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| | Portland, Oregon Audit Inspires Idea of Fire And Police Disability System Becoming Part Of Workers' Comp By Lonce LaMon - June 26, 2011
With cities all over the United States facing economic hardship and huge budget problems, the city of Portland, Oregon, is recommending the city move firefighters and police officers currently covered by the City of Portland Fire and Police Disability and Retirement system (FDPR) into the city’s workers’ compensation program.
The belief is that by combining the two programs, it will reduce the duplicative efforts of having to pay for two employee disability programs, and will reduce costs in the taxpayer-funded Fire and Police Disability and Retirement system.
Property taxes have supported the system, and with declining property values and foreclosures, less tax revenues are flowing into the system. Thus, because disability costs are not paid out of the base General Fund budgets of the Police and Fire Bureaus, there is little financial incentive for the bureaus to control disability costs, the auditors said.
“As a basic business practice, [maintaining two systems] is not cost-effective or administratively efficient for the volume of claims generated by a mid-sized employer with approximately 5,000 employees,” the report said.
Among the other problems created by having two disability systems are:
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Under the workers’ compensation system, there is a formal process to determine if an employee is permanently disabled, which if determined, entitles the injured worker to receive a monetary payout to close the case. No such PD award exists under the Portland Fire and Police Disability and Retirement system, allowing injured workers to collect disability benefits until retirement.
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By maintaining the Portland Fire and Police Disability and Retirement system, Portland is giving up state subsidies for returning injured public safety officials to work, because the subsidies are only available to employees covered by workers’ compensation.
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A separate Portland Fire and Police Disability and Retirement system property tax discourages cost control.
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If no action is taken, property taxes will increase and other government services will continue to be eroded as FPDR requires an increasing share of local government tax dollars,” the report noted.
lonce@adjustercom.com
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