June 19, 2018
Area Executive Vice President
Arthur J. Gallagher
Our 2017 year-end financial audit has been completed and approved by the Board the Directors. We had another good year related to our normal operations and without a large accrual, we roughly broke even for the year.
During 2017, the State of Missouri claimed that MUSIC had been calculating its workers’ compensation taxes and second injury fund payments improperly, although strictly according to the Division of Workers’ Compensation’s instructions. An additional $3.2 million was accrued in 2017 for the difference and were paid under protest. MUSIC has formally requested repayment of the funds and is now awaiting adjudication of those requests.
In the meantime, MUSIC filed bills with the 2018 Legislature to clarify the method of calculation. Senate Bill 981 passed the Senate by a vote of 31-0 and the House by a vote of 143-1. The bill was signed by Governor Greitens on his last day of office. The impact of the bill will be to return the rate calculations to the former method for the future, and we are also hoping will give our litigation a clear argument that the legislative intent would have been the former for the prior years.
We still have $23.2 million in member surplus which is certainly plenty to continue funding our ongoing operations and provide a nice level of cushion for a rainy day.
The full 2017 audit is available on the website under About MUSIC/Financial Audits.