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During their regular meeting Jan. 15, the Glendale Unified School District Board discussed a report that showed the district needs to address increasing workers’ compensation costs. Stephen Hodgson, chief business and financial officer for the district, prepared the report. “This is the second year we’ve had a retrospective premium adjustment,” he told adjustercom.com. “We thought it was time to put together a more extensive report to explain it to the board and the community.”

Historically, the district has used a 65 percent confidence level when budgeting for workers’ compensation premiums. According to Hodgson’s report, that level worked well for 20 years but for the past two years 65 percent has been insufficient. For the year 2000-01 the district had to handle a shortfall of approximately $1.6 million. Last year’s deficit was just over that at $1.7 million.

The excess expenditures come out of the district’s operating budget. “Every dollar we pay in workers’ compensation premiums is a dollar not available for our core mission.” To deal with the shortfall Hodgson said the district would probably have to raise its confidence level to 75 percent. “If we had changed the level two years ago we wouldn’t have to do this at all.”

The district’s director of public information, Vic Pallos, told adjustercom.com that Glendale’s workers’ compensation budget is no different than any other districts’ but they want to address the added costs because they are under proposed state budget cuts.

Hodgson said the cost increase could be attributed to several factors including higher medical treatment bills, an increase in the number of claims and more long-term claims being filed, such as psychological stress, which cost more than medical-only injury claims. Plus, the district is self-insured but must secure excess insurance coverage the cost of which has doubled in the past year from $130,000 to $250,000 according to the report.

“When the stock market is booming insurance companies aren’t worried about their premiums, but during a recession they take a closer look at premium prices,” said Hodgson.

Board members had specific questions about the report such as what types of claims are the most common and what types of employees (i.e. teachers, custodians or cafeteria workers) file the most claims. “It wasn’t a pleasant report to present but I think there will be positive fallout from it,” said Hodgson. “We will identify where the expenditures are and what their causes are.”

During the next several weeks Hodgson will research the board’s questions and present his findings at a later date.