Full-Year Compensation Costs | Mandatory Costs | 1998-1999 Support Book 2 | Fiscal Year Budgets | Budget | CSU
CSU Budget Office

1998-1999 Support Book 2 Documentation

Mandatory Costs: Full-Year Compensation Costs

The full-year cost of 1997/98 compensation increases is based on the estimated cost to fund full-year service-based salary increases (SSI) not funded in fiscal year 1997/98. For example, all SSIs are effective on employee anniversary dates. The CSU funds only that portion of the SSIs expended in the budget year, which would be 10 months for an employee with an anniversary date on September 1. The remaining months are funded in the subsequent year.

Workers' Compensation

Prior to fiscal year 1995/96, the CSU Chancellor's Office paid all worker's compensation claims and related expenses. The CSU funded workers' compensation on a cash basis as claims became payable. Beginning in fiscal year 1995/96, the campuses became accountable for workers' compensation liabilities. A Risk Pool now called the California State University Risk Management Authority, Joint Powers Authority (CSURMA, JPA) was developed and includes workers' compensation, as well as, liability, industrial disability, non-industrial disability, and unemployment. CSURMA is a mechanism that allows campuses to share the costs of claims payments. It is designed to help managers more effectively manage risk and holds managers accountable for containing liability costs. Each campus' base budget was increased by their pro-rata share of the CSU systemwide budget for all liabilities.

The goal of the CSURMA is to fund fully each year's liabilities as they are incurred protecting campuses from significant budget increases as liabilities become payable. Campuses pay a premium to the CSURMA each fiscal year to cover costs of claims attributed to the fiscal year, even though the claims may be paid over future years. Transition to full funding has been difficult due to the following factors:

  • Claims from prior years continue to generate current year payables;
  • Workers' compensation claims costs have been rising as payroll and staff have increased as well as benefit levels payable to injured workers since the early 1990's; and
  • Workers' compensation claims costs have accelerated as campuses aggressively seek to resolve long-standing claims lingering on the books.

In order to fund fully each year's liabilities, campus premium payments to the pool will increase in fiscal year 1998/99 approximately 20% over the 1997/98 premiums. The proposed $4.8 million increase will be allocated to campuses to mitigate premium cost increases.