State Colleges Need Opportunity to Control Workers Compensation

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By Michael W. Klein

“Doing more with less” is a recurring theme these days for families and businesses. It’s also true for New Jersey’s state colleges and universities. Step one is figuring out what you’re spending in the first place. In the case of the state colleges, their workers compensation costs are a surprisingly large expense. Fortunately, the governor and the legislature are offering the institutions the authority to help themselves, while preserving and perhaps enhancing their workers’ safety.

Between fiscal year 2000 and fiscal year 2009, the state colleges and universities’ workers compensation claims increased over 145%, from $1.5 million to $3.7 million. These nine institutions are currently part of the State government’s system that covers all State employees, and state colleges and universities think they can do better. In the face of significant appropriations cuts and tuition caps over the past several years, they have a great incentive to reduce these costs.

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One of the bills in the governor’s “tool kit” would authorize the state colleges and universities to establish a joint-insurance fund—a JIF—to purchase and administer workers compensation coverage. The legislation is bipartisan, sponsored by Senators Teresa Ruiz and Tom Kean, Jr., and Assemblyman John DiMaio. It passed the Senate Budget and Appropriations Committee on August 16, and the institutions hope it will reach the governor’s desk this fall.

The state colleges and universities welcome the responsibilities, and understand the challenges, that come with administering a JIF for workers compensation. That is because they will gain:

  • Greater ability to scrutinize claims and determine the causes—and perhaps develop ways to prevent—injuries.
  • Clearer predictability over costs. It is difficult to budget for workers compensation costs when there is little control over claims. The State often settles cases that result in payments that the state colleges believe, with greater analysis and litigation when necessary, they can prevent or reduce.
  • Improved coordination of return-to-work programs and medical-cost containment programs, which will benefit employees.

To be sure, starting up a JIF will have some costs. Expenses include administrative and legal costs to establish the fund; hiring a third-party administrator to manage the program day to day; and contracting with counsel to handle litigated claims.

In the long-run, however, joint-insurance funds are an established, respected way of administering workers compensation insurance in New Jersey. Municipalities and the county colleges have them. The county colleges, in fact, provide the model for our JIF legislation. They have had the authority to administer their workers compensation coverage under a JIF since 1985, and their program has been an unqualified success.

The state itself would benefit from authorizing the state colleges and universities to maintain their own workers compensation program. The State would no longer need to administer the institutions’ claims, and it could devote more resources to State agencies with greater risk profiles.

Reforming workers compensation insurance at the state colleges and universities will not fix a broken model for funding public higher education. That is a nationally recognized problem, and we await the recommendations from Governor Christie’s Higher Education Task Force, chaired by Governor Tom Kean, to address that overarching, fundamental issue.

In the meantime, with the call to do more with less, New Jersey’s state colleges and universities need the flexibility to examine and control their expenses. Gaining authority over workers compensation is a small but important step in that direction.

Michael W. Klein is the director of government and legal affairs for the New Jersey Association of State Colleges and Universities, and is a resident of Pennington.


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