Economy Affects Oregon Workers’ Compensation Division Revenue

March 24, 2009

Like most businesses and organizations in Oregon, the Department of Consumer and Business Services (DCBS) announced it is being impacted by the economic recession. Because DCBS programs are funded by fees and assessments paid by the industries it regulates, Oregon’s declining employment and payroll are affecting the revenue it collects, the WCD said.

The two funds that support the workers’ compensation system are directly related to Oregon’s employment base — the premium assessment (paid based on payroll) and the Workers’ Benefit Fund assessment (paid based on cents per hour worked). Due to the current economic conditions, the projected revenue decline through 2011 is more than $20 million in the premium assessment operating account alone, the WCD said.

The department said it has taken responsible steps to manage the projected revenue shortfall, including using funds from its reserves, increasing collections revenue, withdrawing budget proposals, not filling vacant positions, and cutting spending.

Unfortunately, those steps will not be enough to meet the revenue shortfall, the division said. In recent weeks, the division said it has notified 27 department employees that they will be laid off over the next few months. Of these, 14 are in the Workers’ Compensation
Division
.

The positions selected for layoff were based on a number of criteria, including areas where revenue sources are affected more than others, areas where workload has declined, areas where programs have been reduced in scope and no longer need the current staffing level, or areas where functions can be consolidated.

Economic conditions have been worsening more quickly than expected, and, as a result, the depth and length of the recession is very difficult to forecast, WCD said. Managing through this period will be challenging. “We believe the steps taken to address the projected revenue shortfall will not harm our ability to achieve our core regulatory mission and that customer service will not be impacted,” said John Shilts, WCD administrator.

WCD said it is developing projections about the potential revenue impact on the Workers’ Benefit Fund and will update employers as it continues to monitor the effects of the recession on its programs.

Source: WCD

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