To the Editor:
I write as an advocate for a healthy and stable workers’ compensation system in Rhode Island.
Article 2, Section 2 of Gov. Daniel J. McKee’s proposed budget (H5076) proposes to amend and increase the indirect cost recovery statute of Rhode Island General Law 35-4-27. With exception, this statute presently mandates the transfer of 10% of the balance, per year, from every state restricted receipt account to the General Fund. If passed as proposed, the budget change will increase the cost of every employer’s workers’ compensation insurance.
The administrative fund at the R.I. Department of Labor and Training is a “restricted receipt account” that pays the bills of the Rhode Island workers’ comp system. No tax money is used to pay for the Workers’ Compensation Court, the Workers’ Compensation Unit at the DLT, the [Chief Judge Robert F.] Arrigan Rehabilitation Center [a state-operated, nonprofit outpatient rehabilitation facility in Providence], etc.
This cost is approximately $24 million per year. The fund is annually capitalized by an assessment of workers’ compensation insurers and self-insured employers based on Rhode Island premiums paid by employers. The Rhode Island assessment is among the highest rates in the country. And in 2024, the DLT increased the assessment from 5.5% of written premiums to 6.5%, a 16% hike. This, of course, leads to increased premiums paid by employers. The primary reason for the increase is that since 2005, 10% of the fund, or over $20 million, has been taken from the workers’ comp system under the “indirect cost recovery” statute, and transferred to the General Fund to try and balance the budget.
The budget article proposes an increase to this “indirect cost recovery” by 50%, from 10% to 15%. This means over $3 million annually, paid by employers for workers’ compensation insurance, will be removed from the workers’ comp system to the General Fund. You can keep a safe workplace, get injured workers back to work, help your carrier manage claims and none of it will matter. Your premiums will go up.
The workers’ comp system can, and should, no longer be subject to this statute. I suggest every employer reach out to their state legislator, object to the increase in the indirect cost recovery statute and ask that the General Assembly add the “administrative fund” at the DLT to the list of statuary exceptions to this statute.
Michael D. Lynch
Consultant for Workers’ Compensation Association of Rhode Island Employers
North Kingstown
