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HomeMy WebLinkAboutCOM 0717.009 2004-2006 Harry Kim ,¢!+t. w y~~ Michael R Ben, SPHR Ma}or ..1i" ~ U'mYOrafAsso~d RmialdK Takahashi . IXpay'Ihrrcrar ofPasorw! County of Hawaii Department of Civil Senri.ce Hupuni Center a 101 Pauahi Stott, Suite No. 2 a Hifa, Hawni'i 96720-4224 a (808) 961-8361 o Fax (808) 961-8617 TCY (808) 961-8619 a e-mail: wfiGcs@w.hawaii.hi.us aJabs Infomiatian: Job Hotline (808) 961-8618 a e-mail: jobs@w.hawnii.hi.us March 24, 2006 Ms. Virginia Isbell, Chair and Members of the Committee on Finance 25 Aupuni Street Hilo HI 96720 Dear Chair Isbell and Members of the Committee on Finance: This is in response to the questions raised in the March 1 b, 2006 memorandum (RE: Operating and Capital Budgets and Program Review March 30, 2006, Day Two) from Deputy County Clerk William E. Smith and the Legislative Audit staff regarding our FY 2006-2007 operating budget. Our responses to the questions posed in the memorandum are as follows: 1. How much has been spent for the Employee Scholarship Program (5151.30/$15,000) in FY06, and for what purpose? No monies have been spent to date. We are in the process of finalizing procedures for implementation of the program. We anticipate starting the program effective May 1, 2006. 2. What vacant positions will not be filled in FY07? We expect to fill our one vacant position, Personnel Program Specialist (Labor Relations), by May 1, 2006. Thus, all our positions will be filled in FY07. 3. Why do workers' compensation claim costs continue to be high (FY07 General Fund budget alone is $2,500,000)? The workers compensation expenditures for the last four years are as follows: Comm. No. Rif. To: Pse Hawaii Cotutty is an Egttaf Opportunity ProviRer wuI Employer. Ref. ~ ct. M Q R 3 n 2~~6 Ms. Virginia Isbell, Chair and Members of the Committee on Finance March 24, 2006 Page 2 Total of All Five Workers' Compensation Accounts (General Fund, Highways, Wastewater, Solid Waste, Golf Course) FY 02 $3,312,164 FY 03 $3,687,829 FY 04 $3,427,020 FY 05 $3,249,742 FY 06 *YTD $1,993,614 (*07/Ol/05 - 02/28/06) 7% reduction between FY 03 FY 04 ($260,809 reduction) 5% reduction between FY 04 and FY 05 ($177,278 reduction) Costs increased between FY 02 and FY 03 because there was a conscious effort made to settle old, outstanding claims. Thereafter, reductions were seen as indicated above. These reductions occurred in spite of rising medical costs. We believe that the reduction in costs can be attributed to a combined effort of our department and line departments to implement safety and health training programs, form active safety committees, and perform aggressive workers' compensation claims management. That being said, however, costs remain high because of the number of claims that continue to be filed. Our efforts have not yet achieved full impact. There is still a lot of training to do, committees to form, and prevention programs to be developed. Also, the costs of investigations, litigation, and medical expenses continue to rise. 4. Does the Department still have a backlog of claims? If by "backlog of claims" you mean a number of claims that are not attended to on a routine basis, no, we do not have a backlog. Either our adjusters or the State (DHRD) adjusters handle all claims. Claims are acted on by an adjuster as needed, dependent on the issues related to each specific claim. We went from in excess of 800 open claims in 2001 to 489 open claims on 03/06/06. 5. Does the "Back to Work" program work? Yes, the County's Return to Work Program does work. The program was implemented on June 1, 2004. Thus far, eight employees have been placed Hawaii County u an F,yua[ Opportunity Proviler an6 Employer Ms. Virginia Isbell, Chair and Members of the Committee on Finance March 24, 2006 Page 3 in the program. Five were placed in light duty positions and were subsequently able to return to their regularjobs. Two were permanently placed in alternate positions. One was released from employment for having permanent restrictions that the County was unable to accommodate. It is well established that by returning an injured employee to some form of work immediately after an injury, recovery is speedier, and costs are reduced. The return to work program is just one component of the County's Safety and Heath Program. 6. Does the County need the Third Party Adjusters expense (5152.02/$125,000)? How much has been expended over the past three years? Yes, the County needs the Third Party Adjusters (TPA) expense in order to keep the number of claims per adjuster to a reasonable/workable number. The TPA expenditure for the past three years were as follows: FY 03 $44,062,59 FY 04 $75,014.09 FY OS $14,922.51 FY 2005 - 06 *YTD $38,965.54 (*07/Ol /05 - 02/28/06) The TPA expense ($125,000) is budgeted to cover the cost of those claims now being handled by the TPA, as well as an unanticipated need to refer additional claims (to the TPA). 7. Why did the General Fund Unemployment Compensation expense increase by $156,000 to $276,000 (5911.91)? Inasmuch as Unemployment Compensation is not part of our department's operating budget, we have referred the question to the Department of Finance for proper response. 8. Is the County still above the national average for workload per adjuster? Because workers' compensation laws differ vastly from state to state, we do not believe that there is a "national average." As an example, some states have caps on benefits that allow adjusters to manage a larger number of claims. Because of the structure of the Hawaii Workers' Compensation system, our claims remain open for many years. In a management study Hmvai`i County is an Equa[ Opportunity Provider and Employer Ms. Virginia Isbell, Chair and Members of the Committee on Finance March 24, 2006 Page 4 done for the state some years ago, the recommended workload was 135 claims per adjuster. The two County adjusters are currently handling a total of 258 claims (122 and 136). This would put them in the recommended range. I can be reached at 961-8361 if you have any further questions or are in need of clarification on any of our responses. Sincerely, Ronald K. Takahashi Deputy Director of Personnel cc: Harry Kim, Mayor Dixie Kaetsu, Managing Director William Takaba, Director of Finance Gary Takamura, Budget Administrator Hawaii County is an F~(ua[ Opportwtity ProviQer wui Empfoy+er