STATEMENT OF BASIS AND PURPOSE FOR
AMENDMENTS TO THE WORKERS’ COMPENSATION RULES OF PROCEDURE
7 CCR 1101-3

BASIS:  §8-47-107, C.R.S. provides the Director of the Division of Workers’ Compensation with authority to adopt and amend proper rules and regulations to govern the proceedings and hearings of the Division.  In addition, §8-44-112 and §8-46-102 provide the Director authority to annually review and adjust surcharge rates based upon appropriations made for the direct and indirect costs of the administration of the workers’ compensation system. 

PURPOSE:  Adjust the premium surcharge rate paid by insurance carriers and self-insured employers.  The amendment will provide sufficient funding for the Workers’ Compensation Cash Fund while decreasing the amount going into the Special Funds.  To be effective July 1, 2009, this rule must be adopted before the final outcome of certain legislative proposals is known.  For example, Senate Bill 09-37, if passed, will not go into effect until August, 2009. That bill reflects the legislative intent to slow down the amount of revenue going into the Special Funds.  This adopted rule takes that intent into account, while also balancing the following: maintaining a sufficient fund balance for the TABOR reserve, preparing for SB09-279, and attempting to generate investment income.  As a result of the adopted rule the total surcharge will be lowered.

The rule amendments addressed the following subjects:

Rule 2-5 Surcharge Rate

(A) 	Increase in the workers’ compensation cash fund premium surcharge rate. 

(B)	Changed year 2007 to 2009.

(C)	Decrease in the special funds premium surcharge rate.                                                           

Pursuant to §24-4-103(4)(b), C.R.S., the Director finds that: 1) there is a demonstrated need for the rule amendments; 2) the proper statutory authority exists for this regulation; 3) to the extent practicable, the rules are clearly stated so that their meaning will be understood by any party required to comply with the regulation; 4) the rules do not conflict with other provisions of law; and 5) the duplicating or overlapping of the regulation is explained by the agency proposing the rules.

Effective date of the new rule will be July 1, 2009.

Bob Summers						      5/04/2009
Bob Summers							Date
Director
Division of Workers’ Compensation