The cost of administering the city of New Orleans workers’ compensation program is projected to increase sharply next year — nearly six times for some employees, according to 2014 budget projections shared with The Lens.
On Thursday, Courtney Bagneris, the city’s interim risk manager, is expected to give the City Council budget committee a preliminary report on an audit of the program, said Lauren Hotard, a spokeswoman for Councilwoman Stacy Head. That should include some explanation for the increase, she said.
City Budget Director Cary Grant told the budget committee in August that the city was experiencing a “large uptick” in workers’ compensation claims this year. The city budgeted $16 million for such expenses this year; he said he expected claims to exceed $24 million.
While significant, that’s nowhere near the sixfold increase projected in next year’s budget, from about $300 to $1,700 per employee. Grant did not address the 2014 projections in his presentation.
Such an increase would cost the city about $2.5 million more in next year’s budget of about $500 million.
Head revealed the 2014 price jump during an Aug. 30 Lens live chat on the city’s 2014 budget, writing that the Council Fiscal Office had just informed councilmembers of the increase for their staff’s personnel costs. “We don’t know why” the costs are rising, she wrote.
Assistant City Council Fiscal Officer David Gavlinski said he learned of the increased cost when his office was using the city’s computerized budget system to prepare the council’s budget reports for 2014. The system automatically put the council’s workers’ comp cost at $1,700 per employee, he said.
In September, New Orleans Inspector General Ed Quatrevaux told The Lens that a budget document showed a “similar increase” in his office’s personnel budget. In a follow-up email Wednesday, Quatrevaux said he has since been told that his office would not see such an increase.
Chief Administrative Officer Andy Kopplin “told me by phone that the OIG cost allocation would remain at last year’s $326/per capita, and not be increased as originally stated,” Quatrevaux wrote.
In a Wednesday phone interview, City Council Fiscal Officer Calvin Aguillard said the administration has not given his office an update since he saw the $1,700 rate in late August. He added, however, that the figure could change after Thursday’s report.
Rather than buying insurance to pay claims for workers injured on the job, the city self-insures, putting a certain amount into its program based on the risk factors of certain types of employees.
As a December 2012 Office of Inspector General report on workers’ compensation cost shows, the $300 figure applies to about 1,900 of the city’s low-risk workers. Per-employee costs for higher-risk employees are greater — up to $3,400 for police officers and $13,800 for firefighters.
In the August meeting, Grant said the city had hired a forensic auditor to review claims data from Hammerman and Gainer Inc., the company hired last year to manage the program for an annual fee of $610,000. The Office of Inspector General’s report noted that the program had not undergone an independent audit in more than a decade.
Last month, Kopplin said rates for all employee categories will go up next year, but he did not say how much. Asked to explain the sharp increase reported by the Council Fiscal Office, Kopplin said, “We’ve gotten some questions on that so we’re looking into whether workers comp has been calculated correctly.”