DJC Op-Ed: SAIF and workers’ comp: If it ain’t broke, don’t touch it Posted on September 8, 2017 by Karla Holland Oregon and its leaders have a history of being able to look forward, of being visionary. The list illustrating Oregon’s leadership on tough public issues is long: ensuring open access to beaches, the Bottle Bill, Oregon’s land use system and the workers’ compensation system, to name a few. Over 100 years ago, Oregon leaders saw a need to help workers recover from workplace injuries, heal themselves, be retrained if needed, and get back to productive work. In 1914, the Oregon Legislature created the State Accident Insurance Fund, which also goes by the acronym SAIF. In 1980, Oregon restructured SAIF, and created the nation’s first public workers’ compensation corporation. By 1986, Oregon gained the dubious honor of having the sixth-highest average workers’ compensation premium rates in the nation, and one of country’s highest frequencies of worker injuries and claims. Medical and disability costs for injured workers were among the highest in the country, but benefit levels for some types of injuries were near the lowest. Some charged that Oregon’s workers’ compensation system was paying out too much in benefits for questionable claims, and that too much of the benefits that were being paid were going to lawyers or care providers of uncertain reputation. In short, the system was failing. In 1990, then-Gov. Neil Goldschmidt convened a labor-management work group that focused on improving and restructuring Oregon’s workers’ compensation system. The workgroup reached agreement on a number of changes to the system. These changes — known as the “Mahonia Hall Reforms” — were enacted into law in a one-day special session in May of that year. The reforms increased benefits to injured workers but decreased the number of workers getting benefits. Criteria for reopening claims were tightened. Other changes eliminated the formal hearings process for resolving treatment disputes, required the use of strict standards in determining disability awards, allowed lump-sum settlements for accepted claims, and doubled benefit awards for certain injuries. There was also a substantial commitment made to the use of return-to-work and safety programs. Since these reforms (and further changes in 1995) were enacted, the performance of Oregon’s workers’ compensation system has been a shining example of a government entity that works and works well. For example: More than 40 percent of Oregon’s employers have purchased workers’ compensation insurance through SAIF. SAIF has among the lowest system costs in the United States. Oregon’s workers rank in the 80th percentile in receiving temporary disability benefits. Statewide, reported workplace injuries have fallen by almost 50 percent. Workplace fatalities have fallen by almost two-thirds. In 1988, the average premium cost per $100 of workers’ wages was $4.86. By 2014, the rate had dropped to $1.37, a reduction of almost 72 percent. By comparison, the average national premium average in 1988 was $3.42 per $100, and it had declined an average of about 54 percent by 2014. This performance in Oregon continues to this day and is, by any measure, a success story. In the late 1990s I was part of a team representing Intel during its period of rapid expansion in Oregon. The company was in the process of making decisions that would bring thousands of jobs and billions of dollars in investments. Oregon was a competitor once again for those investments, having lost to other states in the late 1980s and early 1990s. In working with state and local governments to help make Oregon competitive for Intel’s future growth, we would tell the story about why the company chose to make Oregon its first expansion site outside California. Back in the mid-1970s, when Intel began to look at where to grow, Oregon had numerous competitive advantages: a well-trained and available workforce; an excellent education system; a working transportation system; abundant clean water; low-cost energy; and a predictable land-use system that provided for developable industrial land. By the time the company was looking at its next major burst of growth 20 years later, Oregon’s primary competitive advantages had basically shrunk to two: a state law limiting tax property tax liability for multibillion-dollar investments, and a low-cost, stable workers’ compensation system. Today, Oregon is facing serious fiscal challenges. Despite near-record economic performance and the generation of over a billion dollars of unforecasted additional revenue, our state is still facing serious deficit challenges because our leadership continues to kick the PERS and Medicaid cans down the road. In 2017, the Legislature acted on the Medicaid part of the problem, but that effort may be facing political or legal challenges. Unfortunately, the legislature did not act on PERS reforms. Reforms are critical if Oregon is to reduce PERS’ $22 billion unfunded liability, a situation that has become a vacuum for public funding that could otherwise go to education programs, infrastructure improvements, and other public needs. Until these challenges are met, Oregonians will be facing multibillion-dollar deficit challenges for many years into the future. The governor has appointed a taskforce to develop options to reform PERS that will be available for review by the governor and Legislature. This is a good thing. If there was ever a time for visionary leadership in solving a public problem, now is the time. Unfortunately, the taskforce is not focusing solely on structural reforms to PERS. Among the options being considered are fully or partially privatizing SAIF or even using some of SAIF’s reserve as one-time revenue sources. These are not — should not — be options to address Oregon’s deficit problems. SAIF is one program that is working and working well. Oregon’s workers have been well served by the system. We have improved workplace safety, reduced injuries, implemented programs to return workers back to full health and back to work, and reduced premium costs. In trying to solve one serious problem, Oregon shouldn’t re-create another. As the saying goes, “If it ain’t broke, don’t fix it.” In the case of SAIF and Oregon’s outstanding workers’ compensation system, the saying should be, “If it ain’t broke, don’t touch it.” Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or firstname.lastname@example.org. This column originally appeared in the DJC on August 15, 2017 and can be viewed here (subscription required).