A state audit predicts the Second Injury Fund will become insolvent next year.
The audit forecasts expenditures to outpace revenue by $57.5 million in the next two years. The audit lays blame on a couple of factors. The legislature made changes in the fund during the 2005 legislative session. Those changes did reduce the costs to the fund, but those reduced costs won’t kick-in in time to relieve the short-term problem. The legislature also capped the fund surcharge rate at three percent, insufficient to cover fund expenditures the next two years.
In addition, a State Supreme Court ruling earlier this year ordered the state to pay disability benefits to dependents upon the death of the injured worker.
The audit concludes that benefits would be in danger of not being paid if the fund becomes insolvent, because state law doesn’t guarantee payments through other means. Auditor Susan Montee says the Department of Labor and Industrial Relations or the General Assembly need to act to resolve the fund’s pending insolvency and adds in a letter to Governor Blunt, "None of the bills currently pending in the General Assembly make changes to address the short-term solvency of the fund."
Created in 1943, the Second Injury Fund provides benefits for disabled workers or workers injured on the job who suffered previous injuries.
Governor Blunt requested Auditor Montee to audit the fund.