Levees, Ending Workers Compensation Fund Included In Highway Session

May 17, 2016

The Red River in southwest Arkansas.
Credit US Geological Survey

The governor’s short-term highway funding plan is splitting the agenda with 14 other items in the special session of the Arkansas Legislature convening Thursday. Bills have yet to be filed but drafts are drawn up to re-organize the state’s levee system and to end a workers compensation fund among other items.

Levees

State Sen. Jason Rapert plans to sponsor legislation granting county judges the authority to appoint members to vacant levee district boards and to charge the Arkansas Natural Resources Commission with collecting and assessing information from local boards. The Republican from Bigelow personally faced floodwaters on his own property last year.

File photo. State. Senator Jason Rapert (R-Bigelow) with former State Representative Anne Clemmer testifying to a committee in 2013.
Credit Nathan Vandiver / KUAR

"In May of 2015 and December of 2015 we had two historic floods in our state and it was at that point where we discovered there were several areas of our state that had dilapidated levees or had levee boards that were not functioning,” says Rapert, who has previously organized several hearings on the issue.

“Last year we found out there is no state agency that had any information or was given any oversight of all the levees in our state,” says Rapert. “We felt that’s a big problem when you’re having a crisis and don’t even have a state agency that can tell you how many levees are in our state and whether they are maintained or not.”

ANRC Executive Director Randy Young was consulted during the bill’s drafting and says there are “two major factors in the legislation” that have consensus support.

Arkansas Natural Resources Commission executive director Randy Young and Arkansas Department of Emergency Management director David Maxwell testify to a joint meeting of legislative committees on levees.
Credit Jacob Kauffman / KUAR

“It will require all of the levee improvement districts to file reports with local county clerks who in turn will provide that information to my agency. We should be in a better position to assess those that are functioning and those that are not," Young says.

"It will streamline the process and make it such that the local county judge can fill vacancies on the levee board if we have one that’s not functioning.”

Young agrees with Sen. Rapert that more can be done in the future once the ANRC has a better grasp of the state’s patchwork levee system.

“We have a number of levees that are functioning very good. Then we have some that are not, even to the point of not having a functioning board of directors,” says Young. “The big problem is we really don’t have a handle on the extent of the problem.”                           

Workers Compensation Fund

State Sen. Greg Standridge, a Republican from Russellville, is seeking to end Arkansas’s Workers Compensation Death and Permanent Total Disability Trust Fund. It’s the last fund of its kind in the nation with other states shifting the benefits program for injured workers and dependents to employers’ insurance companies. Currently, businesses only pay the first $204,000 per benefit with the state assuming the rest of the cost.

“We are the last state to have this fund. All other states have done away with it and the companies and self-insurers in other states have already dealt with this,” says Standridge. “It’s nothing new.”

He argues it’s necessary for the state to stop taking new claims because of $130 million in unfunded liabilities for the current beneficiary population.

“We’ll put a stop date on new claims based on actuarial projections and get all those children and widows already in it taken care of for the next 30 years,” he says. “The only other way to rectify this would take a premium tax increase and nobody wants to have that discussion. This is a clean bill.”

The state’s largest organized labor group, the Arkansas AFL-CIO, backs the legislation despite some reservations. President Alan Hughes says he’s concerned about the consequences of letting an underfunded workers compensation plan continue.

“They’d be out on the Capitol steps screaming, ‘I was promised this but now I have nothing.’ Now’s the time to do this, to stop kicking the can down the road until something worse happens.”

While Hughes is satisfied this plan will “safeguard” injured workers and families already in the fund, he is apprehensive that the new system – relying on employers and insurance companies to fairly process claims – will always go smoothly.

“It sort of puts the employee out there more at the mercy of the employer and their insurance carrier,” Hughes says. “You’re damned if you do and you’re damned if you don’t. If you don’t do this, the people in the fund will go under. If you do it, you’ll have hell on the front side having people really have to fight to get what they’re due when you’re dealing with management, the employer, and their insurance carrier. If you’ve had a car wreck before, you’ve seen how hard it is to get your money.”

Sen. Standridge says with organized labor in support, he believes a consensus is in reach. The one big entity that is exhibiting resistance is the Arkansas State Chamber of Commerce. The chamber told KUAR News that CEO Randy Zook “is not interested in responding” to a request for interview.

The head of the organized business group told content-partner Talk Business and Politics earlier this week that the chamber is supportive of the idea of ending the state’s workers compensation fund for death and total disability, but isn’t on board with Sen. Standridge’s proposal.

Randy Zook, Arkansas State Chamber of Commerce president and CEO, said the Chamber has supported ending the trust fund since 2007, but the complicated issue should be considered in the 2017 regular session. The bill makes no provisions for the increasing costs to business, and the Chamber also opposes increasing the premium tax. The Chamber says employers would face unlimited costs for claims, as opposed to the current system where they pay only the first $204,000 per benefit.

“We don’t think it’s the kind of issue that is best considered and decided in a special session with a very short amount of time involved to tend to the issues at hand. … We don’t want to solve part of the problem. We want a comprehensive solution,” he said.

Standridge contends the cost to employers is negligible.

“For small businesses, most people who buy workers comp policies, they can see little to no change,” says Standridge. “The NCCI (National Council on Compensation Insurance, the governing body over workers comp, said intended consequences could be a 3.6-4.6 percent change in rates but also said effective July 1 of this year they are taking a 4.2 percent decrease in the rates of workers comp this year. In actuality, this should basically be a wash and you shouldn’t pay anything different than the previous year.”

AFL-CIO head Alan Hughes says if anyone is to blame for the rushed predicament the chamber says it’s facing, it’s the chamber. He says the chamber has “starved” the state fund, which receives money through insurance premiums.

“Think about the injured workers that were promised this, that it would be there for them. It was the employer’s responsibility to have this fund funded. We tried to get them to raise premiums just a little bit to secure this and they refused to. If anybody’s at fault, they have failed at funding this which is their responsibility,” says Hughes.

“We have the third lowest in workers comp premiums, some of the lowest rates in the country. They starved out another injury fund before this by not being willing to raise premiums to fund programs that injured workers in Arkansas counted on.”