by Matthew Patane
Missouri’s Second Injury Fund was once again declared insolvent Friday, Jan. 11, when the state auditor’s office issued a report stating the fund does not have enough money to cover claims for injured workers.
“The fund is currently insolvent, with unpaid liabilities totaling over $28.1 million, and no means to pay the benefits required by statute,” according to the report issued by State Auditor Tom Schweich and his staff.
The fund had $3.1 million as of Dec. 31, 2012, leaving it with a deficit of $24.9 million. Schweich said it would take increasing the current 3 percent surcharge to seven percent for one year and then be reduced to 5 percent in subsequent years to pay the fund’s obligations.
The fund was created in 1943 to entice employers to hire workers with preexisting injuries, including veterans of World War II. It provides benefits to workers with preexisting injuries and covers any additional injuries these workers sustain while on the job.
Money for the fund is produced by a surcharge placed on employers’ workers’ compensation insurance premiums.
The most recent report, as well as a 2007 audit, attribute the fund’s insolvency to a 2005 law that capped the surcharge on employers at 3 percent.
The report calls on the governor and General Assembly to “work together” to determine what to do with the fund.
Schweich said there are three ways state lawmakers could address the fund’s insolvency:Increase premiums to 7 percent, a combination of increasing premiums and reducing payouts or eliminating the fund altogether.
Schweich said he and his staff conducted the report during the past month at the request of the Attorney General’s Office, which is in charge of overseeing the fund.
As with the 2012 legislative session, a measure has been filed to address the problem. The first bill in the Senate addresses the funding problem.