Auditors: Workers’ comp officials overcharged insurers to rebuild fund
The state improperly charged Connecticut insurance companies and small businesses $450,000 last fiscal year to recoup a legislative raid on the Workers’ Compensation Administration Fund, the state auditors reported Tuesday.
But in a written response to auditors John C. Geragosian and Robert M. Ward, the Workers’ Compensation Commission insisted the assessment was necessary to ensure it had enough cash to run its operations.
Each year the commission assesses self-insured employers and companies writing workers’ compensation insurance to cover the costs of running both the workers’ compensation system and the Department of Rehabilitative Services, which helps injured workers.
The General Assembly and Gov. Dannel P. Malloy took $450,000 from the workers’ compensation fund in December 2012 as part of an omnibus package of spending cuts and fund raids to help close a roughly $250 million, mid-fiscal-year shortfall in the general fund.
In response, the commission built that $450,000 into its expenses – and thus its related assessment – for the 2013-14 fiscal year, Geragosian and Ward wrote.
“A fund balance transfer of that nature would not normally be regarded as a direct or indirect operating expense,” the auditors added. “Insurers appear to have been assessed at a slightly higher rate than the amount considered sufficient to meet budgeted operating expenses.”
Commission Chairman John A. Mastropietro could not be reached for comment Tuesday morning. But in the commission’s written response to the auditors, it said the $450,000 was needed “to ensure there will be sufficient funds to meet the cash flow needs of the agency for the first six months” of the 2013-14 fiscal year.
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