Other veiws: Proposed WSI rate within reason

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A 3.3 percent increase in the average rate Workforce Safety and Insurance uses to determine premiums for employers in North Dakota would reflect a reasonable application of medical inflation and wage growth. It’s essential that WSI maintain an accurate rate, on average, to maintain protections for businesses and workers.

Unfortunately, the rate increase proposed by the WSI advisory board to the governor takes place on an investment backdrop in which employers haven’t seen the dividend rate credits that they had become used to in past years. WSI investment earnings, like for nearly every investor in 2009, were bleak. The resulting reserve fund balance did not exceed the minimum necessary to allow for premium credits to business. The prior year, those credits amounted to 62 percent of an employer’s premium.

The practical result has been businesses paying significantly larger WSI bills.

WSI investments have done better in recent months. In February, the reserve fund balance was at 146 percent of the required reserves. The minimum balance establishing dividend rate credits is 140 percent. Based on that, the expectation is that in June the decision will be made to offer credits beginning July 1.

One of the lessons learned from the meltdown of Wall Street was just how closely networked Main Street and Wall Street are. Investing in stocks and bonds has become so pervasive that no person in America went untouched by the financial crisis.

Although the 3.3 percent average rate increase sounds manageable, for particular segments of North Dakota business and industry the rate increases will be significantly higher. The state has 142 rate classes or job areas. Separate rates may go down as much as 14.4 percent or up 15.6 percent. For instance, in oil well servicing the rate will go down 5.5 percent, but in water well drilling operation it will go up 15.6 percent. For concrete work it would go down 4.8 percent, and for law enforcement it would go up 5.9 percent.

Given the roller-coaster ride businesses face in dealing with WSI payments, because of the combination of basic rate and premium credits, there might be a move to monkey with the rate based on investment markets and the resulting credits, but that would create long-term problems for both the agency and business. The rate needs to be sound on its own. And the fund, which has obligations well into the future, likewise must maintain its integrity.

Gov. John Hoeven should approve the proposed WSI rate increase.

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