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<br />WORKERS' COMP from page 1........
<br />
<br />The League received survey responses from
<br />352 of California's 478 cities, consisting of each
<br />city's workers' compensation costs for the follow-
<br />ing fiscal years: 2002-03, 2003-04 and 2004-05.
<br />The costs were divided into four expenditure
<br />categories: Medical; Permanent Disability;
<br />Indemnity; and Total Costs. Administrative costs
<br />and all other forms of miscellaneous costs were
<br />included into the Total Costs category. (For details,
<br />see "Findings of the League's Workers' Compen-
<br />sation Survey".)
<br />
<br />Further good news: the trend of decreasing
<br />cost is continuing. The Califomia Workers' Com-
<br />pensation Insurance Rating Bureau reported that
<br />the written premium of the first quarter of 2005
<br />equaled $5.9 billion, 8 percent less than the pre-
<br />mium reported in the first quarter of 2004. The
<br />loss ratios of insurers (the amount they pay for
<br />claims compared to premium) dropped from 87
<br />percent in 2002 to 41 percent in 2005.
<br />
<br />In addition, the State Compensation Insurance
<br />Fund, California's largest workers' compensation
<br />insurance carrier with over half the state market,
<br />announced that it was reducing rates by an aver-
<br />age of percent as of January 1. With the added
<br />savings, the League anticipates insurers to con-
<br />tinue lifting the cost burden from public sector
<br />employers.
<br />
<br />SA
<br />Page 13
<br />
<br />FINDINGS OF 11IE LEAGUE'S WORKERS'
<br />COMPENSATION COST SURVEY
<br />
<br />The League's survey revealed that total costs
<br />started at $410,614,865 in fiscal year 2002-03, and
<br />then increased to $427,323,920 in 2003-04. After
<br />passage of S8 899, total costs decreased to
<br />$355,814,691, $54.8 million lower than the 2002-
<br />03 level. Most of the other expenditure categories
<br />experienced the same trend with the exception of
<br />medical costs.
<br />
<br />Medical costs totaled $223,563,729 in FY
<br />2002-03, decreased to $218,016,418 in FY 2003-
<br />04, and then decreased further to $176,995,851 FY
<br />2004-05. Medical cost is the largest expenditure
<br />category in workers' compensation, making up 54
<br />percent of the total cost in 2002-03, 51 percent of
<br />the total cost in 2003-04, and decreased to 50
<br />percent in 2004-05.
<br />
<br />Indemnity, permanent disability and
<br />miscellaneous costs followed the same trend in
<br />increases and decreases. Indemnity costs
<br />totaled $104,438,480 in FY 2002-03, increased to
<br />$106,885,386 in FY 2003-04, and decreased to
<br />$934,596,860 in FY 2004-05.
<br />
<br />Indemnity cost is the second largest expendi-
<br />ture category, making up 25 percent of total cost
<br />from FY 2002-04, and 26 percent in FY 2004-05.
<br />
<br />Permanent disability totaled $76,014,747 in
<br />FY 2002-03, increased to $84,112,067 in FY 2003-
<br />04, and then decreased to $75,206,213 in FY 2004-
<br />05. Permanent disability is the third largest
<br />expenditure category, and that has been steadily
<br />increasing over time. It consisted of 19 percent of
<br />total cost in 2002-03, 20 percent in 2003-04, and
<br />21 percent in 2004-05.
<br />
<br />Miscellaneous costs are costs associated
<br />with administration/staff, purchasing capital
<br />equipment or materials, and any other expenditure
<br />necessary to implement Califomia's workers'
<br />compensation law (Labor Code, Division 4).
<br />Miscellaneous costs totaled $7,098,367 in 2002-
<br />03, increased to $18,794,291 (2003-04), and
<br />decreased to $10,572,720 (2004-05). Miscella-
<br />neous costs consisted of 2 percent of the total cost
<br />in 2002-03, 4 percent in 2003-04, and 3 percent in
<br />2004-05.
<br />
<br />Visit the League's Official Website..www.cacities.org
<br />
<br />PRIORITY FOCUS. PAGE 3
<br />January 20, 2006 - Issue #3
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