The Comprehensive Annual Financial Report and Workers’ Comp Audit

The State Auditor’s Office has released its 2011 Comprehensive Annual Financial Report (CAFR) Summary.  Total government expenses declined 7.42 percent from 2010, with the largest reductions coming from workers’ compensation (-71.44 percent) and unemployment insurance (-21.97 percent).

Unemployment compensation activity reported operating income of $171 million in fiscal year 2011 versus a loss of $985 million in fiscal year 2010.  Unemployment premium revenues collected from employers rose approximately $300 million and benefits paid decreased about $1 billion from the prior fiscal year. This billion dollar reduction in benefits reflects a decrease in the number and duration of claims, the end of a federal supplemental payment and some claimants exhausted benefits.

The Unemployment Trust Fund has a cash balance of $2.554 billion at June 30, 2011. According to Standard & Poor’s, most states do not have a positive balance in their unemployment fund and Washington state has sufficient cash to fund benefits for 15
months.

Similarly, “Workers’ compensation activities reported a gain of $1.8 billion in fiscal year 2011 versus a loss of $1 billion in fiscal year 2010.”  That’s due to increased premium revenues as well as claims expenses being reduced $3 billion, “mainly due to the effect of workers’ compensation reform legislation and the expectation of lower future claims costs.”

More information on the workers’ compensation program is available in the Auditor’s audit of the program during FY 2011, which was also released this week.

More points of interest from the CAFR summary:

  • Tax revenues increased 8 percent over 2010: “Moderate increases in sales and business and occupation tax revenues were due to a slight increase in taxable sales largely due to an increase in the business and occupation tax rate on services and a tax penalty amnesty program.”
  • The state debt burden increased 1 percent.
  • The Budget Stabilization Account balance as of June 30, 2011 was $564,000 (at the end of FY 2008, the balance totaled $302.7 million).
  • PERS 1 and TRS 1 have significant unfunded liabilities, but the liabilities declined in 2011 thanks to the legislature’s elimination of an automatic annual benefit increase.

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