Title 19 | Chapter 5 | Subchapter 8
SUBCHAPTER 8 - REIMBURSEMENT OF WORKERS COMPENSATION BENEFITS
It is the purpose of this subchapter that all programs, regardless of their funding source, contribute equally to the cost of workers' compensation benefits charged to the state agencies operating such programs.
History. Acts 1977, No. 924, § 1; A.S.A 1947, § 13-1407.1.
PLEASE NOTE: The Workers’ Compensation regulations are a compilation of ACA§ 19-5-801et seq. and may be reviewed in their entirety within the Arkansas Code.
Purpose, Authority, History and Administration
Applicable Arkansas Code
Rate Calculation Procedure
Contribution Accounting Procedure (P1-19-5-801, P2-19-5-802, and P2-19-5-803)
FISCAL YEAR-END ACCRUAL PROCEDURE
All programs of state government shall contribute their fair share to the cost of workers’ compensation benefits charged to the state agencies operating such programs. To do this, each state agency receiving an appropriation of Regular Salaries, Extra Help, or Authorized Overtime from Treasury or Cash Funds shall contribute from their Personal Services Matching Funds a percentage of their gross payroll.
Refer to Workers’ Compensation Revolving Fund Law and Reimbursement of Workers’ Compensation Benefits – ACA § 19-5-940 and 19-5-801 through 19-5-809.
Workers’ Compensation requirements for Arkansas State Government were established under the authority of Acts 924 of 1977, 807 of 1979 and 25 of 1981 and incorporated into ACA § 19-5-940 and 19-5-801 through 19-5-809.
The Department of Finance and Administration-Office of Administrative Services (DFA-OAS) administers this program for the Chief Fiscal Officer of the State of Arkansas.
Applicable Arkansas Code:
ACA § 19-5-801 Purpose
"It is the purpose of this subchapter that all programs, regardless of their funding source, contribute equally to the cost of workers’ compensation benefits charged to the state agencies operating such programs."
ACA § 19-5-802 Definitions
1. "Payroll" means the gross total amount expended for a payroll period for regular salaries, extra help, and authorized overtime payments;
2. "Contributions" means a percentage of payroll expenditures paid to the Workers’ Compensation Revolving Fund by a state agency in order to provide current and timely reimbursements of benefits paid by the Arkansas Workers’ Compensation Commission for workers’ compensation benefits charged the agency;
3. "Experience rate" means the process of adjustment in a future period of the contribution rate of an agency based on the difference of the amounts paid to the revolving fund for a fiscal year compared to the amounts of workers’ compensation benefits charged to the agency for a fiscal year in order to recover deficits and refund surpluses; and
4. "State agency" means any state agency, board, commission, department, institution, college, university, and community junior college receiving an appropriation for regular salaries, extra help, and authorized overtime payable from funds deposited in the State Treasury or depositories other than the State Treasury by the General Assembly.
ACA § 19-5-804 Administration
"This subchapter shall be administered by the Chief Fiscal Officer of the State. The Chief Fiscal Officer of the State shall have the authority to establish procedures and to make such rules and regulations as are necessary to enforce the provisions of this subchapter."
ACA § 19-5-806 Contributions Generally
"Each state agency shall make contributions to the Workers’ Compensation Revolving Fund, using the experience rate determined in accordance with this section, from personal services matching costs funds within fourteen (14) calendar days following the end of each calendar quarter. The experience rate for each even-numbered fiscal year will be used to fix the rate for the next even-numbered fiscal year. Each odd-numbered fiscal year’s experience rate will be used to fix the next odd-numbered fiscal year rate. If during any fiscal year the Chief Fiscal Officer of the State determines that the contribution rate for any agency will result in a significant surplus or deficit for that fiscal year, he shall have the authority to adjust the agency contribution rate to reduce such surplus or recover any such deficit, subject to the provision of ACA § 19-5-807."
ACA § 19-5-807 Maximum Contributions
"In the event a state agency builds a deficit which would require a contribution rate greater than two percent (2%), the agency shall continue to make contributions at the rate of two percent (2%) until any deficit owed the fund is repaid. In the event that an agency’s experience rate exceeds two percent (2%) for one (1) full fiscal year their contribution rate shall be adjusted to equal their experience rate, not to exceed a maximum of five percent (5%).
Their contributions shall remain at that level until their experience rate decreases and their accumulated deficit is repaid."
Notification of the next fiscal year’s contribution rate for each state agency shall be distributed by March 1 of each year. These rate assignments shall be forwarded to the DFA-Office of Budget as well.
A newly established agency shall be assigned a contribution rate equal to the experience rate of state government agencies as a whole (the total claims divided by the total salaries). Contribution rates for second and subsequent years’ shall be established through experience rating. The rate calculation method is outlined herein.
To each agency’s current balance:
Add each agency’s pro-rata share of accrued interest,
Add the projected interest through the next fiscal year,
Add the contributions yet due from current year rates,
Subtract projected claims through the next fiscal year,
Subtract the desired fund level (75% of the last 2 years average of claims).
These steps will have established the amount of contributions due for the next fiscal year. Each agency’s contribution rate is determined by dividing the contributions due amount by the projected salaries for the fiscal year.
Workers’ compensation rates may not exceed 5% of the agency’s total gross salaries.
Rate Calculation Procedure
A. At the time a new agency is appropriated salaries, it shall be assigned a contribution rate equal to the experience rate of state government agencies as a whole. (The total claims divided by the total salaries). Second and subsequent years’ contribution rate shall be established in accordance with the rate calculation process below.
B. Contribution rates for the upcoming fiscal year shall be calculated, and these rates shall be sent to the agencies by March 1 of each fiscal year. These rate assignments shall also be sent to the Office of Budget.
C. The following is a general outline of the rate calculation process:
1. Compute the last 2-year average of expenditures. 75% of this total is the desired funding level.
2. Distribute interest to each account using the agencies’ pro-rata share of the fund balance.
3. Project expenditures for the next fiscal year using the agencies’ pro-rata share of the last 2 years of expenditures.
4. Project the contributions yet due based on the current fiscal year rates.
5. To the current balance (after interest has been distributed):
a. Add the projected interest through the next fiscal year,
b. Add the contributions yet due from current year rates,
c. Subtract project expenditures,
d. Subtract the desired fund level.
6. These steps will have established the amount of contributions to be collected the next fiscal year.
7. Divide the agencies contributions requirement by the salary projections for the next fiscal year to determine the contribution rates.
Contribution Accounting Procedure
Quarterly contributions are due within 14 calendar days following the end of each calendar quarter.
At the end of each quarter, agencies with workers’ compensation rates other than zero shall receive an invoice from DFA-OAS for the compensation due amount payable to:
1515 WEST 7th, ROOM 700
PO BOX 2485
LITTLE ROCK, AR 72203
The vendor code is 9990613 for workers’ compensation contributions. The general ledger code is 5010009000 for workers’ compensation contributions. Unemployment and Workers’ compensation contributions may not be combined on a single state warrant or check.
AASIS provides the gross amount expended for a payroll period for all state agencies except the Drug Task Forces. Gross amount expended for a payroll period for Workers’ Compensation purposes is downloaded from the State of Arkansas’ Accounting System into an invoice. These invoices are generated by the DFA-OAS and are distributed to the agency each quarter through messenger service, e-mail or regular mail. Copies of invoices shall be sent only with checks. The agency number and the quarter ending date shall be provided on the state warrant stub by keying this information in the text box on the basic tab when processing the payment in AASIS. See P1-19-5-801
In the event an agency does not participate in AASIS, the agency must complete pro-forma invoices that will be mailed out to the agency each quarter. These pro-forma invoices must be submitted to the payee along with the remittance. See P2-19-5-802
DFA-OAS deposits these warrants and checks to the Workers’ Compensation Revolving Fund (TUW). The TUW Trust Fund shall be used by the Public Employee Claims Division of the State Insurance Department to pay for workers’ compensation claims of state employees charged to the applicable agency.
Call the DFA-OAS Fiscal Accounting Section at (501) 324-9060 with any questions about workers’ compensation contributions.
Call (501) 371-2700 with any questions about workers’ compensation claims.
Fiscal Year-End Accrual Procedure
Each state agency shall record a journal entry utilizing the State of Arkansas’ Accounting System’s transaction ENTER GL ACCOUNT DOCUMENT for the amount of the accrued but unpaid quarterly Workers Compensation contribution to be provided by DFA-OAS. Conversely, the Workers Compensation Trust Fund will record a reciprocal amount due from all the agencies for the unpaid accrual.
The Department of Finance and Administration-Office of Administrative Services-Fiscal Accounting (DFA-OAS-FA) shall e-mail the 4th fiscal quarter invoices to the agencies after the fiscal quarter’s close. Agency contributions are due 14 days after the fiscal quarter closes. A memo shall be attached to each agency invoice reminding the agencies to book the fiscal year-end liability in AASIS and to reverse the prior fiscal year’s liability accrual entry. An advance payment memo shall be attached to the invoices applicable to those agencies which prepay the 4th fiscal quarter invoice prior to the quarter’s close in order to avoid erroneously booking a year-end accrual entry.
DFA-OAS-FA shall record a receivable for agency workers compensation contributions due reduced for amounts received as advance payments.
Workers Compensation Administrative Cost Reimbursements
Each state agency’s share of the administrative costs of processing the Workers Compensation claims attributable to that agency is to be transferred to State Insurance Department-Public Employee Claims Division (PECD). The Insurance Department computes the amounts and the request for the transfer of funds is sent to DFA-OA-Funds Group. The computations also include those amounts due by public school employees, and it is administered by the Department of Education. The Treasurer of State administers the charges for the county and municipal employees.
This fund transfer is usually done in the first month of each quarter for the previous quarter. Since the amount due for the last quarter of each fiscal year is not computed until July of the following fiscal year, the amount due should be accrued in the closing books as soon as DFA-OA-Fund Group sends the amount.
The Insurance Department-PECD sends a worksheet with the calculations per agency and fund. Since funds and appropriations may change over time, the DFA-OA-Funds Group Manager sends a spreadsheet to the agencies that may have changes to make. Any changes requested are made. The Funds Group transfers the funds to the Insurance Department-PECD fund from the agency’s funds within a week after the notification. The information is sent to DFA- Office of Budget. (ACA 11-9-307)