AUGUSTA, Maine — The annual assessment on workers’ compensation insurance policies, used to fund the Workers’ Compensation Board, has been reduced slightly, a sign more Mainers are working than a year ago.
The move pleased employers, who eventually pay that assessment through insurance premiums, and for the reflection of Maine’s employment trends.
“It’s always good news when costs are reduced, the cost of doing business is reduced,” said Peter Gore, vice president of the Maine Chamber of Commerce. He acknowledged the half percent reduction in the assessment will not mean big savings for employers, but is nonetheless significant given past increases in the assessment.
David Clough, Maine director of the National Federation of Independent Businesses, agreed that all employers, large and small, will benefit from even a slight reduction in costs.
“This is welcome news,” he said. “This is money that a small business can invest in the business, maybe in additional employees.”
The board is funded by the assessment on both insurance companies that sell workers’ comp insurance and an assessment on large companies that self-insure. The rate on insurers is 2.53 percent and the rate on self-insured companies is 4.41 percent.
All employers are required to provide workers’ compensation coverage so workers with on-the-job injuries get their medical bills paid and have income while recovering.
Gore said Paul Sighinolfi, executive director of the board for just over a year, has greatly improved the operations and deserves credit for reducing costs at the agency. The budget is $8.86 million for the year starting July 1, well below the $11.2 million authorized by state law.
“This is not just from our efforts to reduce costs,” Sighinolfi said. “We have some surplus funds from this year we are carrying over and we have some payments from past years as the result of some audits of past year assessments.”
He estimated that 40 percent of the reduction in the budget is the result of efforts to control costs, with most coming from the one-time sources. He said it is possible that next year the budget will have to increase.
“But we have been running more efficiently than we have in recent years and I expect that to continue,” he said.
Sighinolfi said he often questions spending, asking if there are less-expensive alternatives, or whether the expenditure really needs to be made.
“My finance guy gets a lot of questions,“ he said.
Sighinolfi said another factor in the lower assessment is the significant increase in the salary base on which the assessment is computed. Last year it was $188 million and this year it is $209 million. Gore said that is an indication that more Mainers are working and that the economy is starting to improve.
“There has been more hiring, there have been more businesses opening,” he said. “In 2008-2009 we saw the base go down as the recession hit and we had a lot of people losing their jobs and businesses.”
He said as the wage base declined, rates went up to provide the needed funds to operate the board. He said employers were hurt as they had more to pay when the economy was in decline.
Clough agreed and said the larger base is a definite sign of an improving economy. He said there have been several new small businesses started in the last year and some expansion.
“This is also an indicator that wages are going up as well,“ he said, “so it is a combination of new workers as well as higher wages that has lead to the increase in the base.”
Sighinolfi believes the increase is a result of many factors, including more workers, higher wages and an increase in the workers in job classifications that have high number of injuries. He said jobs in categories more likely to have claims have higher insurance premiums.
“A reporter or an executive director is not in a class where there are a lot of claims, but someone in the logging industry is,” he said, “so the premiums in the logging industry are significantly higher.”
Sighinolfi said he could not estimate how much of the wage base increase is from more Mainers working, but agreed it is significant.