Call to Order and Roll Call
The 2nd meeting of the Interim Joint Committee on Labor and Industry was held on Thursday, July 18, 2013, at 10:00 AM, in Room 131 of the Capitol Annex. Representative Rick G. Nelson, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Alice Forgy Kerr, Co-Chair; Representative Rick G. Nelson, Co-Chair; Senators Perry B. Clark, Chris Girdler, Denise Harper Angel, Ernie Harris, Jimmy Higdon, Dennis Parrett, and Mike Wilson; Representatives Lynn Bechler, Regina Bunch, Denver Butler, Jeffery Donohue, C.B. Embry Jr., Toby Herald, Thomas Kerr, Adam Koenig, Charles Miller, Terry Mills, Tanya Pullin, Tom Riner, Jim Stewart III, and Brent Yonts.
Guests: Commissioner Sharon Clark, Department of Insurance; Secretary Larry Roberts, Labor Cabinet; Deputy Secretary Rocky Comito, Labor Cabinet; Commissioner Anthony Russell, Department of Workplace Standards; Executive Director Bill Riggs, Workers’ Compensation Funding Commission; Secretary Thomas O. Zawacki, Education and Workforce Development Cabinet; Commissioner Beth Brinly, Department of Workforce Investment.
LRC Staff: Carla Montgomery, Matt Ross, Adanna Hydes, and Betsy Nickens.
Co-Chair Nelson welcomed members and guests to the second meeting of the interim. A motion and second were made to approve the minutes of the July meeting. Co-Chair Nelson mentioned upcoming interim meetings in September and October. Representative Donohue welcomed newly appointed Deputy Secretary Rocky Comito. Representative Bechler asked for remembrance for a family affected by a drowning in Union County. Co-Chair Nelson welcomed Commissioner Sharon Clark, who presented background and the status of the Kentucky School Boards Insurance Trust (KSBIT).
Kentucky School Boards Insurance Trust
KSBIT formed in 1978 to provide insurance limited to school districts, non-profit institutions of higher education, and other tax supported agencies. As a self-insured group, reports were made to the Department of Workers’ Claims until 2004 when the AIK self insurance fund became financially insolvent. Governor Fletcher, through an executive order, transferred the responsibilities for oversight for all self-insured groups from the Department of Worker’s Claims to the Department of Insurance.
In 2008, when Commissioner Clark took office, reports from the year before noted a decline in revenues for KSBIT. In 2009, Kentucky League of Cities (KLC) and KSBIT would financially partner. KLC, through its workers’ compensation fund, transferred a total of 8 million to KSBIT funds. Of those funds, 5.5 million were transferred to the workers’ compensation fund to bring it into solvency and 2.5 million were transferred to the property and liability fund. The board was formed, represented by 17 members of school boards and KLC members. KLC took over administrative operations and actuarial functions.
In 2011, the KSBIT board reported a deficit of 4 million, despite efforts to sustain solvency over the previous year. In July 2012, KSBIT gave notification that the board had made a decision not to offer insurance and would proceed with formal assessments of those formerly insured. Commissioner Clark said the Department of Insurance is considering three options to bring KSBIT back into solvency. First, the department could seek to rehabilitate the insurance fund. This would be the most expensive option. Second, a loss portfolio transfer would be a complete transfer of the business to another entity. School boards would be assessed, but then could walk away from responsibility. Major insurance companies with the experience and financial solvency to handle this transfer have been solicited for bidding to buy the business. Third, other entities were solicited to serve as a run-off to the fund. In this scenario, an entity would take over the fund, but the school boards would still be responsible for the remaining debt after the run-off.
In response to questions from Representatives Pullin and Yonts, Commissioner Clark said various options are available to school districts upon assessment as to how they pay, whether it is through a bonding company, lump sum, or by monthly payment, etc. A list of the school districts to be assessed will be available to the committee.
Overview from the Labor Cabinet
The newly appointed Kentucky Labor Cabinet Secretary, Larry Roberts, introduced new leadership within the cabinet, Deputy Secretary Rocky Comito and Commissioner Anthony Russell, Department of Workplace Standards. Secretary Roberts served eleven years as the director of the Kentucky State Building and Construction Trades Council following 29 prestigious years in state government. Deputy Secretary Comito is a member of the United Auto Workers, having worked with Ford Motor Company from 1974 to 2011. During his tenure at Ford, he served in various offices with the UAW representing the membership. Commissioner Anthony Russell has 20 years of experience with the Labor Cabinet and served 11 years as the director for the education and training division, as well as the administrative safety manager for the Transportation Cabinet from 2005 to 2012.
Secretary Roberts discussed educational outreach programs conducted by the Labor Cabinet, including the Safety and Health Conference, the Apprenticeship and Training Conference, and the Labor Management Conference, as well as other initiatives such as TRACK – Tech Ready Apprentices for Careers in Kentucky. By increasing various other outreach endeavors, Secretary Roberts aims to increase the efficiency of the cabinet.
Overview from the Workers’ Compensation Funding Commission
Executive Director Bill Riggs, Workers’ Compensation Funding Commission, was appointed to the position effective February 1, 2013. He discussed program’s background. Created in 1987 to hold, administer, invest, and reinvest funds collected for specified workers’ compensation liabilities. The commission is required to establish the annual assessment rates necessary to fund various programs.
Education and Workforce Development Cabinet
Secretary Thomas O. Zawacki, Education and Workforce Development Cabinet, and Commissioner Beth Brinly, Workforce Development, were introduced. Secretary Zawacki was appointed in July after serving three years as the commissioner of vehicle regulation in the Transportation Cabinet and is a retired Toyota executive.
In conclusion, Co-Chair Kerr complimented the appointments of Labor Cabinet Secretary Roberts and Secretary Zawacki. She praised the hard work of Commissioner Brinly.
There being no further business the meeting adjourned.