Seattle Courant

In Olympia, Senate Democrats Seek Changes to Retro Program

By Keith Vance
February 19, 2009 03:02PM

The Retrospective Rating program, called Retro, is a government sponsored organization that allows employers to reduce their Labor and Industry costs by pooling together to handle workers' compensation claims and to improve workplace safety. If the employer has fewer insurance claims than expected, they get a refund. If they have more, they will pay more.

The issue, according to Democrats, is that "a recurring miscalculation of refunds ... has depleted the industrial accident fund of more than $100 million, and perhaps as much as $150 million," the bill reads.

But Republicans assert that this bill is political payback because the BIAW spent millions of dollars from its Retro program to fund political attack ads against Democratic Gov. Chris Gregoire last year when she was running against Republican Dino Rossi.

The bill's sponsor, Sen. Jeanne Kohle-Welles D-Seattle, said that the purpose of this bill is to provide "transparency and oversight." She said that the intention of the bill is not get rid of Retro programs or silence political opposition.

She encouraged everyone to "really read this bill and not make assumptions."

The Senate bill 6035 states: "In some cases, those overpayments to the sponsors of retrospective rating plans have been returned to employer members of those plans and in some cases have been used to fund the activities of the sponsors of those plans.

...

The legislature further finds that although the overpayment by the department of labor and industries was not intentional, the error resulting in the overpayment was not identified in the numerous reviews and analyses that have been conducted in the fifteen years since the erroneous calculations began. The legislature finds that additional evaluations and increased transparency of the retrospective rating system are needed."

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To restore public confidence in the use of retrospective rating funds, the legislature intends to make information concerning the sponsoring entities' administration of the program publicly available."

Sue Mathews of T.I. Northwest Corp., a Puyallup contractor, testified on Tuesday in support of the bill.

"The common sense reforms of the bill should have been adopted years ago," Mathews told the Senate Labor, Commerce and Consumer Protection committee.

Last year, Mathews said her small company paid $23,688.67 in Labor and Industry taxes for 15 full time employees.

"That's kind of a large chunk of money," she said.

Rep. Janea Holmquist, R-Moses Lake, said that Retro program participation is entirely voluntary. So if employers have an issue with the political actions of their industry's Retro program, they can chose to not join.

"Correct," said Rick Dubrow, president A-1 Builders in Bellingham, "but the funds, as I understand it, went to administrative costs for this particular program, not for political partisan uses."

And not joining a retro program will cost the employer more money in Labor and Industry taxes, because that's the point of Retro programs, to keep costs low for small businesses that can not purchase their own workers' compensation insurance.

To counter the Democrats' bill Holmquist has her own Retro bill, Senate bill 5464, but it doesn't require public disclosure of Retro program accounting.

Opponents who testified against the bill on Tuesday, spoke on the benefits of the Retro program, but did not address the issue of transparency, or why such transparency would harm Retro programs.

Speaking in favor of the bill, Dubrow said, "This program is completely lacking in rigorous and transparent accounting, and utterly fails to safeguard the substantial workers' compensation premiums we are required to pay by law."

Sen. Rosa Franklin, D-South Tacoma, said the bill is not questioning the usefulness of Retro programs, "It's about accountability."

Read the full text of Democrat-sponsored Senate bill 6035
Read the full text of Republican-sponsored Senate bill 5464