39-71-2505. Payment of unfunded liability for injuries resulting from accidents occurring before July 1, 1990. (1) The state fund shall pay for the cost of administering and paying claims for injuries resulting from accidents that occurred before July 1, 1990, not covered by any other funding source, by borrowing from the reserves accumulated from premiums paid to the state fund, based upon wages payable on or after July 1, 1990, and invested by the board of investments, from time to time, the amount that the state fund determines and that the budget director certifies, as provided in 39-71-2354, will be needed to pay for administering and paying the claims for the ensuing year.
     (2) In January of each year, prior to the start of the following fiscal year, the state fund shall forward to the budget director information pertaining to the amount that the state fund will borrow for the ensuing fiscal year to pay for the cost of administering and paying claims for the injuries provided for in subsection (1). In addition, the state fund shall forward to the budget director the schedule of projected liability payments and cash needs on which the amount to be borrowed is based. The schedule must include but is not limited to total projected liability payments, loans and bond debt payments, revenue from the old fund liability tax provided for in 39-71-2503, projected fiscal yearend cash, and the projected fiscal yearend cash for the year 2007.
     (3) There is imposed on each employer a workers' compensation old fund liability tax as provided in 39-71-2503. The employer old fund liability tax is an amount equal to 0.5% of the employer's payroll for wages paid in the preceding payroll period for wages paid for employment, as defined in this part.
     (4) The employee old fund liability tax is an amount equal to 0.2% of the employee's wages in the preceding payroll period for wages paid for employment, as defined in this part.
     (5) Except as provided in subsection (7)(e), the old fund liability tax is an amount equal to 0.2% on the profit of each separate business of a sole proprietor and on the distributive share of ordinary income of each subchapter S. corporation shareholder, partner of a partnership, or member or manager of a limited liability company.
     (6) The rate of the employer old fund liability tax determined by this section includes the 0.28% employer old fund liability tax provided for in 39-71-2503.
     (7) (a) The old fund liability tax imposed under 39-71-2503 and 39-71-2505 terminates on either January 1 or July 1 of the year in which claims for injuries resulting from accidents that occurred before July 1, 1990, are projected to be adequately funded.
     (b) As used in this part, "adequately funded" means the present value of:
     (i) the total cost of future benefits remaining to be paid;
     (ii) the cost of administering the claims; and
     (iii) an additional amount equal to 10% of the total of the amounts in subsections (7)(b)(i) and (7)(b)(ii).
     (c) Each fiscal year until the old fund liability tax terminates, the independent actuary engaged by the state fund pursuant to 39-71-2330 shall project the unpaid claims liability, as of the following June 30, for claims for injuries resulting from accidents that occurred before July 1, 1990.
     (d) The old fund liability tax terminates on January 1 if, by October 15 of the prior year, the budget director certifies to the department that, based upon the independent actuary's selected best estimate ultimate projections and as approved by the state fund board of directors, claims for injuries resulting from accidents that occurred before July 1, 1990, will be adequately funded as of January 1.
     (e) The old fund liability tax terminates on July 1 if, by February 28 of the year the budget director certifies to the department that, based upon the independent actuary's selected best estimate ultimate projections and, as approved by the state fund board of directors, claims for injuries resulting from accidents that occurred before July 1, 1990, will be adequately funded as of July 1.
     (f) If the old fund liability tax terminates on July 1, the amount of tax imposed under subsection (5) is an amount equal to 0.1% for the full calendar year.
     (g) In determining whether claims for injuries resulting from accidents that occurred before July 1, 1990, are adequately funded, the estimated future amounts of old fund liability tax must be included.
     (h) By October 1 of each year following the first full fiscal year after termination of the old fund liability tax, any funds in excess of the adequate funding amount established in subsection (7)(b) must be returned to the account established in 39-71-2321 to pay claims for injuries resulting from accidents that occurred after July 1, 1990. Under this section, the total amount of funds returned to the account may not exceed $63.8 million.
     (i) If, in any fiscal year after the old fund liability tax is terminated and claims for injuries resulting from accidents that occurred after July 1, 1990, are not adequately funded, any amount returned to the account in 39-71-2321 to pay claims for injuries resulting from accidents that occurred after July 1, 1990, pursuant to subsection (7)(h) must be transferred back to the account established in 39-71-2321 to pay claims for injuries resulting from accidents that occurred before July 1, 1990.
     (j) The independent actuary engaged by the state fund pursuant to 39-71-2330 shall project the unpaid claims liability for claims for injuries resulting from accidents that occurred before July 1, 1990, each fiscal year until all claims are paid.
     (8) The old fund liability tax described in this section must be collected and deposited as provided in 39-71-2321 and 39-71-2503.

     History: En. Sec. 5, Ch. 637, L. 1993; amd. Sec. 1, Ch. 27, L. 1995; amd. Sec. 28, Ch. 276, L. 1997; amd. Sec. 34, Ch. 491, L. 1997.