Payments on retrospective deposit balances resumed July 1, 2013 for the liability program, and are scheduled to resume July 1, 2015 for the workers’ compensation program. Some members have chosen to establish payment plans, which provide for an extended payback period of up to six years. Since payment plans are in place for some members, the Authority’s annual contribution invoice will now have three sections:

1.  Annual Contribution
2.  Retrospective Adjustment for the Current Year
3.  Payment Plan Installment

Payment plans were drafted based on the cumulative balances that existed at the time they were established. Retrospective adjustments occurring thereafter may result in additional deposits due. When this occurs, those additional deposits will be added to the invoice as a retrospective adjustment for the current year, in addition to the payment plan installment.

Standard Sequence for Applying Retrospective Refunds
Some members with payment plans in place, are also scheduled to receive retrospective refunds from the October 2013 retrospective computation. This situation has created the need for a standard sequence for applying retrospective refunds. The standard sequence has been developed and is stated below.

1st To the next scheduled payment plan installment, in the same program as the refund
2nd To the principal balance of a payment plan, in the same program as the refund
3rd To the next scheduled payment plan installment and principal balance, in the other program
4th To the upcoming year’s annual contribution
5th If the refund is still not exhausted, a refund check will be issued for the remaining amount

Some of the steps in the sequence may not apply to your agency this year. If so, we will skip to the next applicable step. A survey regarding this issue was e-mailed to Managers, Risk Managers, and Finance Directors on April 3, 2014. The survey provides members an opportunity to opt-out of the standard sequence if they prefer to keep payment plans unchanged. This means that retrospective refunds will be applied as a credit to the annual contribution. Alternatively, for members who opt-in, retrospective refunds will go to pay down retrospective balances first. The exhibit linked below illustrates how each agency’s annual contribution invoice for 2014-15 will look under both scenarios (opt-in vs. opt-out).

Opt-in vs. opt-out Comparison

Payment Plan Modifications
Opting-in to the standard sequence for applying retrospective refunds will result in payment plan modifications, but only if all of the following conditions apply: (1) A payment plan has been established, (2) a refund is pending from the most recent retrospective adjustment, and (3) the amount of the refund exceeds the next scheduled payment plan installment. If all three conditions apply, the payment plan will be recalibrated as follows.

1.  The principal balance will be reduced by the application of the refund
2.  The fee will accrue on the revised, lower, principal balance beginning July 1st
3.  The fee rate will remain the same
4.  Scheduled payments will remain the same (the final payment will adjust to balance)
5.  The payback period will be shortened, based on the size of the refund

The points stated above represent the Authority’s standard methodology for recalibrating payment plans to account for new retrospective refunds as they occur each year. This methodology keeps the annual payments the same relative to the original payment plan and it shortens the payback period as much as the refund will allow.

Incentive Plan
The incentive plan is still available for the Workers’ Compensation program. It provides discounts to members who are willing and able to voluntarily accelerate payment on retrospective deposit balances owed to the Authority. Incentive plan payments can be made in any amount, and as often as desired for partial or full debt reduction. Payments under the incentive plan must be received by the dates shown below in order for the applicable discount to be recognized.

Payments received between 01/01/14 – 06/30/14 will receive a 2% discount.
Payments received between 07/01/04 – 12/31/14 will receive a 1% discount.

For more information contact Lam Le, Financial Analyst, at (562) 467-8729 or by e-mail at

8081 Moody Street, La Palma, CA 90623
Phone: (800) 229-2343
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