Workers' compensation costs to the City of New Orleans are expected to rise to $24 million this year — well above their budgeted $16 million — along with another rise in claims, according to assistant city chief administrative officers Courtney Bagneris and Cary Grant. Bagneris and Grant gave the bad news on Oct. 3 to the City Council's budget committee. Costs in 2012 for workers' comp were nearly $22 million. Grant said he can't explain the massive hike and that an audit is in process.
Grant said before last year, workers' compensation costs typically fell within budget projections. Bagneris called the leap "an alarming change" as the city faces another lean budget of $500 million. In addition to the hike in workers' comp costs, the city also must factor in the millions of dollars dedicated to the New Orleans Police Department consent decree.
The city budgets funds for workers' comp with a self-insured payment program, rather than buying insurance from third-party insurers. With the increase in claims made by city employees in 2012, even "low-risk" departments faced increased per-employee expenses — from $300 to $1,700. "High-risk" departments, such as the New Orleans Fire Department (NOFD), are trying to make expense cuts where possible to avoid budgeting issues for workers' comp.
Mayor Mitch Landrieu will present his 2014 budget later this month.