A suburb of Phoenix is re-considering how it manages its funds in order to ensure that this city's injured employees will receive their workers' compensation benefits to which they may be entitled.
This city is self-insured for worker's compensation, meaning that in lieu of paying a regular premium for some other company to cover workers' comp claims for things like lost wages and medical expenses, the city maintains sufficient funds of its own in order to pay its employees when they get hurt on the job. Incidentally, the city is also self-insured with respect to medical coverage and already has an independent board overseeing those funds.
However, Arizona law requires that the city's dedicated workers' compensation funds be held in a trust. Many of our readers probably know that a trust effectively designates certain property that a person or company cannot use except in conformity with the instructional document that creates the trust. In fact, a trustee is duty-bound to manage the money in the trust so that it is conserved for its intended purpose.
One benefit to this approach is that it helps employers-including governmental agencies that may be strapped for cash-resist the temptation to raid funds that injured employees may desperately need to help support their families in a difficult time. In this case, an independent board will oversee this city's worker's comp funds once the city fully implements its new law creating a trust for them. An auditor will also regularly review the trust.
Source: Arizona Republic, "Chandler ponders management of workers' comp funds," Maria Polletta, Jan. 9, 2013