m e m o r a n d u m · hearing on october 11, 2011, and will solicit testimony from staff and...

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September 29, 2011

To: Scott Harra, Acting Director, DCBS Mark Long, Acting Deputy Director, DCBS John Shilts, Administrator, Workers' Compensation Division, DCBS From: Chris Day, Senior Forecasting Analyst, Information Management Division, DCBS Subject: Workers' Compensation Premium Assessment Rates Recommendation for CY 2012 Issue In accordance with the requirements of ORS 656.612 and 656.614, the Department of Consumer and Business Services must establish workers’ compensation premium assessment rates effective for calendar year 2012 for insurers, self-insured employers, and self-insured employer groups. The department, in accord with ORS 656.612(5), will conduct an administrative rule making hearing on October 11, 2011, and will solicit testimony from staff and interested parties. This memo constitutes staff testimony that will be entered into the record. Summary Recommendations We recommend that the workers' compensation premium assessment rates in Administrative Rules 440-045-0020 and 440-045-0025 be lowered to 6.2 percent for insurers, and 6.4 percent for self-insured employers and self-insured employer groups for calendar year 2012. Background The Premium Assessment Operating Account (PAOA) includes the following DCBS program areas that are substantially funded by the workers’ compensation premium assessment rate: the Workers’ Compensation Division, Workers’ Compensation Board, OR-OSHA, the Ombudsman for Injured Workers, the Small Business Ombudsman and shared services supporting these activities. The primary funding mechanism for the PAOA is the annual workers’ compensation premium assessment rate established by the department in accord with ORS 656.612 and 656.614, and Oregon Administrative Rules (OAR) 440-045-0010 through 440-045-0030. The OAR 440 rules were first adopted in October 1999 as required by Senate Bill 592, which was passed during the 70th Legislative Assembly. The OAR codifies the applicable assessment rates for a calendar year. The PAOA also is funded by some fines and penalties, federal grant moneys, investment income, other miscellaneous revenues, and a transfer of funds from the Workers’ Benefit Fund (WBF) to reimburse some of the administrative costs incurred by the PAOA account in the administration of Workers’ Benefit Fund.

Information Management Division

T:\FORECAST\WCD\Premium Assessment\2011\Final 2012 Assessment Rate Recommendation.docx

Rate Setting Parameters An adequate account balance should: (1) meet the cash flow needs of the account; (2) accommodate the timing of receipts and expenditures; (3) ensure stable funding for legislatively approved programs and services during uncertain economic times; and (4) minimize the volatility of fees and assessments. To accomplish the rate analysis task, a multi-year forecast perspective is the generally accepted practice. The recommended single year rate recommendation and the multiple year rates, developed for planning purposes only, take into account these objectives according to the following formula:

Required Premium Assessment Rate = {Planned and Forecasted Expenditures and Transfers – (Forecasted Investment Income + Forecasted Other Revenue)} / Forecasted Assessable Premium Base

The formula clearly shows that finding the ratio of planned expenditures and transfers net of non-premium assessment revenue and the assessable (earned) premium base determines the required rate. In the case of the current analysis, the planned expenditures are based on the agency’s 2011-13 biennium Legislatively Adopted Budget (LAB). These expenditures include the following major components: (1) savings reflected in the planned 2011-13 DCBS management action plan. This includes anticipated savings from 10-14 furlough days for every DCBS employee during the 2011-13 biennium, savings from staff reductions due to layoffs and holding positions vacant, savings from employee health insurance contributions, and savings from reducing the LAB by 4 percent, and, (2) updated expenditure forecasts for the Non-Complying Employer Program. The required premium assessment rate also reflects Chapter 574, Oregon Laws 2007 (SB 183), which extends usage of the SAIF Reinsurance Pool Credit through calendar year 2011. Finally, this analysis reflects actual information from the DCBS quarterly financial statements through the period ending June 30, 2011. Within the context of all of the various parameters discussed above, the department’s Information Management Division (IMD) has developed an analysis and recommendation for the workers' compensation premium assessment rate that should be applicable for calendar year (CY) 2012. For years beyond 2012 we have made assumptions of rates that are for planning purposes only and do not constitute a decision as to what those rates will ultimately be. The results of our analysis, detailed recommendations, and assessment rate schedule considerations are discussed below. Detailed Recommendations A. Single-Year CY 2012 Recommendations We recommend that the workers' compensation premium assessment rates be decreased to 6.2 percent for insurers, and 6.4 percent for self-insured employers and self-insured employer groups for calendar year 2012. B. Multiple-Year Rate Schedule For Planning Purposes The multiple-year rate schedule models continuation of the 6.2 and 6.4 percent assessment rates through CY 2016. By modeling this rate schedule, the account balance coverage ratios would


continue to fall through FY 2013 and then begin gradually increasing through the remainder of the forecast period, reaching a coverage ratio of just under two quarters by the end of FY 2016. Naturally, whether this will actually occur is subject to much uncertainty. This uncertainty might arise from any number of factors, including continued softness in Oregon's economy, legislative programmatic changes that affect the workers' compensation system, changes in insurance industry pricing behaviors, potential changes in the state employee compensation structure, or expenditures that are different than forecast. If the assessment rate is decreased to 6.2 percent in 2011, expenditures are projected to continue to exceed anticipated revenues through FY 2013 (see Table 1 and Appendix 2). Given this planned rate schedule, from FY 2010 to FY 2013 the fund balance is projected to decrease from $29.4 million at the end of FY 2011 to about $23.1 million (about one and a half quarters of expenditures) at the end of FY 2013. Then, as assessable premium starts to grow slightly faster than expenditures, the fund balance will grow gradually for the remainder of the forecast period. A detailed discussion of the evaluated rate schedules follows.

Table 1. PAOA Revenue and Expenditure Forecasts, with Ending Balances

Discussion We examined the effects of various assessment rate scenarios before modeling a rate of 6.2 percent for this analysis. Using the 6.2 percent rate assumption, we have included varying assumptions about the future state of the economy and its impact on the workers’ compensation premium assessment base for calendar years 2011 through 2016. The analysis reflects the 2011-13 agency legislatively adopted budget and planned expenditures and transfers discussed previously. The workers' compensation premium forecast was developed using our premium forecasting system, which is a system of econometric models. Inputs into this system include projections of economic variables from the Department of Administrative Services' (DAS) September 2011 "Oregon Economic and Revenue Forecast" (see Appendix 1 for a summary of forecast values). We have made no modifications to the DAS economic forecast, which projects that the Oregon economy will grow faster than the nation through the forecast period, and predicts that Oregon’s Gross State Product will have the second highest growth rate in the nation over the coming years. However, with population growth projected to be higher in Oregon, very little progress on raising per capita income compared to the U.S. is projected out to 2020. Finally, the premium forecast reflects the overall increase of 1.9 percent in workers’ compensation pure premium effective January 1, 2012.

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016Revenues $41,552,851 $53,052,900 $57,250,249 $61,603,113 $65,212,749 $68,468,026Expenditures & Transfers $53,894,023 $57,040,342 $59,627,537 $60,728,273 $62,665,583 $64,767,450

Excess/Deficit ($12,341,172) ($3,987,442) ($2,377,289) $874,840 $2,547,166 $3,700,576Ending Fund Balance $29,424,653 $25,437,211 $23,059,922 $23,934,762 $26,481,929 $30,182,505

http://www.oea.das.state.or.us/DAS/OEA/docs/economic/forecast0911.pdf�


Table 2 shows the actual premium for CY 2010 together with the projected premiums for CY 2011 - CY 2016 used in examining the effects of the assessment rates (the assessable base excludes the premium types noted below the table). Figure 1 displays the actual historical earned premium as well as the forecasted earned premium.

Table 2. Actual and Projected Workers' Compensation Premiums CY 2009– 2016 (millions of premium)

2010 2011 2012 2013 2014 2015 2016 Premiums* $746.4 $762.6 $805.0 $861.2 $915.0 $962.3 $1,005.7

Percent Change 2.18% 5.55% 6.98% 6.24% 5.17% 4.51% * Includes Longshoremen's and Harbor Workers' Compensation Act Premiums that are excluded from the assessable premium base.

Rate Analysis The premium assessment operating account fund balance amounted to $29,424,653 at the end of FY 2011. (The analysis relies on financial statements through the quarter ending June 30, 2011.) Table 3 and Figure 2 (on the following page) show the financial outcomes of our current (control) workers’ compensation premium forecast, with a decrease to 6.2 percent effective January 1, 2012, and four different projected outcomes. This is shown to illustrate the effects on the premium assessment revenue if the economy turns out to be worse than currently forecast (revenue received is only 90% or 95% of forecast) or, conversely, if the economy grows at a faster rate than currently forecast (revenue received is 105% or 110% of forecast) in the September 2011 edition of the Oregon Economic and Revenue Forecast. It is important to note that actual revenue for FY 2011 came in lower than projected by just less than 5 percent, a much smaller deviation than the prior two fiscal years, where the actual revenue for the PAOA was an average of 10 to 12 percent less than forecast the prior year. In addition to fund balance, revenues, and expenditures, Table 3 also shows the fund balance coverage ratio. The fund balance coverage ratio is equal to the number of quarters of average expenditures and transfers covered by the ending fund balance for each fiscal year.

550,000,000

650,000,000

750,000,000

850,000,000

950,000,000

1,050,000,000

1,150,000,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Figure 1. Historical Actual and Forecasted Workers' Compensation Earned Premium

CY 1990 - CY 2016

Forecast


Table 3.

Figure 2. Ending Fund Balances of the Premium Assessment Operating Account, For Various Economic Forecasts, FY 2011 - 2016

Appendices 3 and 4 show more detailed projected quarterly revenues and expenditures that result in the above fiscal year balances for the control and 95 percent assessment revenue projections.

90% 95% Control 105% 110%2011 Revenue $41,552,851 $41,552,851 $41,552,851 $41,552,851 $41,552,851

Expenditures/Transfers $53,894,023 $53,894,023 $53,894,023 $53,894,023 $53,894,023Coverage Ratio 2.23 2.23 2.23 2.23 2.23 Fund Balance $29,424,653 $29,424,653 $29,424,653 $29,424,653 $29,424,653

2012 Revenue $48,113,083 $50,583,295 $53,052,900 $55,521,985 $57,990,590Expenditures/Transfers $57,040,342 $57,040,342 $57,040,342 $57,040,342 $57,040,342Coverage Ratio 1.44 1.61 1.78 1.96 2.13 Fund Balance $20,497,394 $22,967,607 $25,437,211 $27,906,296 $30,374,901




2016 Revenue $61,330,090 $64,904,834 $68,468,026 $72,025,808 $75,580,273Expenditures/Transfers $64,767,450 $64,767,450 $64,767,450 $64,767,450 $64,767,450Coverage Ratio 0.05 0.96 1.86 2.77 3.67 Fund Balance $814,756 $15,521,650 $30,182,505 $44,816,955 $59,433,685

Illustration of the effects of variation from the premium assessment forecastExample using 6.2% Percent Assessment Effective January 1, 2012


Self-Insured Employer and Employer Group Reserves A. Self-Insured Employer Adjustment Reserve On January 1, 1988, the additional assessment against self-insured employers to fund the Self-Insured Employer Adjustment Reserve (SIEAR) was discontinued. As expected, interest on the Reserve's account balance and subrogation recoveries continued to exceed expenditures until FY 1998. The failure of Montgomery Ward occasioned a substantial increase in expenditures, and the legal dispute regarding payment performance under the terms of surety contract language contributed to substantial increases in the reserve expenditures. In FY 2000 and FY 2001, $554,000 was recovered from the two surety companies associated with the Montgomery Ward’s case and deposited into the SIEAR. Due to continued defaults by some self-insurers and an increase in Montgomery Ward’s reserve exposure, the SIEAR fund balance decreased 28.7 percent from June 1998 to June 2005. As a result of the issues discussed above, effective January 1, 2005, an additional assessment of 0.2 percent against self-insured employers to fund the SIEAR was re-instituted. A fund balance approximating $1 million is a reasonable minimum balance given the history of the reserve's long-term liability; the average liability for the past 12 years’ December 31st

amounts to $1,001,374 (see Exhibit A). Assuming a $1 million liability, the reserve ratio, the ratio of estimated liabilities to fund balance, would approximate a value of one. This value means that the long-term liability would be fully funded, a requirement that the department makes of all Oregon workers' compensation insurers (see for example ORS 733.050 regarding inadequate reserves). By using this minimum fund balance, reserves will be sufficient to ensure that claims obligations can be met. In the past, we have recommended that the SIEAR fund balance should approximate $1 million, an amount close to the average long-term liability. As seen in Exhibit A, the long-term liability had been decreasing in the past several years, but experienced a dramatic increase in 2010 due to one company, Coos Head Timber. The liability for Coos Head Timber Company increased $675,317 from $33,435 in 2009 to $708,752 in 2010. The overall liability increased again in 2011 because of two additional companies that filed for bankruptcy, Fleetwood Enterprises and States Industries. They added about $600,000 in additional reserve exposure, but it was partially offset by an approximately $200,000 decrease in the exposure for both Coos Head Timber Company and Montgomery Ward.

The SIEAR account balance as of June 30, 2011 was $1,665,697. Overall, the SIEAR balance increased very slightly from the June 30, 2010 ending balance of $1,635,000. We recommend that the assessment differential for self-insured employers continue at 0.2 percent for CY 2012. Given current revenue and expenditure forecasts, the balance should decline to $617,043 by the end of FY 2016 (see Appendix 5). If current trends continue, the assessment rate may need to be adjusted.


B. Self-Insured Employer Group Adjustment Reserve The Self-Insured Employer Group Adjustment Reserve (SIEGAR) was created in 1981. Prior to 2011, there had been no exposure to the reserve. At the end of 2010, one of the largest self-insured employer groups, The Oregon Contractors Workers’ Compensation Trust (OCWCT), filed for Chapter 11 bankruptcy and surrendered its certificate for group self-insurance. Since early 2011, the SIEGAR has been paying the claims for OCWCT, but the reserve has been getting fully replenished by a $5 million line of credit. However, the line of credit is being quickly depleted, and if claim payments work out as currently projected, the SIEGAR balance would be exhausted by September 2012. The Workers’ Compensation Division and OCWCT are in negotiations to determine how to ensure timely payment of active claims and to reduce or eliminate the exposure to the SIEGAR. The Reserve's account balance as of June 30, 2011 was $633,267. Given that the primary purpose of the SIEGAR is to be available as a temporary source of funding before other methods of payment are developed for paying claims, we have no basis for recommending a different assessment rate at this time. We recommend that the assessment differential for self-insured employer groups continue at 0.2 percent for CY 2012. With current expenditure and revenue projections, the balance would be exhausted by the first quarter of FY 2013 and decline rapidly thereafter (see Appendix 6). However, this is clearly not a realistic outlook, and as a plan for paying future OCWCT claims is established, we will update our projections. If you have any questions about this analysis and recommendations, please let me know. cc: Dorothy Oliver Kay Erickson Kevin Willingham Carey Thompson Anita Mendiola David Miller Lou Savage Gary Helmer Teresa Miller Mary Schwabe Michael Wood Laura Cali Abbie Herman Lisa Morawski Fred Bruyns

WORKERS' COMPENSATION PREMIUM FORECASTING MODEL VARIABLES AND OUTPUT

OREGON OREGON MEDICAL TOTAL ORE OREGON PRIME LOAD INCURRED TOTAL

WAGE/SAL. SERV,MFG,&CON PRICE PAYROLL1

AC. DIS. RATE1

FACTOR2

WC WCWAGE/SAL. SERV,MFG,&CON PRICE PAYROLL1

AC. DIS. RATE1

FACTOR2

WC WC

YEAR EMPL1

EMPL1,5

DEFLATOR2

(000's) CLAIMS2

LOSSES3

PREMIUM4

YEAR (000's)

1966 639,300 N/A 13.14 3,856 N/A N/A N/A 40,355,412 52,227,4081967 651,000 N/A 13.80 4,050 N/A N/A N/A 45,573,616 57,992,6321967 651,000 N/A 13.80 4,050 N/A N/A N/A 45,573,616 57,992,6321968 677,900 N/A 11.10 4,444 32,509 N/A N/A 49,524,804 74,262,0241969 707,300 N/A 11.78 4,867 35,372 N/A N/A 67,664,453 86,896,7201969 707,300 N/A 11.78 4,867 35,372 N/A N/A 67,664,453 86,896,7201970 709,200 N/A 12.57 5,170 30,338 N/A N/A 81,443,901 91,490,4481971 727,200 N/A 13.15 5,601 30,663 N/A N/A 102,253,182 113,160,8161972 774,300 N/A 13.63 6,288 34,835 N/A N/A 113,406,981 144,014,7681972 774,300 N/A 13.63 6,288 34,835 N/A N/A 113,406,981 144,014,7681973 816,200 N/A 14.19 7,091 36,802 N/A N/A 145,013,470 157,091,9521974 838,211 444,062 15.42 7,843 34,214 10.80 N/A 169,923,131 207,486,2241974 838,211 444,062 15.42 7,843 34,214 10.80 N/A 169,923,131 207,486,2241975 837,276 431,309 17.08 8,428 32,172 7.86 N/A 208,865,640 233,180,8481976 878,592 453,904 18.64 9,594 31,013 6.84 N/A 258,997,681 296,045,7281977 936,815 485,282 20.15 10,911 38,657 6.82 N/A 317,537,312 413,593,8241977 936,815 485,282 20.15 10,911 38,657 6.82 N/A 317,537,312 413,593,8241978 1,009,150 519,081 21.81 12,638 47,844 9.06 N/A 391,976,523 488,696,1601979 1,055,890 544,065 23.85 14,369 44,697 12.67 N/A 362,263,175 525,765,6641979 1,055,890 544,065 23.85 14,369 44,697 12.67 N/A 362,263,175 525,765,6641980 1,044,550 530,775 26.63 15,404 44,930 15.27 N/A 363,053,043 544,482,8161981 1,018,670 510,107 29.83 16,120 37,498 18.87 N/A 289,637,051 413,999,8081982 960,897 480,290 33.13 16,027 31,535 14.86 N/A 336,127,578 346,803,6481983 966,562 488,317 36.11 16,684 34,037 10.79 1.120 345,842,788 345,397,3761984 1,006,270 514,711 38.78 18,071 37,702 12.04 1.060 413,831,644 342,905,8241984 1,006,270 514,711 38.78 18,071 37,702 12.04 1.060 413,831,644 342,905,8241985 1,029,560 528,172 41.15 18,980 38,808 9.93 1.150 465,027,767 443,916,9601986 1,058,090 544,770 43.59 20,001 40,157 8.33 1.210 579,158,696 565,400,8321986 1,058,090 544,770 43.59 20,001 40,157 8.33 1.210 579,158,696 565,400,8321987 1,099,550 569,581 46.35 21,430 41,033 8.20 1.224 600,214,728 676,901,568

1988 1,155,750 603,588 49.82 23,507 42,982 9.32 1.258 699,408,755 722,861,7601989 1,203,430 632,125 54.02 25,479 39,170 10.87 1.268 723,775,444 792,314,5601989 1,203,430 632,125 54.02 25,479 39,170 10.87 1.268 723,775,444 792,314,5601990 1,255,618 646,548 58.52 27,654 35,857 10.01 1.260 547,979,266 825,250,9441991 1,253,543 642,027 62.97 28,981 31,479 8.46 1.264 466,222,394 796,229,0561991 1,253,543 642,027 62.97 28,981 31,479 8.46 1.264 466,222,394 796,229,0561992 1,276,463 653,040 67.26 30,997 30,786 6.25 1.260 499,387,610 802,196,9921993 1,317,410 680,424 70.65 32,815 30,741 6.00 1.257 496,581,597 736,940,2241994 1,372,372 718,417 73.36 35,349 31,530 7.14 1.233 558,844,068 722,141,8421994 1,372,372 718,417 73.36 35,349 31,530 7.14 1.233 558,844,068 722,141,842

1995 1,428,106 758,225 75.81 38,341 30,564 8.83 1.241 543,785,092 737,307,449

1996 1,484,777 795,843 77.57 41,680 28,389 8.27 1.204 442,615,694 727,458,5851996 1,484,777 795,843 77.57 41,680 28,389 8.27 1.204 442,615,694 727,458,585

1997 1,536,846 830,402 79.08 45,226 27,922 8.44 1.204 496,646,035 714,065,636

1998 1,562,552 839,731 80.63 47,930 27,049 8.35 1.188 510,832,336 675,734,6121998 1,562,552 839,731 80.63 47,930 27,049 8.35 1.188 510,832,336 675,734,612

1999 1,586,035 849,464 82.59 50,955 25,802 7.99 1.162 472,427,545 599,263,850

2000 1,617,835 867,868 85.00 55,209 25,365 9.23 1.171 530,175,004 611,977,8862000 1,617,835 867,868 85.00 55,209 25,365 9.23 1.171 530,175,004 611,977,886

2001 1,605,758 858,595 87.99 55,710 24,645 6.92 1.184 588,227,611 648,358,575

2002 1,585,337 843,414 90.47 55,917 23,482 4.68 1.226 562,021,480 723,991,908

2003 1,574,402 839,793 93.69 57,328 21,832 4.12 1.250 629,542,226 750,772,9932003 1,574,402 839,793 93.69 57,328 21,832 4.12 1.250 629,542,226 750,772,993

2004 1,606,617 863,932 96.99 60,615 22,325 4.34 1.280 725,111,733 848,186,360

2005 1,654,366 895,443 100.00 64,519 22,114 6.19 1.290 652,618,300 890,619,4832005 1,654,366 895,443 100.00 64,519 22,114 6.19 1.290 652,618,300 890,619,483

2006 1,703,414 931,313 103.18 69,198 23,373 7.96 1.292 737,876,345 967,151,919

2007 1,731,293 949,518 106.56 73,089 23,433 8.05 1.300 729,846,632 1,047,552,6602007 1,731,293 949,518 106.56 73,089 23,433 8.05 1.300 729,846,632 1,047,552,660

2008 1,718,756 938,571 109.33 74,124 21,659 5.09 1.282 772,880,413 969,253,685

2009 1,612,895 865,601 112.33 70,235 18,948 3.25 1.269 724,281,446 806,127,362

2010 1,599,785 860,459 115.28 71,320 18,012 3.25 1.261 656,120,374 746,387,3412010 1,599,785 860,459 115.28 71,320 18,012 3.25 1.261 656,120,374 746,387,341

2011 1,627,274 885,249 117.53 73,963 18,556 3.25 1.263 741,163,821 762,643,8752011 1,627,274 885,249 117.53 73,963 18,556 3.25 1.263 741,163,821 762,643,875

2012 1,658,966 910,064 120.70 77,847 18,973 3.34 1.267 801,655,594 804,999,015

2013 1,696,480 935,656 124.23 82,017 19,347 4.73 1.270 853,094,053 861,214,5582013 1,696,480 935,656 124.23 82,017 19,347 4.73 1.270 853,094,053 861,214,558

2014 1,737,014 967,834 128.06 86,341 19,929 6.49 1.274 904,091,135 914,958,690

2015 1,779,071 999,937 132.29 90,972 20,454 7.68 1.278 956,820,402 962,272,429

2016 1,816,661 1,027,356 136.65 95,620 20,928 7.75 1.282 1,010,765,395 1,005,683,232

2017 1,848,594 1,049,197 140.96 100,338 21,260 7.75 1.285 1,063,751,711 1,046,762,960

2018 1,878,443 1,070,269 145.29 104,900 21,571 7.75 1.289 1,116,226,192 1,085,754,2162018 1,878,443 1,070,269 145.29 104,900 21,571 7.75 1.289 1,116,226,192 1,085,754,216

2019 1,904,264 1,090,083 149.54 109,641 21,892 7.75 1.293 1,168,117,917 1,124,336,093

2020 1,928,648 1,108,676 153.95 114,499 22,193 7.75 1.296 1,220,508,569 1,162,643,5052020 1,928,648 1,108,676 153.95 114,499 22,193 7.75 1.296 1,220,508,569 1,162,643,505

2021 1,949,533 1,127,598 158.43 119,391 22,524 7.75 1.300 1,273,839,030 1,200,893,419

1. From preliminary Department of Administrative Services' September 2011 "Oregon Economic and Revenue Forecast:"

2. From Information Management Division, Department of Consumer and Business Services, 5/2011.

3. From Information Management Division, Department of Consumer and Business Services, 8/2011. Loss figures have been adjusted to reflect changes in The third quarter of 2007 had an estimated job loss of an annualized 0.3 percent, which followed 16 consecutive quarters of job gains. The Oregon Office of Economic Analysis 3. From Information Management Division, Department of Consumer and Business Services, 8/2011. Loss figures have been adjusted to reflect changes in

SAIF's reserving practices.

4. From Information Management Division, Department Consumer and Business Services, 8/2011. Includes coverage related to the Longshore and Harbor4. From Information Management Division, Department Consumer and Business Services, 8/2011. Includes coverage related to the Longshore and Harbor

Workers' Compensation Act and excess coverage for self-insurers.

5. Oregon Construction Employment, Oregon Service Employment, and Oregon Manufacturing Employment data experienced a break in the series 5. Oregon Construction Employment, Oregon Service Employment, and Oregon Manufacturing Employment data experienced a break in the series

beginning in CY 2003 due to the shift from SIC to NAICS.

Note: Vocational Rehabilitation coverage is included in loss and premium figures and are estimated for forecasting purposes prior to 1986.Note: Vocational Rehabilitation coverage is included in loss and premium figures and are estimated for forecasting purposes prior to 1986.

Source: Research & Analysis Section, IMD, Department of Consumer and Business Services Sep-11

Appendix 1 - WC System Forecast Variables

WORKERS' COMPENSATION PREMIUM ASSESSMENT OPERATING ACCOUNT

REVENUE, EXPENDITURES, TRANSFERS, AND FUND BALANCES

FISCAL YEARS 2009-2016; ACTUAL DATA THROUGH 6/30/20116.4% ASSESSMENT RATE EFFECTIVE 1/1/2011 and 6.2% ASSESSMENT RATE EFFECTIVE 1/1/2012

REVENUES FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016

Assessments 1 $41,803,802 $34,714,942 $36,972,335 $48,088,829 $49,785,432 $53,234,041 $56,470,475 $59,345,820

Fines and Penalties 2 1,815,797 1,804,405 1,276,179 1,681,000 1,731,000 1,783,000 1,836,000 1,891,000

Investment Income 2,712,427 1,634,096 (873,153) 782,916 174,816 719,072 981,274 1,247,207

Federal Funds2 5,223,452 5,599,386 7,464,019 5,608,000 5,664,000 5,721,000 5,778,000 5,836,000

Other 2 350,646 37,762 38,283 144,000 145,000 146,000 147,000 148,000

SAIF Reinsurance Pool Credit11 (4,194,391) (3,657,872) (3,324,812) (3,251,846) (250,000) 0 0 0

Total $47,711,733 $40,132,719 $41,552,851 $53,052,900 $57,250,249 $61,603,113 $65,212,749 $68,468,026

EXPENDITURES

Administration 3 $51,801,044 $48,457,726 $45,102,325 $47,406,991 $49,341,971 $50,039,613 $51,460,398 $53,004,210

Chargeback 6 9,318,335 8,789,547 8,011,628 9,075,923 9,446,369 9,596,899 9,869,428 10,165,511

Oregon Health Sciences University 4 1,625,448 1,550,340 1,535,406 1,653,396 1,691,111 1,729,362 1,771,169 1,812,762

Total $62,744,827 $58,797,613 $54,649,359 $58,136,310 $60,479,450 $61,365,875 $63,100,995 $64,982,482

ADJUSTMENTS/TRANSFERS

Non-Complying Employer 5 ($684,822) ($1,432,267) ($2,292,187) ($2,111,935) ($2,456,621) ($2,747,882) ($3,051,225) ($3,367,151)

Insurance Division 7 (214,974) (194,864) (69,085) (59,664) (98,935) (89,436) (92,876) (109,516)

WBF Administrative Expenses 9 3,294,188 3,370,182 3,178,331 3,427,568 3,567,469 3,634,920 3,739,513 3,851,699

BOLI Transfer 10 (115,000) (173,129) (52,871) (160,000) (160,000) (160,000) (160,000) (160,000)

Contractors' Board Transfer 12 0 0 0 0 0 0 0 0

General Fund 0 (500,000) 0 0 0 0 0 0

Misc Transfers/Adjustments 8 (2,415,354) (176,279) (8,852) 0 0 0 0 0

Total (135,962) 893,643 755,336 1,095,969 851,913 637,602 435,412 215,032

Net Cash Flow ($15,169,056) ($17,771,251) ($12,341,172) ($3,987,442) ($2,377,289) $874,840 $2,547,166 $3,700,576

Ending Fund Balance $59,537,076 $41,765,825 $29,424,653 $25,437,211 $23,059,922 $23,934,762 $26,481,929 $30,182,505

Balance Coverage Ratio 3.95 3.02 2.23 1.78 1.55 1.58 1.69 1.86

All figures are actual through quarter ending 6/30/2011

1. Assessment forecasts are based on a premium assessment rate of 6.4 percent effective January 1, 2011 and 6.2 percent effective January 1, 2012.

2. Estimates are from the R&A Section, Information Management Division, Department of Consumer and Business Services.

In FY 2008, 'Other', includes an interest payment of $1.2 million from the AIG settlement.

3. Includes Workers' Comp Division, Workers' Comp Board, OR-OSHA, and Shared Services.

4. Planned OHSU transfers and/or expenditures are equal to 1/16 cent per worker per hour.

5. Net Non-Complying Employer expenditures are transferred to the Workers' Benefit Fund.

6. Chargeback reflects Shared service chargeback expenses.

7. Transfer to Insurance Division in the first quarter of each Fiscal Year to fund workers' compensation activities.

8. Miscellaneous transfers and adjustments are from actual quarterly financial statements.

9. Quarterly transfer from the WBF to the PAOA to cover direct administrative costs associated with WBF programs.

10. Quarterly transfer to the Bureau of Labor and Industries.

11. Annual premium assessment credit for SAIF from CY 2004 through CY 2011, in accordance with Chapter 574, Oregon Laws 2007 (SB 183).

12. Transfer from Construction Contractors' Board for expenses related to the Interagency Agreement for the implementation of HB 2078 (2005 Session).

13. Beginning in FY 2009, financial experience for the self-insured employer reserves has been excluded from this account.

14. Transfer to General Fund as authorized by HB 3696 (February 2010 session).

Column detail may not add to totals due to rounding.

Source: Information Management Division, Department of Consumer and Business Services

9/27/2011

Appendix 2 - Control Forecast

Period Assessment Investment Total Total Excess Ending Fund Coverage

Ending Income 2,6

Income Revenue 3

Expenses/Transfers 4,5

(Deficit) Balance Ratio

FY 1995 $31,571,670 $5,707,304 $48,273,527 $50,860,410 ($2,586,883) $59,952,740 4.22

FY 1996 $32,092,873 $7,237,983 $48,224,709 $56,871,982 ($8,647,273) $51,305,467 3.93FY 1997 $31,538,968 $4,286,546 $42,829,535 $50,618,346 ($7,788,811) $43,516,656 3.44

FY 1998 $32,857,934 $2,400,800 $41,884,183 $49,812,898 ($7,928,715) $35,587,941 3.29

FY 1999 $46,943,507 $2,120,008 $56,179,934 $51,909,917 $4,270,017 $39,857,958 2.90

FY 2000 $42,293,900 $2,333,324 $51,844,252 $54,954,534 ($3,110,282) $36,747,676 3.71

FY 2001 $42,858,965 $3,321,962 $53,127,267 $55,731,278 ($2,604,011) $34,143,665 2.29

FY 2002 $48,738,305 $1,559,872 $57,640,350 $52,341,323 $5,299,027 $39,442,692 2.86

FY 2003 $58,239,386 $1,538,278 $67,509,837 $51,516,111 $15,993,726 $55,436,418 4.35

FY 2004 $58,513,903 $1,842,440 $49,010,790 $53,063,524 ($4,052,734) $51,383,684 3.76

FY 2005 $55,236,669 $2,319,655 $60,550,227 $52,441,402 $8,108,825 $59,492,509 4.62

FY 2006 $59,116,776 $3,164,161 $65,263,693 $52,256,821 $13,006,872 $72,499,381 5.43

FY 2007 $54,837,574 $3,900,346 $61,359,716 $55,198,307 $6,161,409 $78,660,790 5.78

FY 2008 $47,538,717 $3,638,624 $54,551,576 $58,506,234 ($3,954,658) $74,706,132 5.11

09/30/08 10,908,487 748,917 12,083,552 18,292,760 (6,209,208) 68,496,924 3.74

12/31/08 11,755,338 994,962 13,148,005 14,786,380 (1,638,375) 66,858,549 4.52

03/31/09 9,662,038 329,441 11,089,556 14,745,649 (3,656,093) 63,202,456 4.29

06/30/09 9,477,939 639,107 11,390,620 15,056,000 (3,665,380) 59,537,076 3.95

FY 2009 $41,803,802 $2,712,427 $47,711,733 $62,880,789 ($15,169,056) $59,537,076 3.95

09/30/09 8,551,964 317,441 10,083,122 15,204,271 (5,121,149) 54,415,927 3.58

12/31/09 8,756,649 449,805 9,933,295 14,581,279 (4,647,984) 49,767,943 3.41

03/31/10 8,754,218 363,231 9,954,264 14,286,591 (4,332,327) 45,435,616 3.18

06/30/10 8,652,111 503,619 10,162,038 13,831,829 (3,669,791) 41,765,825 3.02

FY 2010 $34,714,942 $1,634,096 $40,132,719 $57,903,970 ($17,771,251) $41,765,825 3.02

09/30/10 8,481,778 109,273 9,970,284 13,804,584 (3,834,300) 37,931,525 2.75

12/31/10 8,547,194 (1,541,860) 8,482,514 12,997,399 (4,514,885) 33,416,640 2.57

03/31/11 8,448,560 469,355 10,283,927 13,923,157 (3,639,230) 29,777,410 2.14

06/30/11 11,494,803 90,079 12,816,126 13,168,883 (352,757) 29,424,653 2.23


REVENUES, EXPENSES, TRANSFERS, FUND BALANCES, AND COVERAGE RATIOS

FISCAL YEARS 1995-2017; ACTUAL DATA THROUGH 6/30/2011

6.4% ASSESSMENT RATE EFFECTIVE 1/1/2011 and 6.2% ASSESSMENT RATE EFFECTIVE 1/1/2012

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Balance 2 quarter coverage

4 quarter coverage 1 quarter coverage

06/30/11 11,494,803 90,079 12,816,126 13,168,883 (352,757) 29,424,653 2.23

FY 2011 $36,972,335 ($873,153) $41,552,851 $53,894,023 ($12,341,172) $29,424,653 2.23

09/30/11 11,954,304 250,517 13,361,225 14,318,691 (957,466) 28,467,187 1.99

12/31/11 12,432,476 137,978 13,528,705 14,193,609 (664,904) 27,802,283 1.96

03/31/12 11,954,304 240,367 13,152,921 14,262,749 (1,109,828) 26,692,455 1.87

06/30/12 11,747,745 154,054 13,010,049 14,265,293 (1,255,244) 25,437,211 1.78

FY 2012 $48,088,829 $782,916 $53,052,900 $57,040,342 ($3,987,442) $25,437,211 1.78

09/30/12 12,237,235 178,930 14,051,164 15,045,272 (994,108) 24,443,104 1.62

12/31/12 12,726,724 136,469 14,748,193 14,811,787 (63,594) 24,379,510 1.65

03/31/13 12,237,235 (267,576) 13,854,659 14,884,013 (1,029,354) 23,350,156 1.57

06/30/13 12,584,239 126,994 14,596,233 14,886,466 (290,233) 23,059,922 1.55

FY 2013 $49,785,432 $174,816 $57,250,249 $59,627,537 ($2,377,289) $23,059,922 1.55

09/30/13 13,108,583 188,086 15,209,169 15,316,141 (106,972) 22,952,950 1.50

12/31/13 13,632,926 142,152 15,687,577 15,086,232 601,346 23,554,296 1.56

03/31/14 13,108,583 221,121 15,242,203 15,161,663 80,540 23,634,836 1.56

06/30/14 13,383,950 167,713 15,464,163 15,164,236 299,926 23,934,762 1.58

FY 2014 $53,234,041 $719,072 $61,603,113 $60,728,273 $874,840 $23,934,762 1.58

09/30/14 13,941,615 254,664 16,136,529 15,805,676 330,853 24,265,615 1.54

12/31/14 14,499,279 196,986 16,636,515 15,566,695 1,069,820 25,335,435 1.63

03/31/15 13,941,615 293,989 16,175,854 15,645,324 530,530 25,865,965 1.65

06/30/15 14,087,967 235,634 16,263,851 15,647,888 615,963 26,481,929 1.69

FY 2015 $56,470,475 $981,274 $65,212,749 $62,665,583 $2,547,166 $26,481,929 1.69

09/30/15 14,674,966 332,021 16,975,737 16,346,803 628,934 27,110,862 1.66

12/31/15 15,261,965 254,546 17,485,261 16,085,138 1,400,123 28,510,985 1.77

03/31/16 14,674,966 374,493 17,018,209 16,166,602 851,608 29,362,593 1.82

06/30/16 14,733,923 286,146 16,988,819 16,168,907 819,912 30,182,505 1.87

FY 2016 $59,345,820 $1,247,207 $68,468,026 $64,767,450 $3,700,576 $30,182,505 1.87

1. Includes WC Division, WC Board, and OR-OSHA

2. Premium forecasts are based on WC Premium Forecasting Model run 8/2011. Data reflect premium assessment rates of 16.8% from

7/1/82 to 12/31/85, 12.0% during CY 86, 7.0% during CY 87, 5.5% during CY 88 and CY 89, 4.5% during the period CY 90 - CY 97, 7.3%

from CY 98 - CY 2001, 8.0% from CY 2002 - CY 2003, 7.0% from CY 2004, 6.8% for CY 2005, 5.5% for CY 2006, 4.6% for CY 2007 - CY 2010,

6.4% for CY 2011, and 6.2% for CY 2012-2016. Reflects economic forecasts from the September 2011 Oregon Economic and Revenue forecast.

3. Includes NCE recoveries, fines & forfeitures, Federal funds and other Rehab revenues through 12/31/95. Also includes a financial statement accrual

of negative revenue in the first quarter of FY 2004, amounting to $18.5 million, for the transfer to the General Fund in accordance with HB 2148 and HB 5077

passed during the 2003 legislative session.

4. Includes expenses, capital outlay, and transfers to the Insurance Division and the Bureau of Labor and Industries (BOLI) and the

Insurance Division. Projected account incremental chargeback revenue is included starting FY 95. The projected expenditures for the 2011-13 biennium

are based on the Legislatively Adopted Budget. Expenditures are escalated at three percent per annum after the 2011-13 biennium.

5. Transfers through 3/31/95 include 1/2 cent per worker per day to OHSU, beginning in the fourth quarter of CY 87, retroactive to 1/1/87. As of 6/30/95 the

transfer to OHSU equals 1/16 cents-per-hour equivalent revenue. As of 1/1/96, two quarters of expenditures for the NCE and Rehab plus quarterly net

expenditures for these reserves was transferred to the Workers' Benefit Fund. Effective 7/1/2001, there is a quarterly transfer from the WBF to the PAOA

to cover direct administrative costs associated with WBF programs.

6. The actual and forecasted premium assessment rates are as follows:

2007 = 0.046 2008 = 0.046 2009 = 0.046

2011 = 0.064 2012 = 0.062 2013 = 0.062

2015= 0.062 2016= 0.062

Note: All data subject to revision.

Source: Research and Analysis Section, Oregon Department of Consumer and Business Services Sep-11

Appendix 3 - Control Forecast

Period Assessment Investment Total Total Excess Ending Fund Coverage

Ending Income 2,6

Income Revenue 3

Expenses/Transfers 4,5

(Deficit) Balance Ratio

FY 1995 $31,571,670 $5,707,304 $48,273,527 $50,860,410 ($2,586,883) $59,952,740 4.22

FY 1996 $32,092,873 $7,237,983 $48,224,709 $56,871,982 ($8,647,273) $51,305,467 3.93FY 1997 $31,538,968 $4,286,546 $42,829,535 $50,618,346 ($7,788,811) $43,516,656 3.44

FY 1998 $32,857,934 $2,400,800 $41,884,183 $49,812,898 ($7,928,715) $35,587,941 3.29

FY 1999 $46,943,507 $2,120,008 $56,179,934 $51,909,917 $4,270,017 $39,857,958 2.90

FY 2000 $42,293,900 $2,333,324 $51,844,252 $54,954,534 ($3,110,282) $36,747,676 3.71

FY 2001 $42,858,965 $3,321,962 $53,127,267 $55,731,278 ($2,604,011) $34,143,665 2.29

FY 2002 $48,738,305 $1,559,872 $57,640,350 $52,341,323 $5,299,027 $39,442,692 2.86

FY 2003 $58,239,386 $1,538,278 $67,509,837 $51,516,111 $15,993,726 $55,436,418 4.35

FY 2004 $58,513,903 $1,842,440 $49,010,790 $53,063,524 ($4,052,734) $51,383,684 3.76

FY 2005 $55,236,669 $2,319,655 $60,550,227 $52,441,402 $8,108,825 $59,492,509 4.62

FY 2006 $59,116,776 $3,164,161 $65,263,693 $52,256,821 $13,006,872 $72,499,381 5.43

FY 2007 $54,837,574 $3,900,346 $61,359,716 $55,198,307 $6,161,409 $78,660,790 5.78

FY 2008 $47,538,717 $3,638,624 $54,551,576 $58,506,234 ($3,954,658) $74,706,132 5.11

09/30/08 10,908,487 748,917 12,083,552 18,292,760 (6,209,208) 68,496,924 3.74

12/31/08 11,755,338 994,962 13,148,005 14,786,380 (1,638,375) 66,858,549 4.52

03/31/09 9,662,038 329,441 11,089,556 14,745,649 (3,656,093) 63,202,456 4.29

06/30/09 9,477,939 639,107 11,390,620 15,056,000 (3,665,380) 59,537,076 3.95

FY 2009 $41,803,802 $2,712,427 $47,711,733 $62,880,789 ($15,169,056) $59,537,076 3.95

09/30/09 8,551,964 317,441 10,083,122 15,204,271 (5,121,149) 54,415,927 3.58

12/31/09 8,756,649 449,805 9,933,295 14,581,279 (4,647,984) 49,767,943 3.41

03/31/10 8,754,218 363,231 9,954,264 14,286,591 (4,332,327) 45,435,616 3.18

06/30/10 8,652,111 503,619 10,162,038 13,831,829 (3,669,791) 41,765,825 3.02

FY 2010 $34,714,942 $1,634,096 $40,132,719 $57,903,970 ($17,771,251) $41,765,825 3.02

09/30/10 8,481,778 109,273 9,970,284 13,804,584 (3,834,300) 37,931,525 2.75

12/31/10 8,547,194 (1,541,860) 8,482,514 12,997,399 (4,514,885) 33,416,640 2.57

03/31/11 8,448,560 469,355 10,283,927 13,923,157 (3,639,230) 29,777,410 2.14

06/30/11 11,494,803 90,079 12,816,126 13,168,883 (352,757) 29,424,653 2.23


REVENUES, EXPENSES, TRANSFERS, FUND BALANCES, AND COVERAGE RATIOS


6.4% ASSESSMENT RATE EFFECTIVE 1/1/2011 and 6.2% ASSESSMENT RATE EFFECTIVE 1/1/2012

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

90,000,000

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Balance 2 quarter coverage

4 quarter coverage 1 quarter coverage

06/30/11 11,494,803 90,079 12,816,126 13,168,883 (352,757) 29,424,653 2.23

FY 2011 $36,972,335 ($873,153) $41,552,851 $53,894,023 ($12,341,172) $29,424,653 2.23

09/30/11 11,344,192 250,517 12,751,113 14,318,691 (1,567,578) 27,857,075 1.95

12/31/11 11,797,960 136,044 12,892,254 14,193,609 (1,301,355) 26,555,720 1.87

03/31/12 11,344,192 233,635 12,536,077 14,262,749 (1,726,672) 24,829,048 1.74

06/30/12 11,148,825 146,777 12,403,852 14,265,293 (1,861,442) 22,967,607 1.61

FY 2012 $45,635,169 $766,972 $50,583,295 $57,040,342 ($6,457,046) $22,967,607 1.61

09/30/12 11,613,360 168,317 13,416,676 15,045,272 (1,628,595) 21,339,012 1.42

12/31/12 12,077,894 125,766 14,088,660 14,811,787 (723,127) 20,615,885 1.39

03/31/13 11,613,360 (244,300) 13,254,059 14,884,013 (1,629,954) 18,985,931 1.28

06/30/13 11,943,492 109,793 13,938,285 14,886,466 (948,182) 18,037,749 1.21

FY 2013 $47,248,104 $159,575 $54,697,680 $59,627,537 ($4,929,858) $18,037,749 1.21

09/30/13 12,441,137 158,582 14,512,219 15,316,141 (803,922) 17,233,827 1.13

12/31/13 12,938,782 113,453 14,964,736 15,086,232 (121,496) 17,112,331 1.13

03/31/14 12,441,137 172,664 14,526,301 15,161,663 (635,362) 16,476,969 1.09

06/30/14 12,703,220 120,587 14,736,307 15,164,236 (427,930) 16,049,040 1.06

FY 2014 $50,524,276 $565,287 $58,739,563 $60,728,273 ($1,988,710) $16,049,040 1.06

09/30/14 13,232,521 182,159 15,354,929 15,805,676 (450,747) 15,598,293 0.99

12/31/14 13,761,821 127,412 15,829,484 15,566,695 262,789 15,861,081 1.02

03/31/15 13,232,521 192,298 15,365,069 15,645,324 (280,255) 15,580,827 1.00

06/30/15 13,372,046 139,031 15,451,326 15,647,888 (196,562) 15,384,265 0.98

FY 2015 $53,598,908 $640,900 $62,000,808 $62,665,583 ($664,775) $15,384,265 0.98

09/30/15 13,929,215 200,992 16,098,957 16,346,803 (247,847) 15,136,418 0.93

12/31/15 14,486,383 136,796 16,591,929 16,085,138 506,791 15,643,209 0.97

03/31/16 13,929,215 215,091 16,113,055 16,166,602 (53,546) 15,589,663 0.96

06/30/16 13,985,697 146,447 16,100,894 16,168,907 (68,013) 15,521,650 0.96

FY 2016 $56,330,509 $699,325 $64,904,834 $64,767,450 $137,385 $15,521,650 0.96

1. Includes WC Division, WC Board, and OR-OSHA

2. Premium forecasts are based on WC Premium Forecasting Model run 8/2011. Data reflect premium assessment rates of 16.8% from

7/1/82 to 12/31/85, 12.0% during CY 86, 7.0% during CY 87, 5.5% during CY 88 and CY 89, 4.5% during the period CY 90 - CY 97, 7.3%

from CY 98 - CY 2001, 8.0% from CY 2002 - CY 2003, 7.0% from CY 2004, 6.8% for CY 2005, 5.5% for CY 2006, 4.6% for CY 2007 - CY 2010,

6.4% for CY 2011, and 6.2% for CY 2012-2016. Reflects economic forecasts from the September 2011 Oregon Economic and Revenue forecast.

3. Includes NCE recoveries, fines & forfeitures, Federal funds and other Rehab revenues through 12/31/95. Also includes a financial statement accrual

of negative revenue in the first quarter of FY 2004, amounting to $18.5 million, for the transfer to the General Fund in accordance with HB 2148 and HB 5077

passed during the 2003 legislative session.

4. Includes expenses, capital outlay, and transfers to the Insurance Division and the Bureau of Labor and Industries (BOLI) and the

Insurance Division. Projected account incremental chargeback revenue is included starting FY 95. The projected expenditures for the 2011-13 biennium

are based on the Legislatively Adopted Budget. Expenditures are escalated at three percent per annum after the 2011-13 biennium.

5. Transfers through 3/31/95 include 1/2 cent per worker per day to OHSU, beginning in the fourth quarter of CY 87, retroactive to 1/1/87. As of 6/30/95 the

transfer to OHSU equals 1/16 cents-per-hour equivalent revenue. As of 1/1/96, two quarters of expenditures for the NCE and Rehab plus quarterly net

expenditures for these reserves was transferred to the Workers' Benefit Fund. Effective 7/1/2001, there is a quarterly transfer from the WBF to the PAOA

to cover direct administrative costs associated with WBF programs.

6. The actual and forecasted premium assessment rates are as follows:

2007 = 0.046 2008 = 0.046 2009 = 0.046

2011 = 0.064 2012 = 0.062 2013 = 0.062

2015= 0.062 2016= 0.062

Note: All data subject to revision.


Appendix 4 - 95% of Forecast

SELF-INSURED EMPLOYER ADJUSTMENT RESERVE

REVENUES, EXPENSES, AND FUND BALANCES


Period Investment Total Total Excess Transfers/ Ending Fund Coverage

Ending Revenue Income Revenue Expenses (Deficit) Adjustments Balance Ratio

FY 1995 $15,713 $76,920 $92,633 $45,776 $46,857 $0 $1,025,098 74.42

FY 1996 $61,075 $64,942 $126,017 $39,598 $86,419 $13,678 $1,111,517 89.26

FY 1997 $4,169 $86,558 $90,727 $36,894 $53,833 $0 $1,165,350 126.35

FY 1998 $10,484 $67,805 $78,289 $228,347 ($150,058) $0 $1,015,292 9.48

FY 1999 $116,832 $51,175 $168,007 $364,667 ($196,660) $0 $818,632 8.84

FY 2000 $576,927 $41,097 $618,024 $408,765 $209,259 $0 $1,027,891 11.13

FY 2001 $240,099 $67,256 $307,355 $331,857 ($24,502) $0 $1,003,389 11.24

FY 2002 $206,443 $43,970 $250,413 $422,455 ($172,042) $0 $831,347 8.71

FY 2003 $321,290 $24,128 $345,418 $397,965 ($52,547) $0 $778,800 9.84

FY 2004 $259,709 $22,217 $281,926 $335,728 ($53,802) $0 $724,998 8.57

FY 2005 $428,547 $20,314 $448,861 $449,938 ($1,077) $0 $723,921 6.63

FY 2006 $682,594 $49,200 $731,794 $339,803 $391,991 $0 $1,115,912 13.20

FY 2007 $533,585 $51,159 $584,744 $359,043 $225,701 $0 $1,341,613 14.30

FY 2008 $410,134 $70,360 $480,494 $363,077 $117,417 $0 $1,459,030 15.04

09/30/08 137,795 16,760 154,555 80,117 74,438 0 1,533,468 19.14

12/31/08 120,977 5,180 126,157 104,184 21,973 (2,359) 1,555,441 14.60

03/31/09 76,481 23,162 99,643 88,254 11,389 0 1,566,830 17.75

06/30/09 82,443 6,895 89,338 71,393 17,945 0 1,584,775 22.20

FY 2009 $417,696 $51,997 $469,693 $343,948 $125,745 ($2,359) $1,584,775 22.20

09/30/09 529,599 21,102 550,701 98,788 451,913 0 2,036,688 20.62

12/31/09 112,580 19,750 132,330 97,476 34,854 0 2,071,542 21.2503/31/10 136,331 16,450 152,781 129,712 23,069 0 2,094,611 16.15

06/30/10 152,173 7,926 160,099 119,710 40,389 (500,000) 1,635,000 2.64

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

Revenues

Expenditures

Balance

06/30/10 152,173 7,926 160,099 119,710 40,389 (500,000) 1,635,000 2.64FY 2010 $930,683 $65,228 $995,911 $445,686 $550,225 ($500,000) $1,635,000 2.64

09/30/10 276,981 23,299 300,280 303,912 (3,632) 0 1,631,368 5.37

12/31/10 394,985 (77,624) 317,361 397,963 (80,602) 0 1,550,766 3.90

03/31/11 414,397 15,863 430,260 348,480 81,780 0 1,632,546 4.68

06/30/11 361,773 12,303 374,076 340,925 33,151 0 1,665,697 4.89

FY 2011 $1,448,136 ($26,159) $1,421,977 $1,391,280 $30,697 $0 $1,665,697 4.89

09/30/11 133,318 14,181 147,499 184,756 (37,257) 0 1,628,440 8.81

12/31/11 133,318 7,893 141,211 184,756 (43,545) 0 1,584,895 8.58

03/31/12 134,127 13,702 147,829 184,756 (36,927) 0 1,547,968 8.38

06/30/12 137,233 8,934 146,167 184,756 (38,589) 0 1,509,379 8.17

FY 2012 $537,995 $44,711 $582,706 $739,024 ($156,318) $0 $1,509,379 8.17

09/30/12 137,233 10,617 147,850 184,756 (36,906) 0 1,472,474 7.97

12/31/12 137,233 8,221 145,454 184,756 (39,302) 0 1,433,172 7.76

03/31/13 138,139 (15,730) 122,410 184,756 (62,346) 0 1,370,826 7.42

06/30/13 142,263 7,455 149,718 184,756 (35,038) 0 1,335,788 7.23

FY 2013 $554,869 $10,564 $565,433 $739,024 ($173,591) $0 $1,335,788 7.23

09/30/13 142,263 10,895 153,158 184,756 (31,598) 0 1,304,190 7.06

12/31/13 142,263 8,077 150,340 184,756 (34,416) 0 1,269,774 6.87

03/31/14 103,326 11,920 115,247 184,756 (69,509) 0 1,200,265 6.50

06/30/14 107,268 8,517 115,785 184,756 (68,970) 0 1,131,294 6.12

FY 2014 $495,120 $39,410 $534,530 $739,024 ($204,494) $0 $1,131,294 6.12

09/30/14 107,268 12,037 119,305 184,756 (65,451) 0 1,065,844 5.77

12/31/14 107,268 8,652 115,921 184,756 (68,835) 0 997,008 5.40

03/31/15 108,447 11,569 120,016 184,756 (64,740) 0 932,268 5.05

06/30/15 111,917 8,493 120,410 184,756 (64,346) 0 867,922 4.70

FY 2015 $434,900 $40,751 $475,651 $739,024 ($263,372) $0 $867,922 4.70

09/30/16 116,351 8,143 124,494 184,756 (60,262) 0 556,781 3.01

12/31/16 116,351 5,450 121,801 184,756 (62,955) 0 493,826 2.67

03/31/17 117,640 6,452 124,092 184,756 (60,664) 0 433,162 2.34

06/30/17 120,653 4,324 124,978 184,756 (59,778) 0 373,383 2.02

FY 2017 $470,995 $24,369 $495,364 $739,024 ($243,659) $0 $373,383 2.02

1. Revenues received for this program are from quarterly reimbursements from the Retroactive Program.

and from the 0.2 assessment rate differential paid by Self-Insured Employers.

2. Expenditure forecasts are from WCD Compliance management staff.


Appendix 5 - Continuation of 0.2 percent Assessment Rate for SIEAR

SELF-INSURED EMPLOYER GROUP ADJUSTMENT RESERVE

REVENUES, EXPENSES, AND FUND BALANCES


Period Investment Total Total Excess Transfers/ Ending Fund Coverage

Ending Revenue Income Revenue Expenses (Deficit) Adjustments Balance Ratio

FY 1995 $17,971 $5,489 $23,460 $0 $23,460 $0 $82,489 N/A

FY 1996 $15,604 $5,706 $21,310 ($1,118) $22,428 $1,118 $104,917 N/A

FY 1997 $12,546 $6,483 $19,029 $0 $19,029 $0 $123,946 N/A

FY 1998 $8,691 $7,705 $16,396 $0 $16,396 $0 $140,342 N/A

FY 1999 $2,482 $7,614 $10,096 ($9,808) $19,904 $9,808 $160,246 N/A

FY 2000 $11,624 $10,030 $21,654 $0 $21,654 $0 $181,900 N/A

FY 2001 $8,389 $12,913 $21,302 $0 $21,302 $0 $203,202 N/A

FY 2002 $5,936 $9,881 $15,817 $0 $15,817 $0 $219,019 N/A

FY 2003 $18,436 $7,013 $25,449 $0 $25,449 $0 $244,468 N/A

FY 2004 $13,072 $7,593 $20,665 $0 $20,665 $0 $265,133 N/A

FY 2005 $24,658 $8,878 $33,536 $0 $33,536 $0 $298,669 N/A

FY 2006 $24,566 $15,189 $39,755 $0 $39,755 $0 $338,424 N/A

FY 2007 $25,324 $15,340 $40,664 $0 $40,664 $0 $379,088 N/A

FY 2008 $28,603 $19,416 $48,019 $0 $48,019 $0 $427,107 N/A

09/30/08 5,263 4,819 10,082 0 10,082 0 437,189 N/A

12/31/08 6,442 1,492 7,934 680 7,254 (680) 444,443 N/A

03/31/09 4,131 6,648 10,779 0 10,779 0 455,222 N/A

06/30/09 9,757 1,991 11,748 0 11,748 0 466,970 N/A

FY 2009 $25,593 $14,950 $40,543 $680 $39,863 ($680) $466,970 N/A

09/30/09 122,632 6,170 128,802 0 128,802 0 595,772 N/A

12/31/09 12,260 5,746 18,006 0 18,006 0 613,778 N/A03/31/10 11,947 4,854 16,801 0 16,801 0 630,579 N/A

06/30/10 0 2,549 2,549 0 2,549 0 633,128 N/A

-3,000,000

-2,500,000

-2,000,000

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

Revenues

Expenditures

Balance

06/30/10 0 2,549 2,549 0 2,549 0 633,128 N/AFY 2010 $146,839 $19,319 $166,158 $0 $166,158 $0 $633,128 N/A

09/30/10 21,097 8,744 29,841 0 29,841 0 662,969 N/A

12/31/10 0 (30,649) (30,649) 0 (30,649) 0 632,320 N/A

03/31/11 651,765 6,926 658,691 804,400 (145,709) 0 486,611 0.60

06/30/11 1,066,805 4,914 1,071,719 925,063 146,656 0 633,267 0.68

FY 2011 $1,739,667 ($10,065) $1,729,602 $1,729,463 $139 $0 $633,267 1.46

09/30/11 1,012,275 5,392 1,017,666 1,000,000 17,666 0 650,933 0.65

12/31/11 1,012,275 3,155 1,015,430 1,000,000 15,430 0 666,363 0.67

03/31/12 1,012,275 5,761 1,018,036 800,000 218,036 0 884,398 1.11

06/30/12 100,970 5,104 106,075 800,000 (693,925) 0 190,473 0.24

FY 2012 $3,137,794 $19,412 $3,157,206 $3,600,000 ($442,794) $0 $190,473 0.21

09/30/12 12,970 1,340 14,310 800,000 (785,690) 0 (595,217) (0.74)

12/31/12 12,970 (3,323) 9,647 800,000 (790,353) 0 (1,385,570) (1.73)

03/31/13 12,970 15,207 28,178 600,000 (571,822) 0 (1,957,392) (3.26)

06/30/13 13,894 (10,646) 3,248 600,000 (596,752) 0 (2,554,144) (4.26)

FY 2013 $52,805 $2,578 $55,383 $2,800,000 ($2,744,617) $0 ($2,554,144) (3.65)

1. Revenues received for this program are from the 0.2 assessment rate differential paid by Self-Insured Employer Groups.

Current projections are calculated as 0.2 percent of the current self-insurer group premium forecast.

2. There are currently no expenditures for this program.

3. There are currently six Self-Insured employer groups with a combined total of over 1400 employers; including cities, counties,

special districts, Oregon Educators, and Oregon Operators.


Appendix 6 - Continuation of 0.2 percent Assessment Rate for SIEGAR

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

Self-Insured Employer Adjustment Reserve Valuations

-

200,000

400,000

600,000

800,000

Exhibit A

m e m o r a n d u m · hearing on october 11, 2011, and will solicit testimony from staff and...

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