LEGISLATIVE FISCAL ESTIMATE

SENATE, No. 1469

STATE OF NEW JERSEY

215th LEGISLATURE

 

DATED: SEPTEMBER 12, 2012

 

 

SUMMARY

 

 

Synopsis:

Provides surviving spouses of certain fire and police personnel who die in the line of duty with workers' compensation for entire period of survivorship.

Type of Impact:

Indeterminate expenditure increase: State General Fund; Local Government funds

Agencies Affected:

Department of the Treasury, local government entities.

 

 

Office of Legislative Services Estimate

Fiscal Impact

 

 

 

 

State Cost

Indeterminate – See comments below

 

Local Cost

Indeterminate – See comments below

 

 

 

 

·        The Office of Legislative Services (OLS) estimates that this bill could have long term costs of an indeterminate amount to the State General Fund for payments to surviving spouses of State troopers and State firefighters.

·        With respect to the surviving spouses of local fire and police personnel who die in the line of duty, it is estimated that the bill could have long term costs of an indeterminate amount to local government entities.

·        The OLS notes that this bill may be considered a State mandate under Article VIII, Section II, paragraph 4 of the New Jersey State Constitution “State Mandate, State Pay” because it requires local entities that fund fire or police departments or forces to provide workers’ compensation death benefits to surviving spouses for the entire period of survivorship.

 

 

BILL DESCRIPTION

 

Senate Bill No. 1469 of 2012 provides workers' compensation benefits to surviving spouses of members of the State Police, State firefighters, and members of local fire or police departments or forces who die in the line of duty during the entire period of the spouse’s survivorship, even if the spouse remarries.  Currently, surviving spouses of deceased members of the State Police, State firefighters or members of local fire or police departments, like other surviving spouses under workers’ compensation, receive a lump sum payment, upon remarriage, of 100 times the amount of weekly compensation paid immediately preceding the remarriage.  Under the bill, a surviving spouse of a State trooper, State firefighter or member of a local fire or police department or force who died in the line of duty will continue to receive weekly workers' compensation benefits as long as the surviving spouse lives, regardless of marital status.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received

 

OFFICE OF LEGISLATIVE SERVICES

 

The OLS estimates that this bill could have long term costs of an indeterminate amount to the State General Fund and to local governments.  The OLS cannot determine the total cost of the bill due to: (1) an uncertainty in the total number of future eligible surviving spouses; and (2) the fact that local workers’ compensation benefits are paid by the workers’ compensation insurer, so that the cost will be recovered from local governmental entities in the form of increased premiums, not directly in the form of benefit payments.  The State self insures for workers’ compensation and thus any increased cost will directly impact the General Fund.  While the OLS cannot determine the total cost of the bill, following is information that may be helpful to understand the financial impact of this legislation, including: a brief history of workers’ compensation benefits for surviving spouses, an estimate of the lifetime cost of this benefit for each surviving spouse, the current surviving spouse population and a rationale on determining the future surviving spouse population.

Prior to 1966, surviving spouses received workers compensation benefits for up to 350 weeks.  In 1966, State law was amended to provide workers’ compensation benefits to spouses for the entire time of survivorship, but after 450 weeks the benefits were adjusted to include an offset for any salary the surviving spouse may have earned.  In 1990, the law was amended to its current form and workers’ compensation benefits were extended to the entire time of survivorship, regardless of the survivor’s income.  However, the benefit is discontinued if the spouse remarries and instead the spouse is eligible for a one time payment of 100 times the weekly benefit at remarriage.

In order to better understand the potential financial impact of Senate Bill No. 1469, it is useful to estimate the cost of providing lifetime benefits to one survivor.  The estimated cost of providing benefits for one survivor, of a death occurring in 2012, is $1.85 million.  This cost is calculated by first determining that the maximum 2012 workers’ compensation benefit rate for a surviving spouse is $810 a week, or approximately $42,120 a year, for the period of survivorship, unless the spouse remarries.  Furthermore, the average age of death for a State trooper killed in the line of duty has been 30 years old.  The average difference in age for married couples is two years in the United States (United States Census, 2000).  The average life expectancy for a female is 80 years (CIA World Fact Book, 2007).  Thus, the estimate is based on a 28 year old woman who would live to be 80 years old.  Benefits to such a surviving spouse would cost $42,120 annually for 44 years, or approximately $1.85 million over her lifetime.  Of course, under existing law, the State or local entity already would pay this amount for the entire period of survivorship in most instances, unless the surviving spouse chooses to remarry.  Senate Bill No. 1469 would only have increased costs for the State or local unit associated with those surviving spouses who do remarry, which as is illustrated in this estimate is a small percentage of a small population.

The exact population of surviving spouses is difficult to determine; however, according to the New Jersey State Police Survivors of the Triangle there have been 21 State police survivor spouses since 1966.  The Division of Fire Safety reports that there have been no deaths of State firefighters and there were approximately 43 local firefighter survivor spouses between 1998 and 2008.  According to Garden State Concerns of Police Survivors (COPS), there were 53 local survivor spouses between 1984 and 2008. 

It is also useful to understand the population of surviving spouses who remarry since, upon remarriage, the surviving spouse no longer collects workers’ compensation benefits.  According to Survivors of the Triangle, six of the 21 (28 percent) State police surviving spouses since 1966 have remarried and, according to Garden State COPS, seven of the 53 (13 percent) local police surviving spouses between 1984 and 2008 have remarried.  We are unable to determine this information for local firefighters.  It cannot be determined to what extent the potential loss of benefits is affecting the decision to remarry and what the behavior of the surviving spouses will be if Senate Bill No. 1469 is enacted. 

To ascertain the future number of surviving spouses requires extrapolating from the historical death rates for State troopers, State firefighters, local police officers and firefighters and their marriage status. On average, a State trooper dies in the line of duty once every 1.4 years and approximately three local police officers and four local firefighters die per year.  Historically, almost all of the State troopers and local firefighters, and approximately 75 percent of the local police officers were married, and left surviving spouses.  Therefore, using this projection, in ten years there will be approximately seven State police, 23 local police and 40 local firefighter surviving spouses.  It is rare for a State firefighter to die in the line of duty and thus they are not included in this estimate.

The State’s cost of providing benefits is different than local units. The State is a self insurer and provides for the cost of workers’ compensation benefits through a General Fund appropriation.  Local government entities purchase workers’ compensation insurance through joint insurance funds.  Therefore, the cost of providing the benefit would be in any increased premiums, not in the direct payment of benefits.

In summary, this legislation, if enacted, will have indeterminate costs to the State General Fund and to local government entities.  These costs are difficult to determine and are dependent upon many variables. The OLS has noted several factors that relate to these costs, including: the current lifetime cost to the State or local government of these benefits for each surviving spouse; the number of current surviving spouses; the current rate of remarriage; and the population of surviving spouses in the future.

 

 

Section:

Commerce, Labor and Industry

Analyst:

Robin C. Ford

Senior Fiscal Analyst

Approved:

David J. Rosen

Legislative Budget and Finance Officer

 

This legislative fiscal estimate has been produced by the Office of Legislative Services due to the failure of the Executive Branch to respond to our request for a fiscal note.

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).