMBUS BUREAU CHIEF

COLUMBUS -- Another strong year of investment returns prompted Gov. John Kasich today to propose a second round of just over $1 billion in workers’ compensation premium rebates to employers.

“Employers of Ohio, you’ve got a big chunk of money coming back to you,” Mr. Kasich said a small Columbus business. “Some will be smaller. Some will be larger. Local governments will get money back.”

The first checks will begin going out in October, shortly before voters head to the polls. If the same thing occurs this time as occurred with the first round last year, a series of check presentations are in the offing.

The rebates were again made possible by robust returns on the Ohio Bureau of Workers’ Compensation investments—13.3 percent over the last year and 8.9 percent over the last three years. The bureau’s reserves total $7.7 billion, above what actuaries say is needed to ensure the viability of the state insurance fund for injured workers.

Steve Buehrer, the former state representative and senator from Delta who heads the BWC, said the decision was made to issue rebate checks rather than use the better-than-expected returns to lower premiums for employers across the board. The rebates are expected to amount to 60 percent of what an employer paid in premiums in their last policy periods.

“The money that allowed us to do the dividend announcement didn’t come from overcharging employers,” he said. “It came from investment returns that well exceeded the investment targets that we put in place. We continue to set premium rates on an annual basis based on the number of accidents and the cost of those accidents we see coming forward in Ohio workplaces.

“We’ll continue to lower premium rates as we’ve done three out of the last four years for private-sector employers as we see the trend continuing to go down,” he said.

Both he and Mr. Kasich cautioned businesses against counting on these divided rebates in the future as employers did more than a decade ago when steep discounts in premiums suddenly disappeared when the Coingate scandal eroded confidence in the bureau’s investment practices.

“If you did it as a rate thing then you’d have to adjust rates up if investment returns didn’t meet expectations, so today is a dividend that we all should celebrate, but it is a one-time event,” Mr. Buehrer said. “Businesses should not plan on this. They shouldn’t put it in their long-term plan. What they should do, which is what a lot of them did the first time around, is invest in safety, maybe hire a few employees, bankroll themselves into the future.”

The BWC’s board is expected to consider the proposal at its September meeting.

The campaign for Mr. Kasich’s Democratic opponent in November, Cuyahoga County executive, called Mr. Kasich’s announcement today “empty rhetoric.”

“Kasich’s ‘pro-business’ policies have benefitted large corporations, many overseas, while Ohio’s small businesses have struggled against higher (commercial activity) and sales taxes, as well as other policies that benefit special interests at the expense of hard-working Ohioans.”

In addition to coming on the heels of a similar $1 billion in rebates last year, the new round of checks will precede a one-time credit that private and public employees will see next year as the BWC transitions from retroactively billing employers for the just completed six months to billing them prospectively for the six months ahead.

The bureau is also putting more money into safety training programs for private and public-sector employees.