North Dakota’s workers compensation agency has $174.4 million more in reserves than state law allows, two years after the Legislature set a limit on its surplus, a new audit report says.
The audit, done by the Brady Martz & Associates accounting firm, also says the Workforce Safety and Insurance agency did not adequately restrict its staffers’ access to customers’ credit-card numbers.
Auditors considered the findings to be a “significant deficiency” in internal control over financial reporting, the audit’s conclusions say.
Cindy Ternes, the agency’s finance director, said the credit-card problem was rectified in a few days, shortly after auditors pointed it out in August. No credit-card numbers were misused, she said.
Rather than displaying an entire credit-card number, the WSI system now only shows the last four digits, Ternes said.
Many agency customers use credit cards to make payments for premiums or assessments, she said. “It’s a daily event,” she said.
Mark Armstrong, an agency spokesman, said variations in the investment returns on WSI’s financial portfolio made it difficult to meet legislative mandates for its surpluses.
The board is “trying to steer this ship to hit a target over a period of time,” Armstrong said. “They’re getting closer to the target.”
Two years ago, lawmakers approved a bill directing Workforce Safety to keep its reserves at between 120 percent and 140 percent of the reserve the agency’s actuary says it needs.
As of June 30, that would have limited the surplus to $146.2 million to $292.4 million, the audit says. However, the surplus on that day was $466.8 million, which is almost 164 percent of discounted reserves, the audit says.
Workforce Safety has been trying to reduce its surplus by giving dividend payments to employers, by setting aside money for business grants to encourage safe workplaces and for education loans for workers. The agency’s critics say it should put more emphasis on increasing benefits for injured workers.
The audit says WSI’s total assets total $1.61 billion. Its actuary estimates the agency has $730.9 million in potential claims payments.
The agency’s audit committee reviewed the findings Wednesday. Its full board of directors is scheduled to discuss them Thursday, when it meets at WSI’s Bismarck headquarters.
WSI plans to pay almost $68 million in dividends to companies during its current budget year, the audit says. During its 2007 budget year, the agency took in $15.4 million less in premiums than it paid out in benefit claims.
North Dakota employers are required to buy WSI’s coverage for their workers, which provides medical and rehabilitation benefits for employees who are injured on the job.
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