02/12/2024 01:30 PM Senate LABOR & COMMERCE

          SB 183-WORKERS' COMP BENEFITS GUARANTY FUND                                                                       
                                                                                                                                
2:13:45 PM                                                                                                                    
CHAIR  BJORKMAN   reconvened  the   meeting  and   announced  the                                                               
consideration of  SENATE BILL  NO. 183, "An  Act relating  to the                                                               
workers' compensation  benefits guaranty fund; and  providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
2:14:24 PM                                                                                                                    
LAURA  ACHEE,   Staff,  Senator  Jesse  Bjorkman,   Alaska  State                                                               
Legislature, Juneau,  Alaska, presented SB  183 on behalf  of the                                                               
Senate Labor  and Commerce Standing Committee,  Senator Bjorkman,                                                               
Chair. She read from the following statement:                                                                                   
                                                                                                                                
[Original punctuation provided.]                                                                                                
                                                                                                                                
     In  recent  years  the Workers'  Compensation  Benefits                                                                    
     Guaranty  Fund  has   had  difficulties  making  timely                                                                    
     payments to  injured workers because the  Fund has been                                                                    
     subject  to   Constitutional  Budget   Reserve  sweeps.                                                                    
     Sweeping  the  Fund  balance  to  zero  each  year  has                                                                    
     created  a hurdle  to paying  claims until  its regular                                                                    
     revenues or  supplemental budget  appropriations become                                                                    
     available. Senate  Bill 183 would rectify  this problem                                                                    
     by moving the  Fund from the General Fund  to the State                                                                    
     Treasury, leaving its balance intact at the end of the                                                                     
      fiscal year as it would no longer be subject to the                                                                       
     CBR sweep.                                                                                                                 
                                                                                                                                
2:15:54 PM                                                                                                                    
CHUCK  COLLINS,  Director,  Division  of  Workers'  Compensation,                                                               
Juneau, Alaska, testified  by invitation on SB 183.  He said that                                                               
the Workers' Compensation Benefits  Guaranty Fund was established                                                               
in  2005  so that  employees  whose  employers had  neglected  to                                                               
insure for on the job injuries would  have a way to be covered in                                                               
the event of  injury. He stated that over the  years the fund has                                                               
paid  out  several  million  dollars  in  benefits.  These  funds                                                               
support  injured  workers  and   their  families.  He  said  that                                                               
currently  there are  over 20  ongoing cases,  several cases  are                                                               
children of injured  workers who were not able to  return to work                                                               
due to the  severity of their injury. He explained  that the fund                                                               
is made  up of  settlements and penalties  paid by  employers who                                                               
were fined for not being properly  insured. In the past, the fund                                                               
was held aside and only accessed  when it was needed. However, he                                                               
stated that  several years ago  the fund was swept.  He explained                                                               
that  it was  a  non-reverse  sweep and  to  date,  just over  $4                                                               
million has  been taken  from the  fund. He  said that  there are                                                               
several  pending  claims  in  addition   to  ongoing  claims.  He                                                               
explained  that  the  division  has  anywhere  from  6-12  claims                                                               
yearly.   The   division  works   to   bring   in  revenue   from                                                               
stipulations.  Referring  to AS  23.30.082,  he  stated that  the                                                               
division would like  to see protections for the fund  so that the                                                               
money  would  not  lapse  -  thus ensuring  that  the  funds  are                                                               
available to  those who  need them.  He referred  to a  member of                                                               
Chair Bjorkman's community  who was badly burned  while working -                                                               
and who continues to receive support from the guaranty fund.                                                                    
                                                                                                                                
2:20:25 PM                                                                                                                    
SENATOR BISHOP asked what the current fund balance is.                                                                          
                                                                                                                                
2:20:30 PM                                                                                                                    
MR. COLLINS  replied that  the fund balance  varies daily  and is                                                               
currently around $300 thousand.                                                                                                 
                                                                                                                                
2:20:42 PM                                                                                                                    
SENATOR BISHOP asked if the fund is owed $4.4.                                                                                  
                                                                                                                                
2:20:46 PM                                                                                                                    
MR. COLLINS replied that this is correct.                                                                                       
                                                                                                                                
2:20:48 PM                                                                                                                    
SENATOR DUNBAR  asked why  the guaranty fund  was changed  from a                                                               
non-swept fund to a swept  fund. He shared his understanding that                                                               
there  are constitutional  prohibitions  on  dedicated funds  and                                                               
asked how SB 183 can avoid the constitutional prohibition.                                                                      
                                                                                                                                
2:21:28 PM                                                                                                                    
MR.  COLLINS replied  that he  cannot speak  to the  legal terms;                                                               
however, he  explained that  all funds are  subject to  the sweep                                                               
action,  as  there  are  no   dedicated  funds.  He  stated  that                                                               
oftentimes, the legislature will protect  funds from the sweep by                                                               
voting for a  reverse sweep - which did not  happen in this case.                                                               
he explained that the division  approached the attorney general's                                                               
office and SB 183 is the best solution.                                                                                         
                                                                                                                                
2:22:30 PM                                                                                                                    
SENATOR GRAY-JACKSON  asked if there is  a plan to make  the fund                                                               
whole.                                                                                                                          
                                                                                                                                
2:22:46 PM                                                                                                                    
MR.  COLLINS replied  that  there is  no plan  to  make the  fund                                                               
whole. He  explained that it is  the will of the  Alaska Worker's                                                               
Compensation Board is to have the  money returned to the fund. He                                                               
clarified that  the division  and the department  do not  have an                                                               
opinion.                                                                                                                        
                                                                                                                                
2:23:21 PM                                                                                                                    
SENATOR GRAY-JACKSON  shared her  belief that  there should  be a                                                               
plan in place to make this fund whole.                                                                                          
                                                                                                                                
2:23:35 PM                                                                                                                    
SENATOR BISHOP  said that he has  a plan to make  the fund whole.                                                               
He shared  his belief that sweeping  the fund was a  travesty and                                                               
that  Alaskan workers  need to  know that  the state  cares about                                                               
them - one way to do this is to make the fund whole.                                                                            
                                                                                                                                
2:24:28 PM                                                                                                                    
CHAIR BJORKMAN held SB 183 in committee.