A Pilot Study of California State Employee Workmen's Compensation and Other Work-Related Disability Benefits

COMMISSION ON CALIFORNIA STATE GOVERNMENT ORGANIZATION AND ECONOMY ChaIrman D. W. HOLMES Madera Wee-ChaIrman HAROLD FURST hrkeley ALFRED E. ALQUIST Senator. San Jose HOWARD A. BUSBY San DIego JACK R. FENTON As ..m blyman. Montebello H. HERBERT JACKSON Sacramento JAMES E. KENNEY Pasadena ANDREW L. LEAVIn San Mateo WALTER H. LOHMAN Lo. Angele. MILTON MARKS Senator. San francIsco PATRICK D. McGEE A. ..m blyman. Van Nuy. NATHAN SHAPELL Beverly Hili. L. H. HALCOMB. Jr. Executive OffIcer A PILOT STUDY OF £~1!!Q!!!~ !!~!! !~!1QX!! w 0 R K MEN S COM PEN SAT ION --------I - ------------ AND DIS A B I LIT Y BEN E FIT S ---------- -------- MAY, 1970 Commission on California State Government Organization and Economy STATE OF CALIFORNIA RONALD REAGAN, Governor COMMISSION ON CALIFORNIA STATE GOVERNMENT ORGANIZATION AND ECONOMY 11th & L Building, S.,ite 550 Sacramento 95814 Chairman D. W. HOLMES Madera ALFRED E. ALQUIST Senator, San Jose HOWARD A. BUSBY San Diego May 1S, 1970 C. E. DIXON Modesto JACK R. FENTON Assemblyman, Montebello HAROLD FURST San Francisco H. HERBERT JACKSON Sacramento JAMES E. KENNEY Honorable Ronald Reagan Pasadena Governor, State of California ANDREW L. LEAVITT San Mateo WALTER H. LOHMAN Los Angeles Honorable Jack Schrade MILTON MARKS President pro Tempore, and to Members of the Senate Senator, San Francisco PATRICK D. McGEE Assemblyman, Van "Iuys Honorable Bob Monagan NATHAN SHAPELL Beverly Hills Speaker, and to Members of the Assembly L. H. HALCOMB, JR. Executive Ollicer Gentlemen: Transmitted herewith is our report setting forth findings and recommendations resulting from the Commission's study of state employee benefits for work-related disabilities as paid through Workmen's Compensation and other disability benefit systems. This analysis, considered by the Commission as a "pilot study", had as a primary objective the development of suf ficient factual data to indicate whether problems exist which are sufficiently important to justify further study and action. Recommendations are made in this report under two general categories. Five recommendations are pre sented to serve as the basis for immediate action. TWo additional areas are recommended for in-depth study with the goal of developing the basis for future action programs. We believe that these findings and recommendations clearly merit proceeding with the action steps as proposed, as well as commencing with the recommended studies. The study was conducted under the general gUidance of a subcommittee comprised of Assemblyman Jack R. Fenton, Howard A. Busby and Walter H. Lohman. Staff work was per formed by Samuel M. Roberts, Consultant, under the overall coordination of the Commission's Executive Officer, L. H. Halcomb, Jr. The assistance and cooperation to the Commission and its staff by the many state agencies consulted have been most helpful in the conduct of the study and preparation of the report. Particularly important have been the data compilations prepared by the State Compensation Insurance Fund and by the Public Employees' Retirement System. These data sources have provided much of the basic factual information required for the study. Respectfully, D. W. Holmes, Chairman Harold Furst, Vice-Chairman State Senator Alfred E. Alquist Howard A. Busby Assemblyman Jack R. Fenton H. Herbert Jackson James E. Kenney Andrew L. Leavitt Walter H. Lohman State Senator Milton Marks Assemblyman Patrick D. McGee Nathan Shapell APPENDIX EXHIBIT C HOW STATE AGENCIES MEET THEIR WORKMEN'S COMPENSATION OBLIGATIONS (Cont.) f. Mechanized loss accounting--direct billing of each agency. g.* Benefit payments are advanced by the State Fund for subse quent reimbursement by agencies involved. Safety Services B. Safety--Loss Management SerI vices 1. Regular distribution of safety posters and bulletins. 2. Accident Prevention Service Reports. 3. Scheduled management-supervisora1 orientation to large agencies. Services ~ecia1 C. Special Services and Programs 1. Claims personnel specializing in state agency claims in districts with large state clientele. 2. Participation by State Fund Rehabilitation Officer in Department of Conservation rehabilitation-retraining council. 3. Rehabilitation case conference program with the Departments of Corrections and Mental Hygiene. 4. Consultation aid in safety programs and in specific loss prevention problems are being provided at the request of an agency. 5. Specialized training and operating guidelines for claims personnel: a. Adjustment of State Cases b. Members of California National Guard claims c. Relationship with State (Public) Employees' Retirement System Services Provided Insured State Agencies Insured State Agencies Services The insured status provides for a contractual assumption of the agencies' statutory compensation liability by the State Compensation Insurance Fund at a determinable cost. * An analysis of a recent l2-month period showed an average monthly outstanding of $700,000 due the State Compensation Insurance Fund. A-13 APPENDIX EXHIBIT C HOW STATE AGENCIES MEET THEIR WORKMEN'S COMPENSATION OBLIGATIONS (Cont.) Related insurance services inc1ud~ in addition to those itemized under the preceding "Adjustment Services" Section: Regular loss prevention consultation; Scheduled safety services; Reports prepared under the requirements of the California Inspection Rating Bureau; Mechanized premium accounting; Payroll Auditing service; Dividend participation. A list of the currently insured state agencies is found in Appendix V. Basis for Establishing Charges Under Master Service Agreement EXHIBIT I displays the determinants of the service charge applicable to the State Contract Service. All data used in EXHIBIT I is derived from the State Fund Accounting Depart ment's books of original entry or semi-annual "Reports for the Insurance Cotmnissioner" • For the purpose of the exhibit, adjustment of some of the data is required. In the source detail, loss payments include unallocated loss expense. Since it is desired to establish a ratio of loss expense to loss payments, unallocated loss expense (!) has been extracted from loss payments and added back into the expense side. Adjustments to the 1968 data are identified as: GO Unallocated loss expense is deducted from loss payments, added back into expense. ~ Adjustment service charges have been added back into claims expense to give us actual expenses since the service charge is normally applied as a credit against loss expense. The dollar figure emerging from adjustment 2 and 3 is displayed in the "revised" column as $9,570,647.93. ~ This adjustment excludes expenses not applicable to the State Service Contract. EXHIBIT II illustrates the tests we have made to determine the ratio of loss expense to loss payment. A-14 TABLE OF CONTENTS SUMMARY OF FINDINGS AND RECOMMENDATIONS 1 Findings 1 Recommendations for Current Action 4 Recommendations for Legislative Study 6 BACKGROUND ON CALIFORNIA STATE EMPLOYEE BENEFITS FOR WORK-RELATED DEATH OR DISABILITY 9 Workmen's Compensation 9 Administration of Benefits 10 General Trends in Workmen's Compensation 11 Salary Continuation Benefits 16 Retirement System Disability and Death Benefits 16 STATE OF CALIFORNIA EMPLOYEE WORK DISABILITY BENEFITS COMPARED WITH FEDERAL EMPLOYEE BENEFITS 18 Comparison Highlights 18 Cost Comparisons 19 Reasons for Cost Differential 21 CALIFORNIA STATE WORK DISABILITY COSTS AND LOSS CONTROL PROGRAMS 23 A. Total Work Disability Expense 23 B. Workmen's Compensation Cost and Loss Trends 24 Total Workmen's Compensation Costs 25 Workmen's Compensation Administrative Expense 25 Incurred Loss Trends 26 Losses by Departments and Agencies 28 Losses by Type of Disability Case 30 C. Other Work-Related Disability Costs 30 Salary Continuation Benefits 31 Retirement System Disability and Death Benefits 31 D. Safety, Medical and Other Loss Control Programs 34 General Program Management 34 Safety Program and Accident Statistics 3S Medical Aspects of Loss Control 37 Management Information Programs 37 Claims Adjustment and Legal Defense 38 APPENDIX INDEX 39 SUMMARY OF FINDINGS AND RECOMMENDATIONS FINDINGS 1. State Employees or their survivors may receive benefits because of work-related disabilities or death from four state-financed sources- Wort.8n's Compensation, salary continuation payaents, retirement system, and Federal Social Security. Benefits are often paid from more than one source at the same time. Certain specified safety and prison custodial employees are granted more liberal benefits than other employees. 2. Total identifiable costs of work disability benefits exceed $20,230,000 per year or approximately 1.31 of total payroll (1961-68) including: Workmen's Compensation $9,340,000 Salary Continuation (Injury Leaves) 6,850,000 Special retirement system benefits 4,040,000 3. Total Workmen's Compensation costs in a ten-year study period (1957-58 to 1967-68) have increaBed 2531 while the number of employees increased 10% and gross payrolls 1821. Total cost and rate of increase per payroll dollar compares favorably with general experience of California employers because of relatively moderate cOBt levels of universities, colleges, and large state office operations. 741 of losses for governmental operations (excluding universities and colleges) occur in five departments and divisions with 471 of governmental employment. Four of these operations--Corrections, Mental Hygiene, Forestry and Highway Patrol--have significantly higher than average cost per employee. Particularly adverse cost trends are noted in Departments of Corrections, Employment, Youth Authority, Parks and Recreation, and Justice. 4. State Compensation Insurance Fund (SCIF) administers Workmen's Compen sation benefits for the state service. Approximately 80t of losses are paid out through the "self insurance" program. The balance of losses are covered through purchase of insurance policies from SCIF. SCIF service charges for the "self insurance" program are somewhat lower in ratio to benefit payments than the net retentions of the carrier on insured risks. The master service agreement executed in November, 1943 specifically requires SCIF to furnish only claims service and legal defense. However, SCIF has assisted state agencies, primarily on a request basis, with respect to safety and other lo.s control program. as detailed in Appendix C. -2- 5. A substantial portion of Workmen's Compensation los lei involve degenerative diseases and other employee health probleml. AnalYlil of four years incurred losses for disabling injuries Ihowed 14.3% of 101lel involved heart casel and 31.6% were back cales. Heart casel have the highelt average cost which hal rilen from $7,000 to $10,500 per claim in four yean. Special "presUliptionl" concerning coapenaability of heart cales are provided in the Labor Code for Highway Patrol, Forestry fire fighterl, and certain other lafety and prison employees. 6. Federal Employee Compensation Act (F.E.C.A.) benefits are computed at subltantially higher ratel than under the state Iystea. Federal average cOlts per disability cale are lower and per death case higher than the State. Average cOlt per governmental employee in the State System is 3.4 times the Federal cost per employee. Federal system is based on different principles than the state system including: • Permanent disability benefits are paid only when lOIS of wagel except for specifically scheduled dilabilities. Only 22% of state disabling injury cOltl involve parts of body that are included in the Federal "scheduled" disabilities. • Federal benefitl and injury presumptions are the lame for all occupa tions. However, higher benefitl are paid for employeel with depend ents than for slngle employees. • Except for aedical cOlt and "scheduled" dilability payments, F.E.C.A. benefits are not paid concurrently with other benefitl such as dilability retirement. Federal lervice hal lubltantially lower dilabling injury frequency rate than the State. The Federal Government Ulel government medical facilttiel more extenlively than the State. 7. For work-related causes, Ipecial industrial disability (50% of lalary) and death benefits (50% to 75% of lalary) are provided for delignated state lafety and prilon custodial perlonnel under Public Employeel' Retirement SYltem. Average employer cost in excess of normal retirement relerve was $48,800 for retirements and $62,600 for death easel (1966-67 cases). Employeel retiring on dilability also receive any Workmen's Compen lation permanent disability benefits for which they are eligible. Such benefit awards totaled $595,629 on 68 out of 75 industrial disability retirements of 1966-67--average $8760 per case. The extent to which "work injury" contribute I to total disability may be a minor element. 14 out of 75 retirements involved minor permanent disability ratings ranging from 9% to 25%. No rating records could be located with reference to 7 cases. -3- Fifty-eight out of 75 Itate employee indultrial dilability retire ments in 1966-67 involved disabilities such as heart dilease, mental conditions, ulcers and back cales. Four out of lix induI trial death penlionl authorized were heart cales. Prior to 1961 industrial dilability retirement penlionl were reduced when earningl from a gainful occupation plul penlion exceeded current pOlition lalary. Since repeal of thil reltriction (Itill applicable to normal dilability retirementl) the frequency of luch retirementl in ratio to IYltem memberlhip eligible hal doubled. There are currently more indultrial dilability retire ment. being authorized than normal lervice retirements among employee claslificationl eligible. 8. There hal been little progrels made in reducing disabling injury frequency rate for the total Itate service in the lalt ten yearl. POllibilities for lubltantial improve.ent are indicated by the excellent record achieved by Divilion of Highways which hal had an active lafety program during the entire period reviewed. Higbway Patrol, Mental Hygiene, and of Conservation Ihow generally Depar~ent favorable trendl for the palt few yearl; linee lafety engineering Itaff lervicel have been provided and lafety programl have received more management support. - Currently a number of large state organizationl,luch al Uni.erlity of California, California State College SYltea and Deparbaent of Correctionl, do not have a full-time safety engineer alsociated with their central ..n agement lervicel. Smaller officel and depart mentl allo have not been provided adequate advilory lervicel and other relourcea neceslary to aUltain effective lafety and other lOla control programa. 9. There recently hal been announced a "Governor's Ptogr. . to Reduce Occupational Injuriea" (Appendix E-2). The program is compre hensive in scope and soundly conceived. It sets forth policies, organizational relponaibilities and goall for an accident prevention and lOll control progr. . throughout the state service. The program recognizes the key elementa on which good lafety recordl are based. Thele elementa are: Continuoul top manage. .n t lupport and follow-up on reaulta. Direct reaponlibility and involvement of all levell of luperviaion. Employee underltanding and motivation. -4- RECOMMENDATIONS FOR CURRENT ACTION 1. The Governor's Program to Reduce Occupational Injuries should be fully iaplemented. It il particularly important that: The program ..n ager be provided with adequate budget for employee information lervice requirementl and for follow-up on program implementation relponlibilitiel alligned to operating departmentl and Itaff agencies. Adequate lafety staff lervices and training aids be provided with priority attention given to need I of office. and departments presently lacking in thele re.ources. Information Iystem. be improved 10 that accident and lOll trendl are promptly reported and publicized and 10 that meaningful analysis can be made of problems and of progrell in reaching accident reduction goal •• Cloler liailon be maintained be~een Itate department. and State Ca.penlation Insurance lund to fully ule available advilory lervices, facilitate clai. ...n agement, and aid in rehabilitation of injured employeel. 2. The State Governaent through itl Health Department, hOlpitall and univerlity medical Ichooll hal the Itaff talentl and other medical relourcel to develop out. tanding programl in all the medical phales of work dilability lOIS control. Particular attention Ihould be given to: The establilhing of medical standardl to be met by applicantl for the ..n y pOlitionl involving subltantial phYlical effort for which Itan dardl have not yet been defined. Providing a more complete program for pre-employment and periodic medical ex. .i nations utilizing Itate facilities when appropriate. Such examinationl, when involving positionl lubject to "heart presumption" liability under Workmen'l Compensation law should include full cardio-valcular evaluation utilizing the mOlt advanced medical techniques. Developing a comprehensive occupational medical program directed to maintaining health of the State 'I work force and reduction of inci dent of degenerative diseasel which are the balic cause of a sub stantial portion of Workmen'l Compensation and dilability retirement expenle. In this connection a study team lhould be assigned to developing a program to reduce incident of heart dileale with Ipecial attention to employee groupl lubject to Workmen'l Compenla tion liability prelumptions with reference to thil health problem. Reviewing possibility of uling state facilitiel more extenlively in connection with firlt medical treabaent of job injuries and follow-up on progrell of recovery. -5- 3. It is rec01llllended that the "Master Agreement" with the State Compensation Insurance Fund (SCIF) entered into in 1943 be revised. Changes in con tract should include: Specific responsibility for SCIF to provide technical advice and assistance in development and administration of safety and other loss control programs. Continuous assignment by SCIF of such full-time personnel to the state service program as may be required to insure full and appro priate utilization of SCIF Resources in loss control efforts and to provide continuous liailon with state Itaff and operating agenciel concerned. Periodic review by SCIF of safety and loss control programs of Itate agencies and preparation of written reportl evaluating the programs and recommending improvements. Provision for periodic advancing of sufficient funds to SCIF to cover benefit disbursement requirements or for establishing some other pro cedure to eliminate the present time lag in reimbursing SCIF for benefits paid out. 4. It is recommended that the Department of General Services adopt a more specific policy with reference to method of administering its Workmen's Compensation. Most benefits are now handled through the "self insurance" program with lower service charge than the carrier retention expense normally expected if insurance were purchased. In addition, when the liability is insured, the insurance carrier receives substantial interest earnings on open case reserves and premiums held prior to dividend pay ments. It is specifically recommended that: State agencies review the process of securing authorization for the purchase of any Workmen's Compensation insurance policy. Special justification for such purchases should be clearly estab lished. Detailed studies be made of all major presently insured riskl luch as University of California to determine desirability of continuing insurance or shifting to self-insurance program. 5. It is rec01llllended that industrial disability retirements be subject to the lame earnings limitation provilionl al ordinary disability retire ments (Government Code Section 21300). Industrial disability retire ments prior to 1961 were subject to this limitation. (See Table 10 and Exhibits E-I and F-3.) -6- RECOMMENDATIONS FOR LEGISLATIVE STUDY A primary objective of this pilot study as originally authorized has been to determine whether there are problems with respect to Workmen's Compen sation and other state employee disability benefit systems of sufficient importance to justify in-depth study. The data presented in this report indicate two general areas which merit further study by the State Legis lature. They are: 1. Possible need for fundamental revisions in Workmen's Compensation pro visions applicable to public agencies to eliminate present financial incentives for abuse and to fulfill objectives of the benefit system more effectively. 2. Modifications in disability retirement and death benefits required to coordinate said benefits with other benefits systems, to eliminate any identified abuses, and to facilitate administration. Workmen's Compensation Studies Analysis of cost trends and comparison of state system with federal system indicate that current costs are high and yet seriously disabled workers receive very modest benefits. The cost problem is of sufficient magnitude to justify an in-depth study by the State Legislature. In addition to state service incurred losses of nearly $10,000,000 per year, the losses of local public agencies are believed to total in excess of $30,000,000 per year. A substantial portion of the Labor Code is devoted to special sections applicable only to public agencies. A number of responsible private organi zations familiar with Workmen's Compensation have recommended that such provisions be replaced by a Workmen's Compensation system specifically designed to meet the special problems of public agency employment. Circumstances of public employment, including stability of work force and civil service's protection of tenure, raise serious questions as to the logic of the permanent disability compensation payment provisions now appli cable. Such payments often amount to "bonuses" for 111 health when granted to employees who suffer no loss in wages and when actual "work injury" 18 a minor element in the basic cause of disability. There appears to be merit in fully considering change to a "wage loss" theory appropriately supplemented with clearly defined schedule of "indemnity" type payments for loss of specific body appendages, sight, hearing, and disfigurement. This we1l proven system has been applicable to the federal service since its inception. Such a change has been advocated for several years by several responsible local government organizations. Studies required to fully analyze this matter and to develop specific revision proposals include: 1. Review of statistically valid lamp1e of state and local government disability injury cases of all types to determine: a. Permanent disability payments and reserve. for .uch payments; -7- b. Individual employment history to ascertain whether disability caused wage loss; c. A sound basis for estimating cost effects of any modifications to be considered in rating systems and/or payment principles. 2. Compilation of all special Labor Code provisions currently applicable only to public agencies. 3. Development of specific alternates and modifications to be considered through consultations and interim hearings participated in by parties interested or affected. 4. Cost analysis of alternative modifications considered significant. Disability Retire.ent and Death Benefits Data presented in this study indicate trends with reference to special industrial disability retirements which are of concern, both from standpoint of cost and possible indication of abuse. The cost problem is of sufficient magnitude to justify interim study. In addition to state service cost over $4,000,000, city and county agencies which contract with Public Employees' Retirement System have twice as many employee. covered under special safety benefits. This means roughly $8,000,000 per year added cost. The extent of "overlap" and other problems with respect to ordinary disabUity retire ment were not covered in the pilot study. It i. suggested that retirement studies be made concurrently with the previously suggested Workmen'. Ca.pensation .tudy; since the benefit syst. .s are directly related and adoption of certain features of the federal systea could even eliminate need for the special industrial disability retirement and special industrial death benefits under Public Employees' Retire.ent Syst... The scope of the study should include: 1. Analy.is of data problems by staff of retirement sy.tem and review of present administrative probl. .s . 2. Compilation of data concerning employer contribution rates required for disability retirement and similar special features of the benefit systems as coapared with employer costs of aor.al retir. ..n t. 3. Individual case analysis and costing with sufficient s ..p le to provide basis for identifying probl. .s and estimating cost changes from modifications which may be con.idered. 4. Comparison of California disability benefits and controls with other major jurisdictions as a means of identifying alternates for considera tion. 5. Preparation of modification suggestions and cost analysis as required. 6. Consultations and interim hearings to obtain proposals for consideration and views of interested parties. ·9· BACKGROUND ON CALIFORNIA STATE EMPLOYEE BENEFITS FOR WORK-RELATED DEATH OR DISABILITY California state employees (or their dependents) who suffer illness, injury, or death "arising out of and in the course of" state employment may receive benefits from four state-financed benefit sources. These may include: (1) Workmen's compensation, (2) Salary continuation payments, (3) The Public Employees' Retirement System (or other applicable special retirement system), and (4) Federal Old Age and Survivors Insurance. Benefits from all four sources are correlated under topic headings in Exhibit A of the Appendix. As detailed in Exhibit A, certain benefits may be provided concurrently from more than one benefit source. Several deSig nated classifications of employees, such as California Highway Patrol, receive special benefit considerations. Disability and death benefits from Federal Old Age and Survivors Insurance (O.A.S.I.) and from the various retirement systems are also provided in some cases on the same basis for non job related illnesses and disabilities. WORKMEN'S COMPENSATION Workmen's Compensation is the oldest of all social benefit systems. Legis lation on Workmen's Compensation in California was first enacted in 1911. In 1917, the Constitution was amended to its present form, and the Workmen's Compensation Insurance and Safety Act was enacted. This act is the basis for current sections of the Labor Code dealing with the subject of Workmen's Compensation. The basic purpose of the law is to provide protection for all employees incurring job injuries, for medical expenses, and for loss of earnings without the delays involved in adjudication through the courts. Workmen's Compensation provisions of the Labor Code are applicable to all public agencies as well as to private employers. However, the Labor Code does contain a substantial number of special provisions relating only to -10- state employees and certain special categories of local government workers. Appendix Exhibit B summarizes the various special provisions relating only to state employees along with code number references and dates of enactment. The la,,, provides five types of benefits which are generally applicable to public and private employers: Payment of all medical expenses. Temporary disability benefits--for a maximum of 240 weeks, computed on the basis of 61.75% of salary with maximum payment of $87.50 per week, seven-day waiting period unless hospitalized or absent from work in excess of 49 days. Permanent disability benefits--four weeks of disability payment for each one percent of permanent disability rating--maximum allowable $52.50 per week--disabilities rated at 70 percent or more include provision for lifetime pension with maximum ranging from $12.12 to $48.46 per week, depending on extent of disability rating. Death benefits for widows and dependents--$20,000; widow with minor child--$23,000. Burial expenses--$l,OOO. Special benefit provisions in the Labor Code applicable to certain state employees are detailed in Appendix Exhibit B. The most important special provisions are: In lieu of Workmen's Compensation temporary disability payments, full salary for up to one year on work injury leaves is required to be paid to law enforcement employees of California Highway Patrol, Bureau of Narcotics, and Bureau of Criminal Investigation and Identification. In lieu of Workmen's Compensation death benefits, widows and dependents of certain specified safety, forestry and prison employees receive "special industrial death benefits" provided by the Public Employees' Retirement System. Administration of Benefits Workmen's Compensation benefits for state employees are administered by the State Compensation Insurance Fund through a "claims adjustment service" or, at the election of some agencies, through a transfer of their liability by purchase of a Workmen's Compensation insurance policy from the State Fund. Appendix Exhibit C prepared by the State Fund summarizes the claims adjust ment and other services performed by the Fund under the master service agree ment and under the compensation insurance policies. -11- In the event of controversy over.eligibility for or amount of benefits, either an employee or an employer can seek a determination of the dispute by the Workmen's Compensation Appeals Board (WCAB). Cases are heard by referees, and may be appealed to the board for final determination with judicial review on questions of law. General Trends in Workmen's Comeensation Costs of Workmen's Compensation to all California employers increased sharply over the last 15 years. This has occurred despite the fact that work-related accidents and death rates have remained relatively stable. The rising cost has resulted from the following developments: (a) Increase in medical costs Because of increases in medical cost$, the medical fee schedule applicable to Workmen's Compensation cases as established from time to time by the Division of Industrial Accidents has been increased six times in the past 15 years: the most recent was in 1969. Further increases can be expected in keeping with the continued rise of all types of medical service costs. This trend will, of course, continue to increase Workmen's Compensa tion costs. (b) Increase in maximum benefit levels Maximum benefits for temporary and permanent disabilities have been increased four times and two times, respectively, since 1957: the last change was made effective January,!, 1969. The present maximums are $87.50/week for temporary disability and $52.50/week for permanent disability. Benefits are computed up to the maximum on the basis of 61.75 percent of weekly salary. Since disability benefits are related to average weekly wages, further increases by the State Legislature in maximum weekly payments are to be expected from time to time as average wage levels rise. Death benefits for widows and dependents have increased three times since 1957; the last change was effective in 1969. (c) Growth in eermanent eartial disability From 1953 to 1962, the number of permanent partial disability claims increased by 123%, while the total work force in California increased by only 41%. Incurred losses for permanent partial disability cases increased 200% during the same period.l/ The larger increase in incurred losses than in the increase-in claims is disproportionate to the change in benefit levels during the same period. Most authorities on compensation agree that this disproportionate increase in the number of permanent partial disability claims is the result of increased litigation and a more liberal inter pretation of medical conditions and diseases construed to be within the scope of the Compensation Act. ]j R:;portof Workmen's Compensation Study Commission, April 1965. -12- (d) Trends in litigation From 1956 to 1963, the number of applications for hearings filed with the WCAB as a percentage of the number of lost time accidents increased from 15% to 28%, or almost doubling in the rate of filing. Since 1963, the filing rate has been relatively stable at 27 to 28~%. (See Chart 1.) The great majority of these filings result in a "findings and award" or in a "compromise and release settlement" to the injured employee or dependents. (e) Broadening interpretation of work-related injuries The Workmen's Compensation Law does not strictly define the cause of an injury or disease. Generally, all injuries or diseases "arising out of and in the course of" employment are compensable, with the determination of employment cause of disability left to administrative and judicial interpretation. More liberal decisions of the courts, referees, and the WCAB on the employment causes of disabling medical conditions have been an important contributing factor in rising compensation costs. Charts 2 and 3 show the trend of heart disease and back cases from 1956 to 1967 for all California employers. It is noted that heart and back injury cases increased approxi mately 300% during the ten-year period. It is often difficult to determine whether employment is a significant cause in either of these two conditions. As shown on Appendix Exhibit B, the Labor Code has specifically defined heart disease and certain other conditions as presumptive, (i.e., presume to be work-related) for California Highway Patrol, fire fighting personnel of Division of Forestry, and a substantial number of other prison and safety personnel. Such conditions are therefore considered to be compensable, unless the State as the employer can clearly prove otherwise. -13- CHART 1 ORIGINRL NEW FILINGS RS PERCENT OF DISRBLING WORK INJURIES CALIFORNIA Percent 33~~~~~~~~~~~ 32 31 30 29 28 27 26 25 24 23 22 2.1 20 19 18 17 16 15 14 o~~~~~~~~~~~ 1956 51 58 59 &0 &1 62 63 64 65 66 67 68 69 70 Fiscal Year ending June 30 Prepared for Division of Industrial Aerid.nttr. bv Divi .. i .... .. I I "I.. . > !:.+ .. +lc+l~ .. .... .I D ______ L ® -14- CHART 2 ORIGINRL DECISIONS INVOLVING HERRT DISERSE INJURIES Annual CALIFORNIA Total 2000~~~~~~~~~~ 1900 1800 1700 1600 1500 1400 1300 12.00 1100 1000 900 800 700 600 500 400 300 200 100 o~~~~~~~~~~ 1956 51 58 59 60 61 62 63 64 65 66 61 68 69 10 Fiscal Year ending June 30 Prepared for Division of Industrial Accidents by Division of Labor Statistics and Research -15- CHART 3 ® ORIGINRL DECISIONS INVOLVING BRCK INJURIES ANNUAL TOTAL CALIFORNIA THOUSANDS 24 23 22 21 20 19 18 17 16 15 14 13 12 I 1 10 9 8 7 6._ 5 o~~~~~~~~~~~ 1956 57 58 59 60 61 62 63 64 65 66 61 68 69 10 Fis(ol Year ending June 30 Prepared for Division of Industrial Accidents by Division of Labor Statistics and Research -16- SALARY CONTINUATION BENEFITS Since 1935, enforcement personnel of the California Highway Patrol, in accordance with provisions of the Labor Code, receive full salary for up to one year in lieu of the lesser Workmen's Compensation temporary dis ability benefit. If the disability continues beyond one year, these employees receive the normal temporary disability payment from $87.50 per week maximum rate. In 1969, the same full salary in lieu of Workmen's Compensation benefit was extended to enforcement officers of the Bureau of Narcotics and of the Bureau of Criminal Identification and Investigation. General employees of the State are authorized to supplement temporary disability payments under Workmen's Compensation by use of accumulated sick leave or vacation leave or overtime credits to the extent necessary to bring total payments to equal full normal salary. Since Workmen's Compensation benefits and sick leave benefits are subject to certain income tax exclusions, employees who are absent on temporary disabilities in connection with work injuries often receive more net take-home pay than they would receive if they were working. RETIREMENT SYSTEM DISABILITY AND DEATH BENEFITS All state employees are covered under some type of retirement system providing benefits in the event of disability retirement and providing death benefits. The two major retirement systems are the Public Employees' Retirement System, covering general employees, safety employees, and a substantial number of non-academic personnel of the University of California, and the UniverSity of California Retirement System. Members of the Legislature are covered under the Legislators' Retirement System, and judges under the Judges' Retirement System. Except for California Highway Patrol and Forestry safety personnel, employees who have entered state employment after December 31, 1961 and are covered under Public Employees' Retirement System are also covered under Federal Old Age and Survivors Insurance. O.A.S.I. also provides certain disability and death benefits. Members of the University of California Retirement System, Legislators' Retirement System, and Judges' Retirement System are not covered under O.A.S.l. The various disability retirement benefits and death benefits are summarized on Exhibit A of the Appendix. It is significant to note that: (1) Certain specified state safety employees are entitled to special industrial disability retirement benefits (50% of salary) which are more generous than disability retirement not related to job injuries (usually one-third salary). All other employees -17- receive the same disability retirement allowance regardless of cause of disability. Employees entitled to special industrial disability benefits are: Since California Highway Patrol 1945 Fish and Game Wardens 1945 Forestry Firefighter 1947 Enforcement Officers--Narcotics 1951 Corrections Employees with Prisoner Custody Duties 1961 Enforcement Officers--Bureau of Criminal Identification and Investigation 1951 San Francisco Port--Harbor Police 1967 Permanent State Lifeguards 1968 Enforcement--State Police 1969 (2) Special industrial death benefits are also granted to dependent survivors of specified safety and prison employees (including those named above and certain other appointees designated in Appendix B). The special benefit is granted in lieu of Work men's Compensation death benefits or normal retirement death benefits. Payment rate is 50% of salary to widow and/or dependent children. If death caused by external violence, added benefits for widow and three children will raise total to 75% of salary. -18- STATE OF CALIFORNIA EMPLOYEE WORK DISABILITY BENEFITS COMPARED WITH FEDERAL EMPLOYEE BENEFITS In this section and supporting Appendix Exhibit A, comparisons are made between Federal and State of California benefits granted to employees incurring work disabilities or injuries. As a major objective of this study, particular attention has been focused on comparison of the State Workmen's Compensation Benefits System with the Federal Employees Compensation Act benefits. Costs of the two markedly different systems are compared. Com ments are made on differences in the payment rates, coverage principles and administrative structure of the two systems. It is apparent, particularly with reference to State of California practice, that many added compensations for work disabilities or industrial death are provided through retirement systems and the Federal Old Age and Survivors Insurance coverage. Disability and death benefits provided through the latter systems, therefore, have been summarized on Appendix Exhibit A in such a manner as to show the concurrent relationship of the various benefits pro vided, often Simultaneously from all sources. In most circumstances under the Federal system, civil Service Retirement Disability and Death Benefits are offered only as an alternate to Federal Employee Compensation Act benefits. These alternate benefits have also been summarized under the same topic headings to facilitate comparison with the State of California Benefit Systems. COMPARISON HIGHLIGHTS 1. Federal Employee Compensation Act (F.E.C.A.) benefits are computed at substantially higher rates than California Workmen's Compensation (W.C.) Benefits. Under federal law, compensation is based on 2/3 salary with no dependents and 3/4 with dependents. Maximum compensation is tied automatically to 3/4 of top step of salary classification GS-15. Current Federal maximum is $21,048 per year ($404.77 per week). Under California law, dependency is not a factor in computation of weekly benefits. The computations are based on 61.75% of actual wage with relatively low maximums presently fixed by the Legislature at $87.50/week for temporary disabilities and $52.50/week on permanent disability awards. 2. Compensation payments for permanent disabilities under federal law are generally made only when there is actual loss of wages due to the dis ability. The only exception to the "wage loss" principle is indemnity payments made for a limited number of "scheduled" disabilities involving loss of use of specific body members. These include only arms, legs and their appendages; hearing, sight, and facial disfigurement. Payments are made under California law on the basis of rating all types of dis abilities in terms of theoretical impairment of employability. Under the -19- California theory, therefore, indemnity payments are made even if there is no loss of wage, and, in case of retirement, are added to retirement benefits. 3. Under the federal system, substantial use is made of federal medical facilities for treatment of injured employees. Approved private doctors and medical facilities are utilized under a closed panel system where federal facilities are not available. Under the California system, use of closed medical panels are optional depending upon agency policy, and state facilities are utilized only to the extent of some first injury treatment. 4. Federal Employee Compensation Act benefits are fully administered by the Bureau of Employment Compensation including claims management, disability determinations, and hearings. Final appeals may be made to the employee's Compensation Appeals Board. Under the California system, claims manage ment is handled by contract or insurance through the State Compensation Insurance Fund. An independent body, the Workmen's Compensation Appeals Board, conducts all original pleadings and hearings concerning benefit disputes. 5. Under the California system, added compensations for work disabilities or industrial death are provided through salary continuation practices, retirement system, and Old Age and Survivors Insurance coverage. Under the Federal system, with the exception of "scheduled disabilities", benefits from the retirement system are offered only a& an alternative to F.E.C.A. benefits. 6. A substantial number of state safety and prison employees are specifically granted more liberal benefits than other state employees under both Workmen's Compensation and retirement systems. Also, as detailed on Exhibit B, special "presumptions" concerning compensability of heart and certain other disabilities are granted to specially designated state employee classifications. Federal benefit systems are uniformly applicable to all civilian employees. COST COMPARISONS Table 1 below compares average cost per employee of F.E.C.A. benefits with Workmen's Compensation benefit costs for California state employees. It is noted that the per capita cost average for the state total is approximately 2.6 times as high as for federal agencies. If employment and incurred losses of colleges and universities are excluded, the State average is 3.4 times as high as the overall federal average. Comparisons are also shown on Table 1 for five selected federal agencies which might be deemed to have reasonably similar work hazards to the similar type of state agencies shown. It is noted that state agencies' costs range from 36% to 295% higher than reasonably comparable federal agencies. -20- Table 1 COST PER EMPLOYEE OF F.E.C.A. BENEFITS COMPARED WITH STATE EMPLOYEES' WORKMEN'S COMPENSATION BENEFITS Federal (1968) State (1967-68) Cost Per Cost Per Employee Agency Employee All agencies $18.88 All agencies $49.24 State (excluding colleges and universities) 63.91 Internal Revenue 8.02 Motor Vehicles Department 16.58 Bureau of Reclamation 26.56 Water Resources 47.71 Forest Service 33.14 Division of Forestry 130.45 Department of Agriculture 21.01 Department of Agriculture 47.08 (excluding Forest service) Bureau of Prisons 46.60 Department of Corrections 91.12 General Services 25.14 General Services Department 34.16 Table 2 below shows a comparison of the average cost of non-fatal disabling injuries for a four-year period. The two columns show a comparison of federal cost with similar average cost for uninsured state agencies. It is noted that, for the year 1967, the state average case cost was almost double the federal average. In terms of trend, federal costs have been rising substantially during the period whereas the state costs have been relatively stable. In addition to data shown on the table, it is interesting to note that the average cost for fatal injury cases for the years 1968 and 1967 under the Federal system was $80,561 and $76,218 respectively for American nationals. State-wide average for fatal injuri~s under California Workmen's Compensation law is reported by SClF as $16,553. The markedly higher federal fatal injury cost is attributable to the generous provision made for continuing annuity to survivors whereas under the State system there is a fixed maximum benefit level of $20,000 for one dependent and $23,000 for more than one dependent. -21- Table 2 COMPARISON OF AVERAGE COST OF NON-FATAL DISABLING INJURY - FEDERAL VS. STATE State Federal (Uninsured Agencies) 1964 $590 $1450 1965 650 1480 1966 738 1450 1967 763 1491 REASONS FOR COST DIFFERENTIAL As shown by data presented in previous sections, the Federal Employee Compensation Act System has substantially lower cost experience than the California Workmen's Compensation System as applied to state employees. This is in apparent contradiction to the fact that federal computation factors and maximum payment rates for temporary and permanent disabilities are sub stantially higher. When the differences in the benefit systems are analyzed, however, there appear to be logical explanations for the cost differential. The significant factors include: (1) Under the Federal system, no permanent disability payments are made for the many expensive types of disabilities involving backs and internal organs unless there is actual loss of wages. During the year 1967-68, over 78.7% of state disabling injury incurred losses involved parts of the body which would not result in Permanent Disability Compensation benefits under the federal system unless there was wage loss resulting from the disability. A substantial part of state costs for these types of cases undoubtedly involve permanent disability benefits paid to employees who returned to work in their former jobs without experiencing any loss of wages. It is believed that this is a major factor in accounting for the lower average cost of disabling injury cases under the federal system as compared with the state system. (2) The disabling injury frequency rate for federal service is sub stantially lower than the injury rate for state service (excluding colleges and universities). The Federal frequency rate for the calendar year 1968, computed in terms of number of disabling injuries per million man hours worked, was 6.9. For the State service (excluding colleges and universities), the frequency rate for 1967-68 fiscal year was 18.39. -22- (3) Under the state a substantial number of safety and syste~, correctional employees are granted a special presumption that heart conditions are deemed to be occupational injuries. As shown in the next section, heart cases have a high average cost. It is believed that these cases are much more frequently compensated under the state system than in the federal service because of the special presumption. (4) Under the Federal system, substantial use is made of government facilities for medical treatment. Charges made for such in-house treatment probably do not reflect the full cost involved. Military hospitals, for example, are permitted to send in an annual voucher charge certifying that so many clinic visits were provided without itemization by name. Charges for such visits range from 50¢ to $1.00. Under the California system, medical expenses constitute approximately 35% of total Workmen's Compensa tion expense. (5) Some seriously industrially injured employees under the Federal system choose disability retirement benefits instead of Federal Compensation System benefits. The employee is not permitted to receive benefits simultaneously under both systems as is the case in California service. -23- CALIFORNIA STATE WORK DISABILITY COSTS AND LOSS CONTROL PROGRAMS As pointed out in previous sections, California state employees receive benefits for work disabilities from a number of sources in addition to Workmen's Compensation. In this chapter the var"ious benefit costs are analyzed and present management programs to control losses are briefly reviewed. Section A summarizes total work disability costs from the com bination of benefit sources to the extent that the expense can be specifi cally identified for a fiscal year. Section B analyzes in detail Workmen's Compensation cost and loss trends of the past ten years. Section C estimates other work disability costs such as salary payments on injury leaves and the expense of retirement systems' special industrial disability and industrial death benefits. Section D briefly reviews the State's safety record and other loss control programs. A. TOTAL WORK DISABILITY EXPENSE Table 3 below summarizes a substantial portion of the State's work disability expense, utilizing data from the most recent complete year available. Complete data is presented for Workmen's Compensation expense of all state agencies including colleges and universities based on the year 1967-68. For the same year, salary continuation costs are shown for operations other than Univer- sity of California. The salary continuation benefits include sick and vacation leave utilized to supplement Workmen's Compensation payments for temporary work disabilities as well as full salary paid in lieu of Workmen's Compensation to State Highway Patrol, state lifeguard service, and certain enforcement personnel of the Justice Department. Data are also shown for cost of funding special industrial disability retirements and special indus trial death benefits which are granted to certain safety personnel covered under the Public Employees' Retirement System. Separate data could not be obtained on retirement system death and disability benefit costs paid to miscellaneous employees where the disability is caused by job injuries. The same benefits are paid to work disability cases as are paid for non-industrially caused cases. The specifically identified cost of $20,229,000 probably would be increased by several million dollars of additional expense if costs of early disability retirements caused primarily by work injuries to miscellaneous employees could be identified and if additions were made for injury leave supplements to Workmen's Compensation benefits granted to university employees. -24- Table 3 TOTAL ANNUAL COST OF CALIFORNIA STATE EMPLOYEE WORK DISABILITIES BASED ON 1967-68 Workmen's Compensation Under Service Agreement (Incurred Losses plus Service Fee) $ 7,526,553 Insured (Premium Less Dividends) 1,813,542 Sub-total $ 9,340,095 Salary Continuation Benefits 6,851,760 (Excluding University of California) Special Industrial Disability and Death Benefits 4,037,638 (Employer Reserves required in excess of amount for normal retirement and death benefits)_ ____ Total - Identified Cost $20,229,493 B. WORKMEN'S COMPENSATION COST AND LOSS TRENDS Workmen's Compensation benefits for most state employees involved in govern mental operations and for all California State College system personnel are administered by the State Compensation Insurance Fund (SCIF) under a master service agreement. Benefits are initially paid by SCIF with cost (plus service charge) reimbursed through invoices billed to the various employing depart ments. Under this program, charges to any given fiscal year budget include payments on liabilities arising from accident cases occurring in many prior periods as well as actual cash disbursements required on current claims. Since liabilities under this program are not insured, it has been commonly referred to as the "self-insurance" program. SClF estimates the total prob able liabilities for each accident case and provides full statistical data on "incurred" losses. These data have been utilized in this study in order to make meaningful cost comparisons and determinations of loss trends for both insured and "self-insured" operations. Benefits for employees of University of California, Departments of Water Resources and Motor Vehicles, and several smaller offices are provided through Workmen's Compensation insurance policies purchased from SClF. Insurance coverage is also purchased to cover a number of state revolving fund or "pro prietory" types of operations. Current insurance policies are listed in Appendix Exhibit D along with the history of policy costs on major policies and for combined data on all insured risks of the State. -25- Total Workmen's Compensation Costs Table 4 shows the combined total cost of workmen's compensation for all state services including colleges and universities under both "self-insurance" and insured programs. Column headed "payment basis" includes net insurance ex~nse (premium less dividends) and cash payments (benefits plus service cl~ge) for each fiscal year under the self-insurance program. The column headed "incurred basis" shows "incurred" liabilities of each year including service charge under the self-insurance program plus net insurance expense. It is noted that total state costs increased 253% to 254% in the ten-year period. During the same period, the number of state employees increased approximately 107% and gross payrolls increased by 182%. Table 4 CALIFORNIA STATE WORKMEN'S COMPENSATION COST (1957-58 and 1964-65 to 1967-68) Payment Incurred Year --Ba-si-s - --B-a-si-s - 1957-58 $2,383,134 $2,644,921 1964-65 5,854,435 7,565,998 1965-66 6,410,902 7,905,188 1966-67 7,935,195 9,114,248 1967-68 8,447,229 9,340,095 Ten Year Increase 6,064,095 6,695,174 % Increase 254% 253% Table 5 summarizes the cost to the State of administration of workmen's compen sation benefits by State Compensation Insurance Fund under both the self insured and insured programs. In order to compare the administrative cost of the two types of programs, a computation is shown of the net insurance retentions as compared with incurred losses under the insurance program. The amount retained by the insurance carrier is computed on the basis of gross premium less dividends less incurred loss estimate. If the average retention percentage of 16.6% for the four-year period is further adjusted in consideration of the fact that State Compensation Insurance Fund pays a gross premium tax to the State of California of 2.35%, the net retention figure would be 12.8%. It is further noted that the insurance retention for the four years shown was substantially reduced by the fact that there was very adverse loss experience on policies of Department of Water Resources and -26- University of California for the years 1967-68 and 1966-67. Based on long term normal premium/incurred loss ratios and cost experience of the State Fund, it would be expected that carrier retentions would be approximately 22.7 to 24.7% of incurred losses. Service agreement charges on the self-insurance program are based on 12\% of benefits paid for all departments except California Highway Patrol. California Highway Patrol service charge is based on 35% of medical payments only. The overall average of 12.7% service charge in ratio to benefits paid for the four years shown appropriately might be further adjusted by considering the fact that the State Fund is carrying currently unreimbursed payments in the neighborhood of $700,000. At the current yield on i.nvestments of short-term funds, this lag in reimbursement may be estimated to currently cost the State Fund approximately $45,000 per year. With the latter adjustment, the effec tive service charge rate might be estimated to be 12.1% of benefit payments. According to the recent check made by the State Insurance Officer, it would cost between 7 and 12% of losses to purchase claims adjusting service from a private firm. Table 5 ADMINISTRATIVE EXPENSE CHARGES PAID BY STATE TO STATE COMPENSATION INSURANCE FUND Service Insurance Agreement -R-et-en-t-io-n _Ch~!:~ Total 1957-58 $ 24,194 $ 232,781 $ 256,975 1964-65 357,306 537,750 895,056 1965-66 187,543 569,873 757,416 1966-67 369,114 716,468 1,085,582 1967-68 - 116,171 768,505 652,334 1968-69 N.A. 856,793 N.A. % of Benefits 16.6% 12.7% (4 year average-- 1964-65 to 1967-68) Incurred Loss Trends Table 6 below shows a ten-year comparison of total state incurred losses and injuries reported. Comparison also is made of incurred losses per hundred dollars payroll, per man year of employment, and average cost per injury reported. Marked percentages of increase are shown with reference to all analysis factors. However, it is of interest to note that incurred losses -27- per hundred dollars of payroll of $0.41 in 1957-58 were lower than a similar benefit/payroll ratio of $0.679 reported by Workmen's Compensation Study Com mission for the 1957 policy year on a combination of all private and public insured risks. The latter ratio had risen by 45% to $0.984 in only five years to 1962 when the Commission statistic series ends. The latter increase compares with a ten-year rise of 44% in state loss ratio per hundred dollars payroll. The apparently favorable state overall cost/payroll ratio is attributable to the typically lower loss levels and accident rates of colleges, universities, and large state office operations. Table 6 TEN-YEAR COMPARISON OF CALIFORNIA STATE WORKMEN'S COMPENSATION INJURIES REPORTED AND INCURRED LOSSES % 1957-58 1967-68 Increase Injuries Reported 11,289 16,673 48% Incurred Losses Uninsured $2,250,607 $7,526,553 Insured 370,120 1,929,713 Total $2,620,727 $9,456,266 261% Incurred Losses Per: $100 Payroll $ 0.41 $ 0.59 44% Employee 21.38 49.24 130% Injury Reported 233.00 567.00 143% -28- Losses Departments and Agencies ~ Table 7 provides a ten-year comparison of losses and reported injuries for state colleges and universities. If losses are analyzed per hundred dollars payroll and per employee, state college system losses, while rising more rapidly than University of California, are still at comparatively lower levels on all indexes. Table 7 WORKMEN'S COMPENSATION INCURRED LOSSES AND REPORTED INJURIES --UNIVERSITIES AND COLLEGES (1957-58 AND 1967-68) % 1957-58 1967-68 Increase Injuries Reported University of California 2,055 3,407 66 State Colleges _ 285. 1,094 284 Total 2,340 4,501 92 Incurred Losses University of California $311,242 $1,321,005 324 State Colleges 55,238 401 642 629 2 Total $366,480 $1,722,647 572 State Colleges Incurred Losses per $100 Payroll $ 0.14 $ 0.21 50 per Employee 8.60 20.13 134 per Injury Report 194.00 367.00 89 University of California Incurred Losses per $100 Payroll $ 0.23 $ 0.28 22 per Employee 13.65 25.90 90 per Injury Reported 152.00 382.00 151 Table 8 analyzes the Workmen's Compensation losses for the State's governmental operations excluding colleges and universities. Ten-year comparisons between fiscal years 1957-58 and 1967-68 are shown for incurred losses per hundred dollars payroll, per employee, and per injury reported. Details concerning claims filed and incurred losses on which the indexes have been computed are -29- shown on detailed Table F-1 of the Appendix. Separate indexes are also shown on Table 8 for the five major agencies and departments which account for over 74% of incurred losses for governmental services. It is noted that four of the five high loss agencies--Departments of Corrections, Mental Hygiene, Highway Patrol and Division of Forestry--show high incurred losses with reference to all measurement indexes. The California Highway Patrol shows the highest losses per hundred dollars of payroll and per man year of employment. The Department of Corrections shows the most adverse trend in cost in the ten-year period. Appendix Detail Tab1e.F-1 also indicates par ticularly adverse loss trends in several smaller departments and offices such as Department of Justice. Table 8 ANALYSIS OF INCURRED LOSSES--GOVERNMENTAL SERVICES (1957-58 COMPARED WITH 1968-69) 1957-58 1967-68 % Increase All Governmental Service (Excluding Colleges and Universities) per $100 Payroll $ 0.55 $ 0.82 49% per Employee 24.14 63.91 165% per Injury Reported 251.00 635.00 153% High Loss Agencies Corrections per $100 Payroll $ 0.13 $ 1. 016 682% per Employee 7.35 90.71 1,134% per Injury Reported 148.00 1,645.00 1,011% Mental Hygiene per $100 Payroll 1.15 1.47 28% per Employee 49.90 114.49 130% per Injury Reported 265.00 724.00 173% Forestry per $100 Payroll 1.36 1.64 21% per Employee 67.55 130.46 93% per Injury Reported 127.00 347.00 173% California Highway Patrol per $100 Payroll 1. 73 2.74 64% per Employee 100.50 225.26 124% per Injury Reported 348.00 1,113.00 220% Public Works--Div. of Highways per $100 Payroll 0.33 .54 64% per Employee 32.70 58.60 64% per Injury Reported 296.00 507.00 71'7.. -30- Losses b~ TlEe of Disability Case In the background discussion on pages 11 and 12, attention was directed to the fact that there have been generally increasingly liberal decisions of courts, referees, and the WCAB concerning the employment causes of disabling conditions which have tended to increase costs of Workmen's Compensation to all employers. It was also noted that special provisions of the Labor Code define heart disease and certain other conditions as presumptive (i.e., presumed to be work-related) for California Highway Patrol, fire fighting personnel of Division of Forestry, and a number of other prison and safety personnel classifications. Utilizing its computer facilities, the State Compensation Insurance Fund made a series of special analyses of loss pa)1lllents and reserves for both insured and self-insured cases for a four-year period from fiscal year 1964-65 to 1967-68. Total incurred losses from disabling injuries causing loss of time of one or more days beyond day of injury for the period were $29,700,000 and involved a total of 17,000 claims. The high lights of this study are summarized in detailed tables F-2 and F-3 of the Appendix. It is particularly significant to note that: (1) Disabling injuries accounted for approximately 98% of total incurred losses for the four-year period from both insured and self-insured programs. (2) Heart cases accounted for 14.3% of losses and back cases for 31.6% of losses. (3) The average cost for heart cases for the four-year period based on number of claims filed was $8,400. This cost had risen from slightly over $7.000 to $10,500 per claim in the four-year period of time. Average cosm per claim on back cases were also significantly higher than for other injuries. (4) Approximately 79% of total disabling injury losses involved parts of the body which would not result in permanent disability payments under the federal system unless actual wage loss or loss in earning capacity had occurred. C. OTHER WORK-RELATED DISABILITY COSTS In addition to Workmen's Compensation expense, the State has other significant costs associated with work-related disabilities. No attempt has been made to estimate the many indirect costs of industrial injuries which are substantial. It is also not possible to identify as a separate cost the portion of Federal Old Age and Security coverage expense which can be attributed to the disability benefit provisions of federal law for which some 75% of state miscellaneous employees are eligible. Added expense which can be estimated with reasonable accuracy includes: (1) Salary continuation benefits paid to employees in addition to or in lieu of the usual Workmen's Compensation temporary weekly disability benefi ts. -31- (2) Special industrial disability retirement or industrial death benefits provided under the Public Employees/Retirement System. Under Labor Code Section 4800, in lieu of Workmen's Compensation temporary disability payments, full salary for up to one year on work injury leaves is required to be paid to law enforcement employees of the Highway Patrol, Bureau of Narcotic Enforcement, and Bureau of Criminal Identification and Investigation. Other state employees are authorized to supplement temporary disability payments by use of accumulated sick or vacation leave or overtime credits to the extent necessary to bring total payments to equal full normal salary. The total cost of these wage continuation benefits are estimated by the Personnel Board to be $6,851,760 for the year 1967-68. The estimate includes state college employees but does not include University of California. Table No. 9 shows the average number of work days lost per employee for the year 1967-68 compared with the year 1958. While it is noted that the total number of days lost has increased from 78,327 to 86,115 for governmental services, this represents an actual drop in the average number of lost-time days per employee from .84 to .71. Similar comparisons on average lost-time days are shown for the five agencies accounting for the greatest proportion of state Workmen's Compensation losses. The table indicates some improvement in the record of the Highway Patrol. However, there has to be an increase in lost-time from industrial injuries per employee in the Departments of Corrections and Mental Hygiene. Table 9 AVERAGE NUMBER OF WORK DAYS LOST PER EMPLOYEE FROM INDUSTRIAL INJURIES (1967-68 COMPARED WITH 1958) 1958 1967-68 All Governmental Agencies .84 .71 (Excluding Colleges and Universities) High Loss Agencies Corrections .21 .43 Mental Hygiene 1. 60 1. 94 Forestry N.A. 1. 39 California Highway Patrol 3.15 2.97 Public Works--HigtMays N.A. .30 Retirement System Disability and Death Benefits As listed on page 9 of this report and detailed in Appendix Exhibit B, certain specified state safety and prison employees are entitled to special industrial disability retirement and death benefits. -32- Table 10 shows the number of state employee industrial disability retirements granted by year for a ten-year period from 1958-59 to 1968-69. It is believed significant to note that there has been a substantial increase in the number of such retirements since 1961. Prior to 1961, reduction in retirement benefit was made if the total of benefit and earnings from gainful occupation exceeded the current salary of the position from which the employee had retired. In 1961 this earnings limitation provision, which is still applicable under normal disability retirement conditions, was removed. According to a special staff study on this problem, which is reproduced in Exhibit E-l the incident of disability retirements under the industrial provision has doubled in ratio to number of covered employees eligible since the year 1961. It is also interesting to note that there are more industrial disability retirements than service retirements among safety employees eligible for such special disability retirement benefits. Table 10 STATE EMPLOYEE INDUSTRIAL DISABILITY RETIREMENTS (1958 to 1969) Year Retirements Year Retirements 1958-59 14 1963-64 42 1959-60 14 1964-65 74 1960-61 25 1965-66 57 1961-62 36 1966-67 82 1962-63 33 1967-68 98 1968-69 62 In order to determine the cost of special industrial disability retirements and industrial death benefits, a special analysis was made of all such bene fits granted in the fiscal year 1966-67. Als~ in order to determine the amount of "overlap" of benefits granted under Workmen's Compensation, a special review of all of the 1966-67 cases was made to determine the amounts of Workmen's Compensation awards also given to the retired employees. Table 11 shows an analysis of the industrial disability and industrial death benefits by cause of disability. The table also shows the reserves established to finance the awarded benefits from employer contribution and employee contribution. In estimating work disability costs, we have attributed such special costs to the amount of matching contribution that would be in excess of a normal 60-40 ratio for a normal retirement benefit. It is noted that over half the industrial death benefit expense involved heart deaths. Of the industrial disability retirements, 58 out of 75 involve such disabilities as heart disease, mental conditions, ulcers, and back cases. In terms of cost, the latter type cases represented 74% of excess of normal expense. Average employer "excess" cost for retirements was $48,827 and for death cases $62,606. -33- Table 11 SPECIAL INDUSTRIAL DISABILITY RETIREMENT AND DEATH BENEFITS- GRANTED 7/1/66 to 6/30/67 Employer Cost Reserves Established (in excess of Employee Employer normal 60/40 No. Contribution Contribution share) Industrial Disability Retirements Heart 18 $ 124,868 $ 851,524 $ 664,222 Back 32 266,559 2,012,548 1,612,710 Mental 4 26,082 215,706 176,583 Ulcers 4 25,636 290,419 251,965 Other 17 112,321 1,125,002 956,521 Total 75 $ 555,466 $4,495,199 $3,662,001 Industrial Death Benefits to Survivors Heart Deaths 4 $ 41,626 $ 258,884 $ 196,445 Accidents 2 7,187 189,972 179,192 Total 6 $ 48,813 $ 448,856 $ 375,637 Grand Total 8I $ 604,279 $4,944,055 $4,037,638 A special study was made by State Compensation Insurance Fund of all 1966-67 retirement cases to determine the amounts of Workmen's Compensation disability awards and settlements and to indicate the percentage of disability rating. The results of this portion of the study are summarized on Table 12. It is of significance to note that 21 out of 75 retirements involve ratings below 25% or it was not possible to find a specific rating record on the disability. Table 12 SPECIAL INDUSTRIAL DISABILITY RETIREMENTS BY % OF DISABILITY- WORKMEN'S COMPENSATION COST AND EMPLOYER COST IN EXCESS OF NORMAL W.C. Disability No. Workmen's Retirement Cost Rating % Case Compo Award (Excess normal 60/40) No. Rating Record 7 $ 232,754 9-25% Rating 14 $ 49,565 576,191 25% to 70% Rating 46 406,000 2,530,204 Over 70% 8 140 064* 322 762 2 2 Total 75 $ 595,629 $3,662,001 * Including value of life pension from Workmen's Compensation. -34- D. SAFETY, MEDICAL, AND OTHER LOSS CONTROL PROGRAMS In previous discussion, a series of cost analysis tables with explanatory comments have been presented to define the magnitude of the State's work disability expense problem in terms of all benefit systems. Sufficient data were available to specifically identify cost trends for the most widely applicable of the benefit programs, Workmen's Compensation. In this section, the current status of programs designed to control expense of work disabilities is briefly revie~ed. This phase of the pilot study has been of limited scope. The information presented is based on available published reports, review of administrative manuals and regulations, and a series of personal interviews. Discussions concerning loss control efforts were held with safety officers of seven major state departments; with Personnel Board supervisors of training, safety and medical programs; and with the Program Manager of "The Governor's Program to Reduce Occupational Injuries". General Program Management Since 1949 when Section 19261 was added to the Government Code, the State Personnel Board has had general authority to develop comprehensive employee health and safety programs for the state service. In 1952, the position of Safety Coordinator was established in the Training Division of the State Personnel Board. With very limited staff resources, the central safety program has been confined to compiling and publishing quarterly and annual industrial injury and motor vehicle accident statistics for the general state operations; offering limited technical advice and assistance to departmental safety programs; and developing some special safety training programs such as the Driver Safety Training Program. The Safety Section has also regularly published reports summarizing Workmen's Compensation incurred losses by agency and organization unit as compiled from claims reports prepared by the State Compensation Insurance Fund. The Medical Officer of the State Personnel Board has established medical standards to be applied in examining applicants for some jobs requiring unusual physical stress such as Highway Patrolmen, Forestry Firefighters, State Lifeguards. The ~~dical Officer also provides other professional medical advisory service for the Personnel Board and state departments with reference to any types of personnel actions relating to employee health including disabilities caused by work injuries. The State Personnel Board has established a special program to facilitate rehabilitation of disabled state employees headed by a vocational rehabilitation specialist. On June 6, 1968, the State Personnel Board held a special hearing concerning Workmen's Compensation costs and safety programs. Comprehensive presentations were made at the hearing by representatives of six major state agencies and by the State Compensation Insurance Fund. During the subsequent fiscal year 1968-69, special study was given the many problems involved in improving state safety and other loss control efforts. The key determination made as a -35- result of the hearing and special studies was the need for firmly estab lishing safety and loss control as a "top management" program with policies, organizational responsibilities, goals, and follow-up under direct sponsor ship of the Governor. Such a program was officially announced by Governor Reagan on February 2, 1970. "The Governor's Program to Reduce Occupational Injuries" is reproduced in Appendix E. The program sets a goal for reducing disability injury frequency 10% each year for the next three year •. A program manager has been provided by the State Personnel Board from the staff uf SCIF under a cost reimbursement contract arrangement. Safety Program and Accident Statistics Table 13 shows a ten-year comparison of disabling injury frequency rates per million man hours worked for total state governmental services and for the five departments and divisions which account for 74% of general government Workmen's Compensation incurred losses. Appendix Charts F-l to F-9 inclusive present in detail the accident frequency trends. Table 13 TEN-YEAR COMPARISON OF ACCIDENT FREQUENCY RATES (DISABLING INJURIES PER MILLION MAN HOURS) 1957 1967-68 All Governmental Agencies 18.92 18.39 (Excluding Universities and Colleges) High Loss Agencies Corrections 6.71 14.81 Mental Hygiene 48.00 40.41 Forestry 13.70 32.61 California Highway Patrol 49.40 47.30 Public Works--Highways 16.11 8.68 In general, the tables and charts indicate little progress has been made during the study period in reducing the accident frequency rate for the total state service. The year 1958 appears to have been the low point in the total index followed by a marked rise in 1960 and 1961 to the 22-23 level and then stabilizing at an 18+ level from 1963 forward. The Public Works Department--Division of Highways, during the entire period studied, has achieved impressive results in reducing accident frequency rates almost every year. As shown in previous Table 8, workmen's costs also have risen less rapidly and are presently below the average for the state service per employee or per payroll dollar. The department has had a comprehensive safety program established as an integral part of the management and super visory process. Full-time technical safety engineering staff service has been provided both at central management level and in each of the field operating divisions. -36- Both the California Highway Patrol and Department of Mental Hygiene show moderate improvement in safety record during the period. 'In 1962 a compre hensive study waS made of safety and other work disability loss control problems of the Department of Mental Hygiene by the Audits Division of the Department of Finance. In accordance with the study recommendations a safety program was established with professional safety engineering staff guidance. Currently there are two professional employees in headquarters staff and full-time safety officers at three of the sixteen hospitals operated by the department. Marked reduction in frequency rate has been made from a high in 1961 to a low of 32+ in 1964. Since 1964 accident rates have ranged from 35 to 40. Costs per payroll dollar and per employee (Table 8) have continued to be significantly higher than state average but have risen less rapidly than the State average. The California Highway Patrol currently has an active safety program with continuous management support and participation. Professional technical staff has been provided to assist in program developolent. Department data processine facilities are currently being utilized to analyze accident problems and provide comprehensive information on results achieved. Favorable trends are evident since 1962 and 1963 in reducing the high frequency rate. The Departnlent of Corrections and Division of Forestry industrial accident trends have been adverse during the study period. Of particular concern are both accident and cost trends of the Department of Corrections. The department currently has no full-time professional safety engineering staff to assist in developing safety programs. The Department of Conservation (including Division of Forestry) reorganized its safety program in 1965 with employment of a full-time safety engineer. The frequency rate of 32.6 for 1967-68 for the Division of Forestry represented substantial improvement from the 40 to 50 level of the five prior years. The rate is still signifi cantly higher than ten years ago. Data are not publi.hed on accident frequency rate. of Univer.ity of California or California State College Iy.tem. Thele organizations do not maintain central lafety engineering staff services to analyze accident problem., to develop lafety and other lOll control programs, and to facilitate implementation of programs by operating personnel at the varioul collegel and univer.itiel. Under the master service agreement covering "self-insured" state operations, responsibility of the State Compensation Insurance Fund has been limited to claims administration and legal defense. However, the Fund has voluntarily made available to state departments on a request basis the use of Safety Training materials and other safety advisory services. The departments with active safety programs have utilized SClF resources. However, it is apparent that many state agencies have failed to use SCIF facilities and services on any consistent basis. With reference to motor vehicle safety, considerable progress is indicated by Appendix Chart F-9. The accident rate for the total state fleet has dropped from approximately 17 accidents per million miles traveled in 1958 to a 11.3 rate in 1968-69. Particular emphasis has been given to this program by the State Personnel Board Safety Coordinator. Program has involved Defensive Driver Training programs made available to all agencies and issuance of a driver training manual. -37- Medical Aspects of Loss Control Attention has been directed in several previous sections to the broadened interpretation of types of employee disabilities now considered compensible under Workmen's Compensation. It was also noted that special presumptions with reference to heart problems have been granted to a substantial number of state safety and prison personnel. Many studies of Workmen's Compensation costs indicate that degenerate diseases and a variety of pre-existing health problems are the basic cause of a major portion of Workmen's Compensation expense. Actually, the severity of the original job injury may be a minor element in determining the ultimate cost of a claim. This is particularly evident with respect to back injuries. Back and heart claims analyzed in Appendix Table F-2 accounted for 45.9% of disabling injury incurred losses during the four-year period. It is probable that 60 to 70% of state loaaee relate primarily to degenerative diseases and pre-existing health problems. Pre-employment physical examinations have been required for only a limited number of state positions. In 1967-68 departments first were generally authorized to pay the expense of such examinations when deemed desirable. The most comprehensive examination is prescribed by the California Highway Patrol which now requires X ray of lower back and electrocardiogram as well as a general physical examination. No state department presently requires periodic physical examinations and there are no current occupational health programs specifically directed to reduction of cardio-vascular or other degenerative disease problems. An important part of a modern loss control program is to provide for the best possible first treatment of industrial injuries and competent follow-up medical service. With assistance of SCIF, most state departments have now designated doctors and medical facilities to be used for first medical treatment of injured employees. Subsequent referrals to specialists when required are handled by SCIF as a normal part of the claims management process. Although the State has the most extensive medical resources of any single organization in California, relatively little use has been made of these resources in the Workmen's Compensation program. Management Information Programs A management information system to provide regular and timely reports on accident and loss trends to all levels of management and supervisory personnel is an important part of an effective loss control program. Such programs have been developed particularly with respect to accident statistics in the Depart ments of Public Works, Water Resources, and California Highway Patrol. The general reporting system under the Personnel Board has been limited to general government operations,with data on University of California and California State College systems omitted. A well-coordinated information system has not been developed to serve the needs of supervisory personnel throughout the state service. -38- Claims Adjustment and Legal Defense State Compensation Insurance Fund is responsible for Workmen's Compensation claims adjustment and legal defense. The State Administrative Manual requires all departments to file reports on job injuries within five days with SCIF. A November 1965 audit of state cases in five offices of SClF showed the average filing time was 18 days. Whether this delay generally has been corrected is not known,although it was noted several departments presently require internal processing and approval procedures prior to release of injury reports which could cause unnecessary delays. The extent to which departments follow progress of employees off work on injuries and maintain liaison with State Fund representatives to facilitate claims management and rehabilitation of injured workers varies depending on policies and program of the concerned department. Whether the State as a whole or particular departments have higher than average number of claims settled through litigation procedures is not known since SClF does not compile such records by individual policy or service account. -39- APPENDIX -IND-EX Exhibit A Work Disability Benefit Comparisons - Federal--State of California A-I Exhibit B Workmen's Compensation Special Benefits and Presumption. for State Employees A-6 Exhibit C How State Agencies Meet Their Workmen's Compensation Obligations A-ll Exhibit D Insurance Coverage Data: A-l8 Currently Insured State Agenciel Recapitulation of Inlured State Agencies Policy History Exhibit E Staff Memoranda E-l "Should the Earnings Telt be Reltored to Apply to Allowances Payable Under Prospective Industrial Disability Retirements?"--by Public Employees' Retirement System A-22 E-2 Governor's Program to Reduce Occupational Injuries A-28 Exhibit F Detail Tables and Supporting Data F-l Workmen's Compenlation Claim. and Incurred LOlles (1957-58 and 1967-68) A-37 F-2 Workmen's Compenlation Di.abling Injurie. - Number, Incurred Losses, Average Cost per Case A-38 F-3 Summary of Retirements for Service, Di.ability and Industrial Deathl (1963-64 to 1967-68) A-40 F-4 Department of Corrections Employee Safety Program- Frequency Rate of Disabling Injurie. A-4l F-5 Frequency Rates of Disabling Employee Injuries- Department of Mental Hygiene A-42 F-6 Department of Con.ervation--Di.abling Occupa tional Injuries A-43 F-7 Frequency Rates of Di.abling Employee Injurie.- Depare.ent of California Highway Patrol A-44 F-8 Division of Highway.--Personal Injury Accident Frequency A-45 F-9 Statewide Total--California State Vehicle Accidents A-46 APPENDIX EXHIBIT A WORK DISABILITY BENEFIT COMPARISONS FEDERAL--STATE OF CALIFORNIA I. TEMPORARY DISABILITIES - ABSENCE FROM WORK) (WI~H Federal Employees All Medical Expenses Use of Sick and Vacation Leave Time for Full Salary or Federal Employees Compensation Act (F.E.C.A.) Benefits of 2/3 salary (if single) or 75% (with dependents. Maximum - $21,048 per year (404.77/week). Three-day waiting period unless disability exceeds 21 days or results in permanent disability. State Employees All Medical Expenses Workmen's Compensation (W.C.) Benefits which may be supplemented up to full salary by use of sick and vacation leave. W.C. benefits of 61.65% of salary with maximum - $87.50 per week for 240 weeks. Seven-day waiting period unless hospitalized or off more than 49 days. California Highway Patrol and Peace Officers of Bureau of Narcotics and Bureau of Criminal Identification and Investigation receive full salary up to one year in lieu of W.C. benefits. Thereafter, regular W.C. benefits as above which then may be supplemented with sick and vacation leave. II. PARTIAL PERMANENT DISABILITIES - (WITH RETURN TO WORK WITH JURISDICTION) Federal Employees Medical Expenses and Job Earnings F.E.C.A. Award if "scheduled" disability. F.E.C.A. payments on other disabilities only if wage loss. A-l APPENDIX EXHIBIT A WORK DISABILITY BENEFIT COMPARISONS FEDERAL--STATE OF CALIFORNIA (Cont.) II. PARTIAL PERMANENT DISABILITIES - (WITH RETURN TO WORK WITH JURISDICTION) (Cont.) Scheduled Disabilities Award for permanent total or partial loss of use of anatomical members and functions as specified in F.E.C.A. Act schedule -- arms, legs and their appendages; sight; hearing; and disfigurement only. Other Disabilities No compensation for other disabilities (such as back, hernia, circulatory system, nervous system, internal organs) determined to be job-caused unless disability causes reduction in earnings. F.E.C.A. benefits then paid of 2/3 wage loss; 3/4 if dependents. State Employees Medical Expenses and Job Earnings Workmen's Compensation disability award Workmen's Compensation permanent disability award - All types of job-related disabilities subject to rating. Amount of award rating based on type and extent of disability adjusted for age and occupa~ tion. Four weeks payment per one percent rating. 61.75% salary with maximum $52.50 per week. If employee returns to lower-paid positions because of disability, no specific compensation for wage loss (except to extent may be covered by disability award described above). III. PERMANENT DISABILITY ~ (NOT ABLE TO RETURN TO WORK WITH ORIGINAL EMPLOYER) Federal Employees Medical Expenses (F.E.C.A.) F.E.C.A. Compensation benefits or Disability Retirement (and Scheduled F.E.C.A. award, i~applicable - See Section III above) F.E.C.A. Compensation Benefit Totally Disabled (No possible gainful employment) - Life time payment 2/3 salary, 3/4 if dependents - Present maximum $404. 77/week. Automatic cost of living adjustments. Disabled with some earning capacity - 2/3 loss of earning capacity, 3/4 if dependents. A-2 APPENDIX EXHIBIT A WORK DISABILITY BENEFIT COMPARISONS FEDERAL--STATE OF CALIFORNIA (Cont.) III. PERMANENT DISABILITY - (NOT ABLE TO RETIJRN TO WORK WITH ORIGINAL EMPLOYER) (Cont. ) Federal Employees (Cont.) Disability retirement - eligible if five years service; computation formulas usually provide 40% of average salary for five highest years; retirement annuity terminated if employee recovers from disability or earning capacity restored for two years to 80% of current salary of position from which retired. State Employees Workmen's Compensation Benefits plus Disability retirement plus Federal O.A.S.I. Disability Allowance (if covered and eligible) Workmen's Compensation Benefits Medical Expenses (if continued medical provided in award) Permanent Disability Award - Amount payable determined by percent of disability rating (see Section III above). If rated 70% or more, continued life-time pension after payment of number of weeks of award. Maximum life pensions - 70% rating, $12.l2/week; 100% rating, $48. 46/week. Disability Retirement General employees under Public Employees' Retirement System (P.E.R.S.) - eligible if 10 years service or $500 on deposit with system. Computation formulas designed to provide 1/3 of average salary for three highest years. Until minimum age for voluntary retirement, allowance reduced if earnings from gainful occupation and retirement allowance exceeds current salary of former state position. Special Industrial Disability Retirement - For safety employees specified only (see Appendix B). No length of service requirements. Retirement allowance 50% of average salary for three highest years. No limit on earnings after retirement. University of California Employees Under U.C. System - Qualification: two or more years service. Payment calculated by same formula as for normal retirement but actuarial factor shall not be less than .015. If credited with ten years service or $2,500 on deposit, payment not less than 1/2 of retirement allowance calculated as through service continued until compulsory retirement age. A-3 APPENDIX EXHIBIT A WORK DISABILITY BENEFIT COMPARISONS FEDERAL--STATE OF CALIFORNIA (Cont.) Ill. PERMANENT DISABILITY - (NOT ABLE TO RETURN TO WORK WITH ORIGINAL EMPLOYER) (Cont.) State Employees (Cont.) Federal O.A.S.I. Disability Coverage Approximately 70% of current miscellaneous state employees under P.E.R.S. (except Patrol and Forestry Firefighters) are covered also under Federal Social Security. Such covered employees are eligible to receive O.A.S.I. disability benefits if totally disabled in addition to P.E.R.S. Disability benefit. Offset reduction in state allowance only made in cases of Special Industrial Disability Retirements (see above). IV. DEATH FROM INDUSTRIAL INJURY Federal Employees Burial Expenses: F.E.C.A. pays up to $800. F.E.C.A. survivor benefits or Retirement System Death Benefits. F.E.C.A. Survivor Benefits Wife - 45% of salary; wife and children - 40% + 15% for each child up to maximum of 75% of salary. Provision made for other types of dependents. Retirement System Death Benefits Lump-sum death benefit, refund of contributions plus interest if no survivors. Survivors benefit - 55% of employee's basic retirement annuity to widow plus additional benefits for surviving children. (Amount per child depends on formula--highest $661.20 per year per child.) State Employees Burial Expense (all employees) - Not more than $1,000 from Workmen's Compensation. Special Industrial Death Benefit (In lieu of Workmen's Compensation). Payable only to: Survivors of Highway Patrol, Forestry firefighters, permanent state lifeguards, enforcement officers--Narcotics and Criminal Identification and Investigation; and certain prison, correctional and parole employees. Amount: 50% of highest three-year average salary to widow or eligible children. If death "caused by external violencell additional benefits ; for children to maximum of 75% salary for widow and three children. If employee was covered by state under Federal O.A.S.I., an offset reduction made for amount of O.A.S.I. survivor benefits. A-4 APPENDIX EXHIBIT A WORK DISABILITY BENEFIT COMPARISONS FEDERAL--STATE OF CALIFORNIA (Cont.) IV. DEATH FROM INDUSTRIAL INJURY (Cont.) Other State Employees (Under P.E.R.S.) Workmen's Compensation death benefit plus retirement system death benefits plus Federal O.A.S.I. survivors b~nefits (If covered). Workmen's Compensation death benefit - one dependent, $20,000; widow with one or more children, $23,000. Payable in installments - maximum $87.50/week. Retirement system death benefits - (a) If member was eligible for retirement, qualified survivors receive one-half member's unmodified retirement allowance. (b) Otherwise, basic death benefit paid of accumulated contributions including interest plus one month's salary for each year's service not to exceed six years. (c) Survivors of employees not covered by Federal O.A.S.I. or not eligible for" special industrial death benefit!! are generally eligible for "1959 survivors benefits" ranging from $90 to $250/month depending on their number. These benefits paid in addition to (b) above. Federal O.A.S.I. survivors benefits - Amount paid varies depending on average covered wages and number of eligible dependents. University of California Employees (Under U.C. System) Workmen's Compensation death benefit plus retirement system death benefits. (Not covered under O.A.S.I.) Workmen's compensation death benefits--as stated above. Retirement System benefits - With dependent survivors: (a) If member was eligible for retirement, one-half single life retirement to survivors. (b) If member had less than eight years service, $130 per month to survivors. (c) If ~ember had eight years or more service but not eligible for retire ment, one-third single life retirement calculated as though member served to age 67 (but not less than $130 per month) to survivors. Increased basic allowance paid to survivor for dependent children. A-5 APPENDIX EXHIBIT B WO~~~~_CO~EN~~!ION_~PECIAL BENEFITS AND PRESUMPTIONS FOR STATE EMPLOYEES I. Statutory presumptions and benefits in workmen's compensation pertaining generally to all California state employees are: 1917 Labor Code sec. 3604. Violation of civil service or other law or regulation regarding hiring will not disqualify the injured person from workmen's compensation (1917). 1917 Labor Code sec. 4155. Conclusive presumption that the state has elected to come within certain employments otherwise excluded from workmen's compensation (1917). 1939 Govt. Code sec. 18102. Election of sick leave pay, vacation pay, or workmen's compensation disability pay for an industrial injury (1939). 1941 Govt. Code sec. 19332. Absence because of industrial injury is not a break in continuous service for purposes of salary adjust ments, sick leave, vacation, or seniority (1941). II. Special classes of California state employees also are provided the following specific statutory presumptions, privileges and benefits for workmen's compensation: A. CALIFORNIA HIGHWAY PATROLMEN 1931 Vehicle Code sec. 2253. Deemed to be on duty 24 hours a day when actually exercising powers or duties imposed or authorized by law (1931). 1935 Labor Code sec. 4800. Salary in lieu of temporary disability pay ments for one year (1935). 1943 Labor Code sec. 3212.5. Presumption of industrial heart and 1959 pneumonia injury after five years of employment (1943). No appor tionment of hernia, heart trouble or pneumonia to pre-existing disease (1959). 1945 Govt. Code sec. 21022. Special industrial disability retirement allowance regardless of age or length of service (1945). A-6 APPENDIX EXHIBIT B WORKMEN'S COMPENSATION SPECIAL BENEFITS AND PRESUMPTIONS FOR STATE EMPLOYEES (Cont.) A. CALIFORNIA HIGHWAY PATROLMEN (Cont.) 1945 Govt. Code sec. 21363. Special industrial death benefits (1945). 1957 Vehicle Code sec. 2254. Entitled to examine records of California Highway Patrol or State Compensation Insurance Fund in any dispute arising from industrial disability (1957). B. ACTIVE FIREFIGHTERS OF DIVISION OF FORESTRY 1937 Labor Code sec. 3212. Presumption of industrial hernia injury (1937), 1939 heart trouble (1939), and pneumonia (1939). No apportionment to 1959 pre-existing disease (1959). 1947 Govt. Code sec. 21020.6. Special industrial disability retirement allowance regardless of age or length of service (1947). Classes of firefighters enumerated in Govt. Code sec. 20017.6 (1967, 1968). 1947 Govt. Code sec. 21363.5. Special industrial death benefits (1947). Classes of firefighters enumerated in Govt. Code sec. 20017.6 (1967,1968) C. PEACE OFFICERS OF THE BUREAU OF NARCOTIC ENFORCEMENT 1951 Govt. Code sec. 21020.7. Special industrial disability retirement allowance regardless of age or length of service (1951 repealed 1965). 1951 Govt. Code sec. 21363.7. Special industrial death benefits (1951, repealed 1965). 1961 Labor Code sec. 3212.7. Presumption of industrial heart, hernia, pneumonia and tuberculosis injury (1961). No apportionment to pre-existing disease (1961). 1963 Govt. Code sec. 21020.75. Special industrial disability allowance regardless of age or length of service for law enforcement members, which includes narcotic agent (Govt. Code sec. 20017.7 1963). 1963 Govt. Code sec. 21363.75. Special industrial death benefits for law enforcement members, which includes narcotic agent (Govt. Code sec. 20017.7 1963). 1969 Labor Code sec. 4800. Full salary in lieu of temporary disability payments for one year (1969 amendment). A-7 APPENDIX EXHIBIT B WORKMEN'S COMPENSATION SPECIAL BENEFITS AND PRESUMPTIONS FOR STATE EMPLOYEES (Cont.) D. DEPARTMENT OF CORRECTIONS CUSTODIAL EMPLOYEES 1945 Govt. Code sec. 21363: Special industrial death benefits (1945). 1959 Labor Code sec. 3212.2: Presumption of industrial heart injury (1959). 1961 Govt. Code sec. 21020.8: Special industrial disability retire ment allowance regardless of age or length of service (1961). E. DEPARTMENT OF YOUTH AUTHORITY GROUP SUPERVISORS 1959 Labor Code sec. 3212.2: Presumption of industrial heart injury (1959) • F. PEACE OFFICERS OF THE BUREAU OF CRIMINAL IDENTIFICATION AND INVESTIGATION 1951 Govt. Code sec. 21020.75: Special industrial disability allowance regardless of age or length of service for law enforcement member, which includes certain persons in the Bureau of Criminal Identification and Investigation (Govt. Code sec. 20017.75 (1951, amended 1963) ). 1951 Govt. Code sec. 21363.75: Special industrial death benefits for law enforcement members, which includes certain persons in the Bureau of Criminal Identification and Investigation (Govt. Code sec. 20017.75 (1951, amended 1963) ). 1961 Labor Code sec. 3212.7: Presumption of industrial heart, hernia, pneumonia and tuberculosis injury (1961). No apportionment to pre-existing disease (1961). 1969 Labor Code sec. 4800: Salary in lieu of temporary disability pay ments for one year (1969 amendment). G. LAW ENFORC ING WARDENS OF THE DEPARTMENT OF FISH AND GAME 1945 Govt. Code sec. 21020.5: Special industrial disability retire ment allowance regardless of age or length of service (1945). 1949 Labor Code sec. 3212: Presumption of industrial heart, hernia, 1959 and pneumonia (1949). No apportionment to pre-existing disease (1959). A-8 APPENDIX EXHIBIT B WORKMEN'S COMPENSATION SPECIAL BENEFITS AND PRESUMPTIONS FOR STATE EMPLOYEES (Cont.) H. SAN FRANCISCO PORT AUTHORITY HARBOR POLICEMEN 1959 Govt. Code sec. 21363.4: Special industrial death benefits (1959). 1967 Govt. Code sec. 21020.75: Special industrial disability allow ance regardless of age or length of service for law enforcement members, which includes certain persons in the San Francisco Port Authority who are peace officers (Govt. Code sec. 20017.76 (1967) ). 1967 Labor Code sec. 4800: Salary in lieu of disability payments for one year (1967). I. OFFICERS AND ENLISTED MEN OF THE CALIFORNIA NATIONAL GUARD OR NAVAL MILITIA 1952 Military and Veterans Code sec. 341: Conclusive presumption that average yearly earnings is not less than $2,500 (1952). J. OFFICERS AND SUPERVISORS OF CADET INSTRUCTION 1957 Military and Veterans Code sec. 520: Conclusive presumption that average yearly earnings is not less than $2,500 (1957). K. OFFICERS AND ENLISTED MEN AND WOMEN OF STATE MILITARY RESERVE 1955 Military and Veterans Code sec. 562: Conclusive presumption that average yearly earnings is not less than $2,500 (1955). L. SECURITY OFFICERS AT ATASCADERO STATE HOSPITAL 1959 Labor Code sec. 3212.2: Presumption of industrial heart injury (1959). M. APPOINTED STATE MEMBERS OF YOUTH AND ADULT CORRECTIONS AGENCY, YOUTH AUTHORITY, BOARD OF TRUSTEES OF INSTITUTION FOR WOMEN OR WOMEN'S BOARD OF TERMS AND PAROLE, BOARD OF CORRECTIONS OR ADMINISTRATOR OF YOUTH AND ADULT CORRECTIONS AGENCY 1963 Govt. Code sec. 21363.6: Special industrial death benefits where death occurs in course of official duties and as a result of misconduct of an inmate or parolee (1963). N. APPOINTED STATE MEMBER DEPARTMENT OF CORRECTIONS OR ADULT AUTHORITY 1959 Govt. Code sec. 21363.3: Special industrial death benefits where death occurs as a result of official duties within a state prison or facility (1959). A-9 APPENDIX EXHIBIT B WORKMEN'S COMPENSATION SPECIAL BENEFITS AND PRESUMPTIONS FOR STATE EMPLOYEES (Cont. ) O. PERMANENTLY APPOINTED STATE LIFEGUARDS 1968 Govt. Code sec. 21020.75: Special industrial disability allow ance regardless of age or length of service for law enforcement members, which includes certain permanently appointed state lifeguards (Govt. Code sec. 20017.8·(1968) ). 1968 Govt. Code sec. 21363.75: Special industrial death benefits for law enforcement members, which include certain permanently appointed state lifeguards (Govt. Code sec. 20017.8 (1968) ). P. EMPLOYEES OF CALIFORNIA STATE POLICE DIVISION WHO ARE PEACE OFFICERS AS DEFINED IN SECTION 830.2 OF THE PENAL CODE. 1969 Govt. Code sec. 20017.75: Amended to include the State Police as "Law enforcement members". This places such employees in the group entitled to: 1. Govt. Code sec. 21292.75 - Industrial disability retirement allowance 2. Govt. Code sec. 21363.75 - Special (industrial) death benefit. A-IO APPENDIX EXHIBIT C HOW STATE AGENCIES MEET THEIR WORKMEN'S COMPENSATION OBLIGATIONS Insured !nd Uninsured Agencies The state government's workmen's compensation liability--obligations to its employees--are administered by the State Compensation Insurance Fund through a "claims adjustment service" or, at the election of some agencies, through a transfer of their liability by purchase of a workmen's compensation insur ance policy from the State Compensation Insurance Fund. Master Agreement Those entities not insured have been authorized under Insurance Code Section 11871 to participate in a claims adjustment service agreement estab lished between the State Compensation Insurance Fund and the Department of Finance. The charges provided for in the master agreement are described as: " ••.... the Fund will be paid l2~% of its expenditures on each claim against any agency except certain claims against the California Highway Patrol; to wit, claims made by or on behalf of any employee in the California Highway Patrol who receives salary in lieu of disability payments during leave of absence, under Labor Code 4800, as to which claims the Fund will be paid 35% of its expenditures, exclusive of the disability payments. These respec tive percentages, it is agreed, represent by the average the actual cost of services rendered." The basis for establishing the rates of charges is set forth at the end of this exhibi t. External Controls Government Code (13294) and Insurance Code (11860) provide for an audit of the State Fund's books and records. Periodic audits under these provisions are made by the Auditor General and the Department of Finance. They include a review of the "Adjustment Service" Program, the disposition of benefit funds and the service charges. -_._------ Note: Exhibit prepared by the State Compensation Insurance Fund. A-ll APPENDIX EXHIBIT C HOW STATE AGENCIES MEET THEIR WORKMEN'S COMPENSATION OBLIGATIONS (Cont.) Services Provided the State of California Under the Master Agreement Following is an outline of the services provided under the master agreement: A. Claims Adjustment Services 1. Liability decisions 2. Claims investigation a. On questionable claims b. Serious and Willful Misconduct allegations Legal Services 3. Legal representation a. On all cases before the Workmen's Compensation Appeals Board and to all levels of appeal. b. Defense of Serious and Willful Misconduct applications. c. Counsel and service on compensation-related subrogation matters. d. Advice and counsel on request. 4. Fiscal and medical controls a. Inclusion of state claims under Potential High-Cost Claims Program under criteria common to all claims. b. Advice and counsel of State Fund Medical Department on difficult and complex medical problems. c. Preparation and maintenance of panels of physicians for state agencies with dispersed operations. d. Full use of State Fund consultants lists. e. Estimating and reserving standards common to all claims. A-12 APPENDIX EXHIBIT C HOW STATE AGENCIES MEET THEIR WORKMEN'S COMPENSATION OBLIGATIONS (Cont.) One objective in testing data and in developing ratios is to determine average cost. As average cost is a function of direct cost plus indirect cost, we have tested the data, developed both of these ratios and combined their values to reflect average cost. For the five years 1964-1968, the direct cost averaged $11.38 and the indirect cost averaged 2.00 giving a total average cost of $13.38. Analysis of 1968 year develops a direct cost of $12.50 and an indirect cost of $2.32 for a total cost of $14.81. Highway Patrol Provision of the Labor Code for salary continuation for one year is accepted in lieu of disability payments for law enforcement personnel of the Highway Patrol. To make allowance for this deviation, we base a service charge on the only true reflection of adjusting expense, medical benefits. The following analysis develops an expense factor based on medical benefits. Total compensation and medical benefits divided by medical benefits to develop a ratio of medical to total benefits. Compensation and medical benefits together equal 2.60 times medical bene fits for 1968. An average for the years 1964-1968 is 2.84. Based on EXHIBIT II, the medical ratios would be as follows: 12.37 x 2.60 = 32.2 12.37 x 2.84 = 35.1 12.50 x 2.60 = 32.5 12.50 x 2.84 = 35.5 A-15 EXHIBIT I 1913-1968 Schedule P Una lloca ted Compo & Med. Loss Expense 0 Compo Loss Payments 1913-1968 $893,194,974.24 -$6,536,169.38 $886,658,804.86 Compo Loss Expense Payments 1913-1968 $82,581,844.28 + 6,536,169.38(!) $89,118,013.66 1968 Total Adjustments Revised Compensation and Medical Payments Compo payments on Fund policies $43,316,710.97 > ..I. .. Med. payments on fund policies 27,016,137.13 $70,332,848.10 0\ Uninsured State Employees Compo & Med. 6.164,847.43 Disaster Service Workers Comp. & Med. 31,503.38 Suhsequcnt injuries Compensation 1,048,082.14 Total Compo & Med. payments $77,577,281.05 -$1,006,908.730 $76,570,372.32 C!) Other Costs +l,006,908.73 CV Claims Expense Dircct $7,706,945.90 { +856,793.30 9,570,647.93 > Other State Fees 326,565.01 326,565.01 ~ )ther Expenses 9,673,583.05 $17,707,093.96 9,673,583.05 ~ h9,570, 795.99 ~ Less Cost not applicable ~ Acqt1is i tion $2,385,269.43 Safety 2,396,077.08 ~ Payroll Auditing 1,814,833.64 Underwriting 1,628,781.19 $8,224,961.34 ~ Ss,224,961.34 H ~ 0) ~ Unallocated Loss Expense n $11,345,834.65 o 1968 -9,570,647.93 Sepvice Change fop 1968 sr, 77 5,186.72 EXIlI BIT II Ratios Direct Cost: 1913-1968 $ 89,118,013.66 ::- $ 10.05 $ lfif6--;b" 58-;-S-()4-:S-6 1968 $ 9,570,647.93 $ TI>;5-'rrr;rrr:!"l ::: $ 12.50 Indirect Cost 1968 $ 1,775,186.72 c $ 2.32 $ lG--;"5i1r;n-~'-l > Direct Cost 1913-1968 + Indirect Cost 1968 ..I. ... $ 10.05 + 2.32:: $ 12.37 -...J Direct Cost 1968 + Indirect Cost 1968 $ 12.50 + 2.32=$ 14.82 > "'0 "'0 txj § ~ ~ ::c I-f Q:I I-f t-i:I n APPENDIX EXHIBIT D INSURANCE COVERAGE DATA CURRENTLY INSURED STATE AGENCIES NUMBER POL. DATES NAME 107000-69 7-1-69/70 Department of Agriculture Self-Supporting Functions, et a1 107008-69 7-1-69/70 Department of Insurance 107011-69 7-1-69/70 Department of Professional and Vocational Standards 107018-69 7-1-69/70 Division of Farm and Home Purchases, Department of Veterans Affairs 107042-69 7-1-69/70 Public Utilities Commission - Transportation Rate FUnd 107052-69 7-1-69/70 California State Educational Agency for Surplus Property 107057-69 7-1-69/70 Department of Real Estate, Real Estate Fund 107058-69 7-1-69/70 Department of Motor Vehicles, Motor Vehicle Fund 107063-69 7-1-69/70 Department of Savings and Loan, Business and Transportation Agency 107064-69 7-1-69/70 California Industries for Blind 107066-69 7-1-69/70 Department of Water Resources 107068-69 7-1-69/70 Old Age-Survivors Insurance Disability Certification Program, Department of Rehabilitation 107069-69 7-1-69/70 Department of Corrections, Inmate Welfare Fund 107071-69 7-1-69/70 Department of Education's Library Service and Construction Act Program 107072-69 7-1-69/70 Trustees of the California State Colleges 107076-69 7-1-69/70 National Defense Education, Title V 107077-69 7-1-69/70 Adult Education for Civil Defense, State Department of Education 107078-69 7-1-69/70 Opportunity Work Centers for the Blind Revolving Fund, Department of Rehabilitation A-18 APPENDIX EXHIBIT D CURRENTLY INSURED STATE AGENCIES (Cont.) NUMBER POL. DATES NAME 107080-69 7-1-69/70 Trustees of the California State Colleges for San Francisco State College 107082-69 7-1-69/70 Department of General Services, Service Revolving Fund 107084-69 7-1-69/70 Department of Education, Manpower Development and Training Act Program Fund 107085-69 9-30-69/70 State Personnel Board A.I.D. - Thailand Project 107087-69 7-1-69/70 Department of Education, Elementary and Secondary Education Act Title II, Title III, Title V and Title VI 107088-69 7-1-69/70 California School for the Blind, Department of Education ESEA Title I, Project Code 60-ST-03-02-2004 107089-69 7-1-69/70 California School for the Deaf - Riverside - Education ESEA Title I 107090-69 7-1-69/70 Board of Pilot Commissioners for the Bay of San Francisco, San Pablo and Suisun 107092-69 7-1-69/70 California School for the Deaf, Department of Education, ESEA Title I 107093-69 7-1-69/70 Cooperative Personnel Services Division of California State Personnel Board 107094-69 7-1-69/70 Automobile Accident Study Commission 107095-69 7-1-69/70 Department of Rehabilitation NOTE: 107026-68 10-1-68/69 Poultry Improvement Commission of State of CANCELLED California 10-1-69 16012-69 6-30-69/70 Regents of the University of California A-19 APPENDIX EXHIBIT D INSURANCE COVERAGE DATA (Cont.) RECAPITULATION OF INSURED STATE AGENCIES Incurred Payroll PremiUlll LOI.el Dividend 7/1/64 to 7/1/65 $ 402,627,246 $1,865,540 $ 636,142 $ 872,092 7/1/65 to 7/1/66 465,441,029 1,775,000 1,054,973 532,484 7/1/66 to 7/1/67 525,268,864 1,891,484 1,174,608 347,762 7/1/67 to 7/1/68 592,828,304 2,232,087 1,929,713 418,545 $1,986,165,443 $7,764,111 $4,795,436 $2,170,883 7/1/57 to 7/1/58 $ 154,071,415 $ 446,786 $ 370,120 $ 52,472 (14 Itate agenciel) A-20 APPENDIX EXHIBIT D INSURANCE COVERAGE DATA (Cont.) POLICY HISTORY Incurred Policy Year Payroll Prnium Lo ••e . Dividend DEPAR'l'MINT or WATER RESOURCES 107066 64-65 $ 19,475,301 $ 220,859 $ 8,851 $ 160,123 65-66 28,497,456 93,558 30,753 40,698 66-67 27,374,251 55,478 98,005 ND 67-68 45 470 581 145 702 223 058 ND $ 120 1 ,817, 1 589 $ 515, 1 597 $ 360 1 ,667 $ 200,821 57-58 $ 772,260 $ 5,967 $ 288 $ 2,894 GENERAL SERVICES 107082 10/64-7/65 $ 6,566,145 $ 76,025 $ 17,531 $ 38,012 65-66 8,210,537 88,428 20,540 45,983 66-67 9,673,157 100,426 35,099 * 42,179 67-68 10.292 105 100.895 43 230 * 35.818 1 1 $ 34,741,944 $ 365,774 $ 116,400 $ 161,992 DEPAR'lMENT or AGRICUL'l'UltE 107000 64-65 $ 7,376,853 $ 44,001 $ 10,238 $ 20,241 65-66 7,424,060 36,609 28,828 6,407 66-67 7,818,993 30,511 50,130 67-68 8 083 153 35 387 42 450 1 1 1 1 $ 30,763,059 $ 146,508 $ 131,646 $ 26,648 57-58 $ 5,683,610 $ 27,306 $ 25,955 $ 4,505 DEPAR'l'MDT or II)'1'OR VEHICLIS 107058 64-65 $ 31,094,341 $ 136,729 $ 23,239 $ 79,987 65-66 34,204,100 153,609 67,680 54,531 66-67 37,849,195 143,636 49,279 * 63,200 67-68 41.419.199 166 634 107 177 * 34 160 1 1 1 $ 144,566,835 $ 600,608 $ 247,375 $ 231,818 UNIVERSITY or CALIrORNIA 16012 64-65 $ 318,714,040 $1,267,974 $ 492,837 $ 551,568 65-66 365,688,987 1,271,806 815,958 343,387 * 66-67 418,612,387 1,414,758 885,903 346,616 * 67-68 463.569.348 1 633 672 1.321.005 432.923 1 1 $1,566,584,762 $5,588,210 $3,515,703 $1,674,494 57-58 $ 136,831,605 $ 363,847 $ 311,242 $ 32,749 * Include. e.timated additional dividend to be paid on the 1966 and 1967 year •• A-21 APPENDIX EXHIBIT E-l SHOULD THE lADINGS TEST BE USTORED TO APPLY TO ALLOWANCIS PAYABLE UNDIR PROSPECTIVE INDUSTRIAL DISABILITY RETIREMENTS? ISSUE: Should the earningl telt be reltored to apply to allowancel payable under prolpective 1adultrial dilability retire.entl? EXPUNAnOIf: Until the October 1961 dilability and iadultrial dl1abl1ity retir. .e nt rollI, all perlona vho retired for either ordlnary or lndultrlal dil ability vere lubject to a ca.aon earning I telt related to earningl in ..,lo,.ent not lubject to SYltea aemberlhip. Uader provillonl of AB 943, Chapter 2169, Statutel of 1961, effective Septeaber 15, 1961, the dllability earningl telt val removed for all iadultrial dilabillty retir. ..n tl under the SYltem, for thOle vho had already retlred al vell al to prolpective indultrlal retireaentl. The earningl telt, however, continued vith relpect to either mlicellaneoul ...b erl or lafety aeaberl vho retired under ordinary (non-lndultrial) dilabUity. Monthly dilability allowancel are ..d e up of either two or three ele ..n tl, the life anDUity fro. the meaber'l contributionl and interelt, and a penlion current lervice, or if prlor lervlce val performed (Ier vice before the SYltea began or the contract vith a public agency began) then the allowance vould include a penlion prior lervice. The penaion portiona are peid by the ..p loyer. Under the earningl telt the peneion (employer) portion of the allowance il reduced if the .onthly outlide groll earningl plul the penlion por tion of the allowance il greater than the current lalary earnable In the pOlition fro. vhich the ..p loyee retired. The penlion portion (employer lhare) could be reduced up to the total of the monthly penlion ..o unt. Irrelpectlve of the outlide earningl the annulty portlon (allowance pay able from ...b er contrlbutlona and lnterelt) continuel payable in full to the retired ...b er. The earningl telt doel not affect benefitl that ..y become payable to the lurvivor of a ae.ber retired for dilability. The earningl telt val operative for indultrial dl1abl1ity retireaent fro. the firlt month of retirement untl1 the earlielt age of lervice retirement; age SO, for State lafety ...b erl; and, age 55, for mOlt publlc agency lafety m. .b erl. MOTE: Prepared by Public £aployeel' Retirement SYltea A-22 APPENDIX EXHIBIT E-l SII)ULD THE EARNINGS TEST BE RESTORED TO APPLY TO ALLOWANCES PAYABLE UNDER PROSPECTIVE INDUSTRIAL DISABILITY RETIREMENTS? (Cont. ) Under the Public Employees' Retirement System safety members of the System (Patrol, Fore.try, Fish & Game Warden, Law Enforcement, Policemen, Firemen, County Peace Officers) are entitled to industrial disability (and industrial death) benefit.. About 33,000 of the approximate 400,000 current System members have industrial disability benefit coverage. (See Exhibit A for safety member.hip in the System as of June 30, 1968) There were 1,539 industrial disability retirements on the Sy.tem's May, 1969 retirement allow ance roll. The average allowance being paid was $326.00 per month. (Exhibit B shows data on recent individual industrial disability cases.) Under the general provisions of the Labor Code, temporary and permanent dis ability benefits are provided and provi.ion may al.o continue for medical treatment. Under other provi.ions of the Labor Code, most System safety members are entitled to up to one year of absence on full .alary for purposes of recuperation from industrial injuries. The System does not administer these benefits. These benefits are payable by the Labor Code insurer, or in the case of the salary, payable by the employer directly. The System becomes involved in an industrial case usually after the foregoing benefits have been provided and an application for retirement is received from the safety member. Under the Retirement Law, "disability" means dis ability of permanent or extended and uncertain duration, as determined by the Board on the basis of competent medical opinion. The test of disability is as to the dutie8 of the p08ition in which he was employed. The System benefit payable as a result of industrial di8ability retirement is a life allowance equal to one-half of final compensation (average salary rate of the highe8t three consecutive years). All State safety member. (about 10,500) and about 101 of the public agency .afety member. (2,500 of 22,500 total) have one-half of this allowance continued to certain .urvivors for life or in the ca.e of children, to age 18. About 251 of the System'8 safety members have benefit formulae which are correlated to Federal Social Security coverage. As the .afety member retires for industrial disability, and hal Social Security coverage with a System employer, then the amount of the System allowance (pension portion) is reduced or "offset" by the amount of any Social Security pension benefit payable. A person retired for industrial disability is precluded from employmept by any employer participating under the System. He is not prohibited from, nor does he suffer any penalty because of, employment with any other employer, public or private. He receives hi. allowance only during disability, and is subject to re examination until he attain8 minimum age for 8ervice retirement. (Age 50 for State safety member.; age 50 or 55 for local safety members, depending on contract provision). He may a180 apply for reinstatement from retirement up to mandatory retire ment age. If re-examination shows ce.sation of disability (on involuntary examination) or ability to perform the dutiee of the p08ition for which the A-23 APPENDIX EXHIBIT E-l SII>ULD TIlE EARNINGS TlST BE RESTORED '1'0 APPLY '1'0 ALLOWANCES PAYABLE UNDER PROSPECTIVE INDUSTRIAL DISABILITY RETlREMIHTS? (Cont. ) member il applying for relnstateMnt, the member' I allowanee 11 tel'llinated. Involuntary reinatatement for a state member provide I a right to return to the pOlition frOB which retired. Right of a local lafety .ember to rein Itatement to hil position under these conditionl depends on local civil lervice provilionl, if any. The following is a coaparilon of the total personl retired under thil SYltem for indultrial dilability for each of the filcal yearl Ihovn compared to the total lafety membership (number of prilon ..a berl with indultrial cover age not known): Perlonl Retired 1 Indultrial Dilability Por Indultrial No. of Safety Retir. ..n tl of Total Pilcal Year DieabUity Meaberl Safety Memberlhip 1960-61 61 17,800 * .3431 1961-62 67 19,200 * .3491 1962-63 98 20,705 .4731 1963-64 116 22,851 .5081 1964-65 167 24,614 .6781 1965-66 141 27,178 .5191 1966-67 210 29,182 .7201 1967-68 218 31,114 .7011 (* Data Not Available. Estiaate baled on projection frOia ~stu.ated--Actual count of 13,900 lafety aeabers 6-30-58). Since the year ending June 30, 1961, the rate of indultrial dilability retireMnt (lalt colu.n above) hal doubled relative to lafety .--berlhip. Although the caule of the increale in indultrial dilability retirementl il not ablolutely attributable to the removal of the earningl telt, the change in higher numbers of such benefits has occurred subsequent to that removal. DISCUSSION: The requirement for disability retirement is inability to perfol'll the duties of the position held. MOlt of the employments to which the right of induI trial disability retirement attach require high phYlical Itandardl, 10 that a aeaber aay be entitled to industrial disability retirement while pOlsessing capacity to fully perfol'll in other employaents. Ability to qualify on the basis of leIS severe impairment tends to increase the number of cales baled priaarily on lubjective complaintl, and in which motivation .ay be critical. The relult in luch calel may be a lublidized occupational change, lOll of A-24 APPENDIX EXHIBIT 1-1 SHOULD THE EARNINGS TEST BE ItES'l'ORID TO APPLY '1'0 ALLCJlANCIS PAYABLE UNDER PROSPICTIVE INDUSTRIAL DISABILITY RlTIRIMEITS? (Cont. ) services of a trained employee capable of perfor.ing his job if motivated to do so, or outright imposition on the employer by an knowingly e~loyee capable of perfo~ing. The doubling of the incidence of industrial disability retir. ..n ts since the removal of the earnings test eight years ago is an indicator of its effectiveness as a deterrent or restraint in connection with effective ad.in istration of the retirement test. It permits the retir. .e nt allowance to serve as a subsidy for an occupational change for a ...b er retaining .ub stantial physical capacity. It'les.ens inducement of a m. . to retire be~ when he i. in fact capable of performing. It impo.e. nard.hip on any DO ..m ber .ince it never work. to reduce total income below what it would have been had he continued in his employment. The severely disabled 18 not affected. The ...b er doe. not lo.e workmen'. caapen.ation right., and accordingly the functioning of the retirement allowance a. a sub.idized occupation change for .ember. not .everely disabled and not at retirement age is appropriate. The average cost of an industrial di.ability retire- ment is in the area of $60,000 to $70,000. This .e. .s over-generous for a member who is able to perform in other employment at possibly greater salaries. Avoidance of an unnecessarily high incidence of retirement, and reducing the cost for members marginally disabled, also .ay enable ..p loyers to provide so.e improvement in benefits for the .ore severely disabled without increas ing total outlay.for this benefit. Finally, in its absence, employers under the System are penalized. These employers cannot realize any benefit fra. service. of a trained e.ployee, since the employee .ost 8urrender his allow ance and retired statu. totally to work for such an employer, but subsidizes the employment of another eaployer not participating in the Syste• • RICOMMDDATIONS: 1. That the "earnings test" be restored to industrial disabUity retir. .e nts; 2. Alternatives: (a) Alteration of the disability test to require a greater degree of impairment of physical capacity or greater assurance of disability. Possibilities include; (1) A requirement that there be objective evidence of disability, thus precluding finding. of disability on purely subjective coaplaints; and (2) A specified minimum permanent disability rating under the workmen's compensation laws. (b) Elimination of an improved allowance because di.ability is .ervice incurred, and substitution of improved scale of workmen's compensation benefits. This would permit recognition of degrees of disability. (c) Initiation of an effective rehabilitation program in an effort to salvage remaining capacity. Effort et rehabilitation could be ..d e a condition of retirement, and retirement benefits integrated or coordinated with progress of rehabilitation. (d) An in-depth study be made considering expanded pre-eaployment medical examinations, benefits provided, redefinition of "disabUity", continu ance in another State employment for which the employee has been rehabili tated through direct action by his employer, and a correlated earnings test. A-25 APPENDIX EXHIBIT E-l SHOULD THE EARNINGS TEST BE RESTORED TO APPLY TO ALLOWANCES PAYABLE UNDER PROSPECTIVE INDUSTRIAL DISABILITY RETIREMENTS? (Cant.) SAFETY MEMBERSHIP IN PUBLIC EMPLOYEES' RETIREMENT SYSTEM JUNE 30, 1968 SAFETY MEMBERS Percent SYltem Total State City County Districts Full Formulae Member I California Higbway Patrol-- Age 55 1.31 5,050 5,050 Foreltry Safety--Age 60 .21 622 622 Foreltry Safety--l/60 .31 982 982 Warden Safety--Age 60 86 86 Warden Safety--l/60 128 128 Law Enforcement--Age 55 69 69 Local Safety--Age 55 4.31 16,560 14,834 1,293 433 Local Safety--Age 55 Money Value 39 39 Total Full Formulae 6.11 23,536 6,937 14,873 1,293 433 1 Modified and Supplemental Formulae Foreltry Safety--l/90-l/60 .81 2,540 2,540 Warden Safety--l/90-l/60 44 44 Law Enforcement--Age 55 Modified 90 90 Local Safety--Age 55 Modified .5'1. 1,948 1,575 133 240 Local Safety--Age 55 Supplemental .11 466 303 127 36 Local Safety--l\'I. @ 60 Supple.ental .61 2,490 1,972 298 220 Total Modified and Supplemental 2.0'1. 7,578 2,674 3,850 558 496 TOTAL SAFETY MEMBERS 8. 1'1. 31,114 9,611 18,723 1,851 929 1 About 241 of safety members have Social Security Coverage. Formula for lervice retir.-ent il correlated to Social Security; industrial dilability allowancel reduced by Social Security pension under both coordinated and 8upplemental formulae. A-26 RANDOM SAMPLES OF RECENT INDUSTRIAL DISABILITY RETIREMENTS SERVICE LAST LIFE AS A SALARY ALLCMANCE MEMBER TOTAL 1 ALWS. 1 ALWS. AGE AT MEMBER RATE FINAL ALLCMANCE NET FOR CONTRIB. EMPLR. BENEFIT TO FINAL TO LAST CLASS DISABILITY RETIRE. ~YEARS~ ~PER K>.} ~ ELECTED AK>UNT SURVIVOR ANT. & INT. RESERVE RESERVE COMPo SALARY :"'O'C6I) ~~ Policemen Police Chief Heart 50 1/4 19.625 $1,213 $1,082 Option 1 $370' None None $ 621 $58,113 $58,733 341 311 ~t;J (Nearly • (S.S. tz.I all Ofhet ~a Prior Applied) Svc.) tz.Itz.I Policeman Mental 29 1/2 8.700 $ 777 $ 747 Urmod. $374 None None $ 1,346 $77 ,130 $78,476 501 481 ~> "'O~ (5 yra. .... prior ~ CI)~ BVC. ) "'OCI) Policeman Wrist 25 2.747 $ 828 $ 729 Unmod. $364 One- $182 $ 1,524 $91,689 $93,214 501 441 tz.I n~ Half ~tz.I ~ Contr. .... CI) I .N... .. ~~ Firemen til:! ---rire Fighter Heart 50 1/4 16.342 $ 807 $ 733 Option 1 $355 None None $16,390 $41,660 $58,051 481 441 .... tz.I ~~ Fire Captain Lungs 59 1/2 12.705 $ 972 $ 853 Option 3 $332' Option 3 $166 $ 2,249 $49,781 $52,030 331 341 (Over 11 (S.S. Offset (- S.S. Offset if CI)CI) yra.prior action later applied) ~CS BVC. ) pending) ~~ t"'t;J Fire Engineer Back 47 1/4 11.900 $ 969 $ 891 Option 1 $437 None None $13,539 $57,674 $71,213 491 451 > ~CS HiBhwal Patrol "'0 Traffic Officer Back 38 3/4 8.347 $ 842 $ 763 Option 1 $381 One- $191 $ 6,840 $79,047 $85,887 501- 451 C»I) ~ C H o a n lf t r. . ti . l . :! . " " ' ' 0 0 .~... t"'t"' .... 0< X Traffic Officer Ulcer 48 3/4 9.855 $ 842 $ 782 Option 1 $388 One- $195 $ 9,549 $52,983 $62,533 501- 461 ~CS Half =~ Contr. .... ~F= Forestry ~t"' t.i.l.:!. Foreman 11 Back 55 5.198 $ 905 $ 734 Option 1 $366 One- $183 $ 2,545 $57,298 $59,843 501- 401 ~ Half -~~ Contr. n o n 2: tz I .I Fire Prevention Heart 53 1/2 26.423 $ 905 $ 807 Ulllllod. $403 One- $202 $11,357 $64,945 $76,911 501 451 -. :: s~tz.I ~ Officer II Half t'tCl)CI) Contr. .~ APPINDIX ElHIII T 1-2 GOVEDOR' S PROGRAM TO REDUCE OCCUPATIONAL INJURIES The Governor's Program To REDUCE OCCUPATIONAL INJURIES January 26, 1970 TO: ALL STATE DEPARTMENTS SUBJECT: GOVERNOR'S PROGRAM TO REDUCE OCCUPATIONAL INJURY During the next three years, the Governor's Program to Reduce Occupa tional Injuries wi I I initiate the newest, most dynamic concepts ever oppl ied to accident loss prevention in the State of California. The Program is now underway. You and your associates are invited to attend the Governor's official ceremony in the Capitol rotunda at 12:00 noon February 2, 1970. This ceremony wi I I introduce a program of events ~n designed to give statewide visibi lity to the total commitment that exists - a commitment by employee organizations and al I levels of State Government to these Proqram objectives: To reduce the frequency and costs of occupational injuries and, concurrently, to reduce the physical suffering and economic hardship experienced by injured employees and the i r fam iii es . This is the first in a series of communications deal ing with specific facets of our statewi de effort. The Governor's Pol icy statement with the Program Outline is attached and the contest format - a vital incen tive to total involvement - is enclosed. Distribution of promotional and resource material wi II be timed to start with the Governor's Ceremony. The success of this significant al I-out effort wi I I be directly dependent upon your contribution. Our goals are both realistic and attainable. Our Program symbol, the stylized drop of blood, wi I I become synonomous with the prevention of needless waste of our most valuable resource - oeople. The challenge of the Governor's Program is inescapable. Together, we wi II meet it successfully. PAUL B. COSSABOON Program Manager 801 Capitol Mall • Sacramento, CA 95814 • Phone (916) 445-4968 Attachments A-28 State of California APPENDIX EXHIBIT E-2 Memorandum GOVERNOR'S PROGRAM TO RlDUCE OCCUPATIONAL INJURIES (Cont. ) To • HEADS OF AGENCIES, DEPARTMENTS, Date January 26, 1970 MAJOR UNITS AND ALL STATE EMPLOYEES Sublect: PROGRAM TO REDUCE OCCUPATIONAL INJURIES From : Governor'. OfRce Last year, 3,722 state employees suffered job-related disabling injuries and 22 died. As a result, 91,566 productive work-days were lost. Not only do these statistics represent physical and economic hard ship beyond calculation for our employees and their families, but the effect upon efficient government operations is equally devastating. The impact is further intensified by the realization that many, or possibly all, of the events which caused these injuries and deaths could have been prevented. This condition cannot be allowed to continue. For this reason, I have asked Paul B. Cossaboon, of the State Compensation Insurance Fund, to head the Governor's Program to Reduce Occupational Injuries--an all-out effort by every unit of state government to control this needless waste of human resources. The objective will be--and it must be accomplished--to reduce the disabling injury rate by a minimum of 10% per year. The Cabinet will review progress of the program on a regular basis. Each report will receive my personal attention. I urge every administrator, every supervisor and every employee throughout the state to give the highest priority to achieving our objective. The impact upon our lives and the quality of our services will be significant. Sincerely, Q .~~ RONALD REAGAN Governor A-29 APPENDIX EXHIBIT E-2 GOVERNOR'S PROGRAM TO REDUCE OCCUPATIONAL INJURIES (Cont.) STATE OF CALIFORNIA A POSITIVE PROGRAM TO REDUCE OCCUPATIONAL INJURIES I. ESSENTIALS OF THE PROGRAM I. The issuance of a Governor's policy statement instituting the Program to Reduce Occupational Injuries in State service. 2. The periodic review by the Governor's Cabinet of the departmental occupational injury rates and the effectiveness of departmental accident reduction programs. 3. The setting of departmental goals by each director in fulfi I I ing his respon sibi lity for the reduction of occupational injury rates, and the establ ishment of policies, directives, and fol low-up to obtain results. 4. The development of a positive departmental accident reduction program which is tai lored to meet specific departmental problems and normally includes: a. Assurance that the injured employees wi I I receive prompt and effec tive medical treatment. b. Procedures to identify the causes of injuries and a funded program to el imlnate or minimize the hazards identified. c. Supervisory practices that demonstrate a sincere interest in the employee's recovery by: (I) maintaining personal contact with the disabled employee and his dependents, (2) arranging for return to some productive work assignment as soon as it is medically advisable, (3) identifying when rehabi litation services may be desirable, and (4) maintaining contact with the employee during any rehabi litation or retraining and assisting in his placement in State employment. d. Training for managers and supervisors in the administration of effec tive accident reduction programs. I I. PROGRAM OBJECTIVES To effect an average reduction of 10% a year in the rate of disabling occupa tional injuries per 1,000,000 man-hours worked for the next three years. A-30 APPENDIX EXHIBIT E-2 GOVERNOR'S PROGRAM TO REDUCE OCCUPATIONAL INJURIES A Positive Program to Reduce Occupational Injuries - contd. (Cont.) 1969 Annual 1970 Departmental Minimum Frequency Rate Goal for Reduction 15.0 or higher 15% 10.0 to 14.9 10% 5.0 to 9.9 7% 0.0 to 4.9 Maintain Same Rate I I I. RESPONSIBILITY The Governor I. To issue a policy statement instituting the Program to Reduce Occupational Injuries. 2. To establ ish a formal recognition plan for outstanding safety achievements by State departments. Governor's Cabinet Members I. Tc hold each department head accountable for achieving the occupational injury reduction goals of his department. 2. To review each department's accident rates as compared with its goals and encourage the initiation of new programs when the department's goals are not met. 3. The Secretary, Agriculture and Services Agency, to be responsible for coordinating this program. Department Heads I. To establish and publish department goals and policies for reduction of occupational injuries. 2. To al locate funds, time, and other resources needed to achieve departmental accident prevention goals. 3. To establish practices which cal I for fol low-up by a supervisor with his injured employees to assure that proper treatment is provided, that rehabi li tation services are offered when needed, and to assist the employee to return to temporary light duty as soon as it is medically feasible. 4. To provide managers and supervisors with safety training and technical safety staff services. A-31 APPENDIX EXHIBIT E-2 GOVERNOR'S PROGRAM TO REDUCE OCCUPATIONAL INJURIES (Cont.) A Positive Program to Reduce Occupational Injuries - contd. 5. To encourage and recognize employees who develop safety devices and safe practices in the areas in which they work. 6. To include occupational injuries and responsibi lity for accident prevention in performance appraisals for and managers. individuals~ supervisors~ State Personnel Board I. To offer technical siaff services to State managers in carrying out this program, through the State Safety Coordinator, State Medical Officer, and the Coordinator of Services to Handicapped Persons. 2. To maintain appropriate standards for health and physical fitness for entry into the State service. To advise departments on in-service standards of health and physical fitness and on uti I ization of employees within their capabi lity and physical I imitations. 3. To advise on uti lization of employees on temporary duty assignments during recovery from injury. To .assist permanently disabled employees in rehabi li tation and placement in State employment. 4. To prepare and distribute statistical data and reports to keep management informed of the status of this program. State Compensation Insurance Fund I. To faci litate and encourage communication between the disabled employee, the attending physician, and department supervisors. 2. To participate in the early identification of employees with probable permanent disabi I ity and to assist department supervisors in effecting their rehabi litation. 3. To assist departments in promoting safe practices by providing safety information materials. 4. To make analysis of claims for cause and effects of accidents and offer advice on the improvement of this program. Department of Industrial Relations - Division of Industrial Safety I. To provide minimum standards for safety in places of employment. 2. To provide inspection of State faci lities, both State-owned and rented, for compl iance with safety standards. 3. To provide technical advice and training assistance with accident problems upon request or complaint. A-32 APPENDIX EXHIBIT 8-2 GOVERNOR'S PROGRAM TO UDUCE OCCUPATIONAL INJURIES (Cont. ) A Positive Program to Reduce Occupational Injuries - contd. Department of Rehabi litation I. To evaluate and diagnose the extent of disabi lity and determine a vocational program to retrain employees who develop physical limitations on the job, when requested by the employee or his supervisor. 2. To participate with State departments and the Personnel Board to find suitable positions in State employment for State employees with physical lim i tat ions. Department of Public Health To provide technical study, Inboratory work, and consultation on occupational health problems, when requested by State departments. A-33 APPENDIX EXHIBIT E-2 GOVERNOR'S PROGRAM TO REDUCE OCCUPATIONAL INJURIES (Cont. ) GOVERNOR'S PROGRAM TO REDUCE OCCUPATIONAL INJURY CONTEST TIME PERIODS: January I, 1970 - December 31, 1970 January I, 1971 - December 31, 1971 January I, 1972 - December 31, 1972 GOALS: Minimum goals for each department wi I I be establ ished on the fol lowing basis: 1969 Annual 1970 Department Minimum Frequency Rate* Goal for Reduction 15.0 or higher 15% 10.0 to 14.9 10% 5.0 to 9.9 7% 0.0 to 4.9 Maintain Same Rate *Calendar 1969 frequency rates wi I I be provided each department as soon as avai lable. Meanwhi Ie, latest data, Fiscal 1968-69, wi I I be used. AWARDS: Awards wi I I be made by the Governor to the two departments in each division having achieved the highest percentage of their goals each year. Quarterly Awards wi I I be made to the Agency with the highest and lowest percentage achievement toward the goal at the quarterly Cabinet report. Special Awards wi I I be made annually to departments for outstanding achievement. A-34 APPENDIX EXHIBIT E-2 GOVERNOR'S PROGRAM TO REDUCE OCCUPATIONAL INJURIES (Cont.) CONTFST DIVISIONS: DIVISION A - Over 4 mi I lion Man-Hours Annually Department Man-Hours - Frequency Rate - Fi sca I 1968-69 F i sca I 1968-69 Conservation 13,487,851 19.5 Corrections 12,394,740 12.5 Equal ization 4,464,984 5.4 General Services 7,276,662 21.3 Hi <1hway Patro I /3,244,7/4 49.8 Human Resources Developmen1 15,827,824 4.5 Mental Hygiene 36,001,767 36.8 Motor Vehicles /1,946, /6/ 10.6 Pub I i c Works 36,718,984 9.7 Water Resources 8,180,636 10. I Youth Authority 6,343,570 13.9 DIVISION B-1 mi / lion to 4 mi I lion Man-Hours Annually Department Man-Hours - Freguency Rate - F i sca / 1968-69 Fi sca I 1968-69 Agriculture 3,591,482 10.3 Compensation Insurance Fund 3,226,968 1.6 Contro II er /,068,017 4.6 Education 3,953,007 15.4 Fish and Game 2,506,826 22.7 Franchise Tax 3,0 11,468 4.0 Industrial Relations 2,875,021 " • I Justice 2,935,392 " .6 Parks and Recreation 3,063,900 16.0 Professional and Vocational Standards 1,277 ,067 15.7 Pu b I i c Hea I th 2,820,639 5.0 Publ ic Uti I ities 1,416,564 1.4 Rehabi I itation 3,886,955 1.8 Social Welfare 3,232,492 7.7 Veterans Affairs 1,663,721 18.6 A-35 APPENDIX EXHIBIT B-2 GOVERNoa's PROGRAM TO REDUCE OCCUPATIONAL INJURIES (Cont. ) CONTEST DIVISIONS: (Continued) DIVISION C - 250 thousand to I mi I I ion Man-Hours Annually Department Man-Hours - Frequency Rate - F i sca I 1968-69 F i sca I 1968-69 Alcoholic Beverage Control 779,581 5. I Corporations 536,622 3.7 Employees' Retirement System 556,817 1.8 Finance 470,281 2. I Health Care Services 395, 158 0.0 Insurance 524,898 3.8 Legislative Counsel Bureau 252,113 0.0 Mi I itary 613,172 3.3 Personnel Board 957,555 0.0 Real Estate 405,377 2.5 Savings and Loan 319,686 0.0 Teachers' Retirement 279,428 0.0 Water Resources Control Board 358,700 5.6 DIVISION D - Under 250 thousand Man-Hours Annually Department Man-Hours - Frequency Rate - F i sca I 1968-69 F i sca I 1968-69 Aeronautics 37,247 0.0 Air Resources 104,852 9.5 Banking 143,645 13.9 Commerce 179,192 0.0 Disaster Office 126,438 7.9 Fire Marshal 153,762 6.3 Horse Racing Board 42,804 0.0 Housing and Community Development 231,039 17.3 Navigation and Ocean Development 141 ,276 0.0 Secretary of State 189,179 0.0 Treasurer 98,138 20.4 A-36 APPENDIX EXHIBIT P-l WORKMEN'S COMPENSATION CLAIMS AND INCURRED LOSSES-BY AGENCY AND DEPARTMENT . (1957-58 COMPARED WITH 1967-68) 1957-58 1967-68 % Incurred Incurred Increa.el Claim. LO.lel C1aia. LO.lel (Decrea.e) Human Re1ationa Agency Correction. 237 $ 35,383 544 $ 892,490 2422 Employment 107 14,639 356 140,504 860 Mental Hygiene 3,080 816,966 2,862 2,212,834 170 Youth Authority 150 23,932 438 149,130 523 Other De!artmentl & Office. 170 54.788 276 83 254 52 2 Tota1--Human Re1ationa 3 744 f 945.708 4.476 f3•478.212 268 2 Relources Agency Fore.try 1,264 $ 160,103 1,213 $ 421,640 163 PlIh and Gule 231 64,555 190 165,997 157 Park. and Recreation 201 13,335 316 116,331 772 Water Re.ource. 165 11,288 (in.ured) Other De!artaent. & Officel 14 4 846 23 1 403 Total--Re.ource. AsencI 1.875 ! 254 127 1 742 705 371 Buline.s & Tran.portadon Agency California Highway Patrol 850 $ 296,382 1,319 $1,474,539 398 Public Workl--Hignway. 1,456 430,368 2,105 1,069,677 149 Other De!artment. & Office. 21 10.129 59 20.159 99 Total--Bulinel. & Tran.!. 2.327 $ 736,879 3,483 !2,564.375 -245 - Agriculture & S.rvicel Agency Agriculture 93 $ 14,867 85 $ 41,822 181 General Servicel 75 29,134 271 86,102 196 Other De artments & Office. 178 15 872 232 51 200 222 Tota1--A riculture& Service. 346 59 873 588 179 124 Other Governmental Education 133 $ 26,245 116 $ 48,520 85 JUltice 23 298 83 81,231 27,160 MUitary 52 98,733 150 43,117 (56) Milce11aneoul Other 186 73.506 139 24.961 Total--Other Governaenta1 394 $ _198.782 488 $ 197.829 ~0.5l State Co11ese. 285 t 55.238 1 ... 094 401.642 628 ! TOTAL--S!LF-INSURED 8,971 $2,250,607 11,871 $7,526,553 235 Univer.ity of California 2,055 $ 311,242 3,407 $1,321,005 325 Department of Agriculture (pt) 84 25,955 66 42,450 63 Water Re.ource. 9 288 393 223,058 General Service. (part) 141 43,230 Dept. of Motor Vehiclel 549 107,177 Other Inlured 170 32.635 246 192.793 TOTAL INSURED 2,318 $ 370,120 4,802 $1,929,713 421 GRARD TOTAL 11,289 $2,620,727 16,673 $9,456,266 261 Note: 1957-58 data rearranged to compare with prelent aaeney orS_Biz_tion. A-37 WORKMEN'S COMPENSATION DISABLING INJURIES NUMBER, INCURRED LOSSES, AVERAGE COST PER CASE (1964-65 TO 1967-68 INCLUSIVE) Four Year Total % of 1964-65 1965-66 1966-67 1967-68 Losses Heart Cases Number Claims 118 145 134 111 508 Incurred Losses $ 831,691 $1,056,730 $1,215,342 $1,169,792 $4,273,555 14.3% Cost Per Case Medical $ 1,806 $ 1,696 $ 2,475 $ 3,177 $ 2,251 Compensation 5z242 5 z 592 6 1 595 7,362 6 1 162 Total $ 7,048 $ 7,288 $ 9,070 $ 10,539 $ 8,413 Back Cases Number Claims 1,002 1,156 1,166 1,229 4,553 > w I Incurred Losses $2,119,522 $2,161,310 $2,320,867 $2,774,341 $9,376,040 31.6% 00 Cost Per Case Medical $ 712 $ 602 $ 703 $ 791 $ 703 Compensation 1,403 1 1 268 1 z 287 1z466 1 1 356 Total $ 2,115 $ 1,870 $ 1,990 $ 2,257 $ 2,059 Other Injuries Number Claims 2,626 2,886 3,204 3,229 11,945 ~ ." S Incurred Losses $3,381,560 $3,757,336 $3,846,844 $5,067,927 $16,053,667 54.1% Cost Per Case e ~ Medical $ 416 $ 463 $ 447 $ 600 $ 486 .. Compensation 872 839 754 970 857 .... Total $ 1,288 $ 1,302 $ 1,201 $ 1,570 $ 1,343 .... I-i ~ I N WORKMEN'S COMPENSATION DISABLING INJURIES -- NUMBER, INCURRED LOSSES, AVERAGE COST PER CASE (1964-65 TO 1967-68 INCLUSIVE) Four Year Total % of 1964-65 1965-66 1966-67 1967-68 Losses All Disabling Injuries Number Claims 3,746 4,187 4,504 4,569 17,006 Incurred Losses $6,332,773 $6,975,376 $7,383,053 $9,012,060 $29,703,262 100% Cost Per Case Medical $ 539 $ 544 $ 574 $ 714 $ 596 Compensation 1,152 11122 1 065 1 258 1 151 2 2 1 Total $ 1,691 $ 1,666 $ 1,639 $ 1,972 $ 1,747 > • \oil \0 NOTE: Disabling injuries are injuries causing loss of time of one or more days beyond day of injury. $ SOURCE: Derived from State Compensation Fund data on all Insured and Uninsured State Agencies ~ (including colleges and universities). ~ a .... .t.i.d. t-i ~• N APPENDIX EXHIBIT F-3 SUMMARY OF RETIREMENTS FOR SERVICE, DISABILITY, AND INDUSTRIAL DEATHS (1963-64 to 1967-68) Net RetirementB For The Year Service Disability Industrial Death Members at Per 100 Per 100 Per 100 Public Employees' Retirement System End of Year Number Members Number Members Number Members 1. Miscellaneous (State, U. C. and Public Agencies) (1) 1963-64_ ______________________ 1964-65 _______________________ 288,505 3,710 1- .78 336 1-8.59 6 1-480.84 302,157 3,621 1- .83 352 1-8.58 12 1-251.80 1965-66 _______________________ 323,105 4,134 1- .78 414 1-7.80 16 1-201.94 1966-67 _______________________ 1967--68 _______________________ 337,378 4,238 1- .80 510 1--6.62 5 1--674.76 353,947 4,570 1- .77 660 1-5.36 9 1-393.27 2. California Highway Patrol (2) 1963-64 _______________________ 2,852 32 1- .89 30 1- .95 12 1- 2.38 1964-65 _______________________ 2,983 32 1- .93 55 1- .54 8 1- 3.73 1965-66 _______________________ 3,624 26 1-1.39 33 1-1.10 3 1- 12.08 1966-67 _______________________ 4,475 26 1-1.72 53 1- .85 3 1- 14.92 1967-68 _______________________ > 5,050 27 1-1.87 61 1- .83 4 1- 12.63 • ~o 3. Fore 1 st 9 r 6 y 3 --64 _______________________ (2) 3,948 16 1-2.47 4 1-9.87 3 1- 13.16 1964-65 _______________________ 4,049 10 1--4.05 9 1--4.50 5 1- 8.10 1965-66 _______________________ 4,216 12 1-3.51 10 1--4.22 5 1- 8.43 1966-67 _______________________ 4,192 10 1--4.19 13 1-3.22 4 1- 10.48 1967-68 _______________________ 4,144 19 1-2.18 8 1-5.18 4 1- 10.36 4. Warden (2) 1963-64 _______________________ 1964-65 _______________________ 263 3 1- .87 1 1-2.63 ---- 262 2 1-1.31 -- 2 1- 1.31 1965-66_ ______________________ 269 4 1- .67 1 1-2.69 1 1- 2.69 1966-67 _______________________ 261 3 1- .87 1 1-2.61 ---- 1967-68 _______________________ 258 5 1- .52 3 1- .86 1 1- 2.58 5. Law Enforcement (2) 1963--64 _______________________ 1964-65 _______________________ 23 6 1- .04 -- ---- -- ---- 1 1 9 9 6 6 6 5 - - 6 6 7 6 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 1 1 2 1 0 2 5 9 3 2 2 1 1 1 - - - . . . 1 3 5 1 8 5 - 2 1 - 1 1- - 1. . 1 5 5 5 - - - - - - - - - - - - - - - - - - 1967-68 _______________________ 159 4 1- .40 2 1- .80 -- ---- 6. Public Agency Safety (2) 1963--64 _______________________ 15,765 144 1-1.09 96 1-1.60 14 1- 11.26 1964-65 _______________________ 16,298 154 1-1.12 121 1-1.43 22 1- 7.86 1965-66 _______________________ 18,960 129 1-1.47 103 1-1.84 12 1- 15.80 1966-67 _______________________ 20,139 155 1-1.30 145 1-1.39 20 1- 10.07 1967--68 _______________________ 21,503 159 1-1.35 175 1-1.22 18 1- 11.95 - - (1) Although these are predominantly non-service connected, there are a few industrial disabilities due to the coverage of prison members having custodial duties. (2) These are predominantly industrial disability retirementB. DEPARTMENT OF CORRECTIONS EMPLOYEE SAFETY PROGRAM FREQUENCY RATE OF DISABLING INJURIES PER 1,000,000 HOURS WORKF.D FREQ. RATE DISABLING INJURIES 25 20 .. ~• .... 15 .... ANNUAL RATE '-J.... 10 5 ~ ~ i 59-6060-61 61-62 62-63 63-64 64-65 65-66 66-67 67-68 68-69 69-70 FISCAL YEAR ~ == ... .t-4. ..:I 'I•II FREQUENCY RATES OF DISABLING EMPLOYEE INJURIES DEPARTMENT OF MENTAL HYGIENE COMPARED TO STATEWIDE AGENCY RATES (RATES PER 1,000,000 EMPLOYEE HOURS) RATE: 1,000,000 DEPT. OF MENTAL HYGIENE-- EMPLOYEE HRS. S TAT E WID ERA T E S ........ w ...... oooo .. oo .. oo .. oo ow. 80~- 70 I 60 i V' \ ,, ~ , / 50 ... j' .... V ~ ". \ :0- . 1\, I > ! ..•.. 1/ '\ .J ~ N 40 I ~ ~. \. .. W ", II ", 1\ I' " -~/ - V - ' i-o- I ~\ ..... ~\ ~' \ V ...... .... \ J 30 I • ... .. .. •• OOoo ... 20 Jl • . - .... .... Il • • • ~ 10 .. ~" " ~" .. oo .... •• ..! .. .... ~". ... .. .... ... ' .. . •• • ' . . . . luI " > " " " o .. ' ~ L ~ 10 '---- ,- = :s: t-I ~ t-i ~~~~~l!._V._~.H.l_~~~)(~)(1 2 3 4)(1 2 3 4)(~ "•d 58 59 60 61 62 63 64 65 66 67 ~ ~ 70 \.It YEA R DATA FROM STATE PERSONNEL BOARD QUARTERLY TABLE 91 (REv' 5 - 1968) DEPARTMENT OF CONSERVATION DISABLING OCCUPATIONAL INJURIES FREQUENCY RATE - Number of injuries per 1,000,000 employee hours worked DEPARTMENT OF CONSERVATION ... ------------. STATEWIDE .....•....•..............•.......•••..................•.•.....•••.. 70 -- _:\ 60 : , \, -- , ' > • 50 \ , ,,' , ~ w~ L\, ,. , ,I, '~ \ /', , ,,' 1.." -- ~ ~ I', I \ b..~ 'At- t ' , ~.. , , ' .... I 40~ '~ / - \" I ~..,.. ., ~ .... i • 'I -1 ~ i I 30 L ~ e •• 20 I r - • + - ._ - . * . .e - o . , , . , - .••• f·f t.. .... .. ..... .. . ~ . • .. . •• ~I ______________________________________________________________ ~ .... ••• ..- ••• .+ ••• •••• ••• •• • ••., •••.••• a,a .t.i..l I-- e. ,. •••• ••• • _. t~.. ---- .; 10 fi•ll Q'\ ---- I-- o I I r-- 1--- 1- I I I I I- I I I I I -I I I I C 0 c . : > >. u• •c c(lJ i!:' u• •c c ClI 2 :.- u • • c O c J :~ u • • c cQ:).?. :' u• • c: c ClI Z :- u • • c c C1I . z:. u. .c; '1 '= ~ u• •c c CJ z:- u • o ::l3 ClI 0 ::l::l ClI 0 ::l::l (IJ 0 ::l::l (IJ 0 ::l::l Ci.1o ::l::l (IJ 0 ::l::l (IJ 0 ~:-. (IJ 0 ::l::l ClI "'") -:;,-:;, 0"'") "'")"'") 0"'") -:;,-".) 0"'") "'")"'") 0"'") "'")"'") 0"'") -~"'") 0"'") "'")"'") 0"'") "'")-:;, 0"'") "'")"'") 0 1962 1963 1964 1965 1966 1967 1968 1969 1910 FREQUENCY RATES OF DISABLING EMPLOYEE INJURIES DEPARTMENT OF CALIFORNIA HIGHWAY PATROL COMPARED TO STATEWIDE AGENCY RATES (RATES PER 1,000,000 EMPLOYEE HOURS) RATE; DEPT. OF CALIF. HIGHWAY PATROL--- 1,000,000 5 TAT E WID ERA T E 5 ••••• •••••••••••• , EMPLOYEE HRS ~ 140 130 120 110 100 , 90 , .. ~ ...... .. .. ~ > 80 ", I I i \ ., , / , 1\ 70 , ! \ ,I \ ! '. J\. l\ , :i \ , I ,( \ , 60 I , .' -\ I ~~ \ 1/ ~ \ , 'i \ If i\ / \ 50 • \ I \ .' ~ \/ J \ , i . > " ,.".- • 40 l/ ..... ' f ~ a rHIt ... .... ... 30 .. . .. . .... .' . . . .. 20 0. '. '" 0- . - " ..' .. ~. 0 · ..~.~ .. . .. . .., .. ..... . . . .. .~ '", 0 - • 1 1 ~ Il - - l 1 S 1 "IIJ 10 ..I. . ~ -~-- .~-~ ~~ ~ -- J -- ......J ____ L-- ~~~~~~~~)~~~~~ 58 59 60 61 62 63 64 65 66 67 68 69 70 YEA R DATA FROM STATE PERSONNEL BOARD QUARTERLY TABLE 91 (REV. 5-1968) DIVISION OF HIGHWAYS PERSONAL INJURY ACCIDENT fREQUENCY a 40 w ';;;L ~ ~ 35 VOl ~ ::l o :I: Z I 30 ~ i I I I z I I I I Q I I I --I I .. -J 25.59 25.33 25.53 I I 25 I ~~ ' \ ! I ""cx i I u.J I a.. I I ! ~ I ~ 20 ~20.30 I9Q ~ ~ I I ! > ~ ~ i tV J z ~ , I I & I 15 ~.86 14.62 i f I ~ Lt.J I ~ ~ § 12.58 ~ t- ~ .t.i.t. 11.85 ~ .., I-i 10.03 ~ 10 10.04 c • o o 9.96 ~ / ........ 9.10 --I 8.66 51950 1955 1960 1965 APPENDIX EXHIBIT r-9 STATEWIDE TOTAL ~ CALIFORNIA STATE VEHICLE ACCIDENTS PER MILLION MILES 20 ~ V i\ , V J ~ V RATE OF STATE VEHICLE ACflDENTS ~ ~ 15 ....... V V I'i\ / 1\ 1\ ~ V 1\ Ann. - ....... Rate 10 68-69 11.3 I 5 ~~~~~~~~~~~~ 58 59 60 61 62 63 64 65 66 67 68 69 10 YEA R DATA: STATE PERSONNEL BOARD TABLE 92-92A (REV. 10-1969) A-46 .6,80369-404 5-70 5M