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State Office of Risk Management seeks increased workers’ compensation funding; air‑ambulance disputes noted
Summary
The State Office of Risk Management requested higher allocations for workers' compensation cost trends and described enterprise risk, continuity planning and a potential liability tied to air‑ambulance billing disputes.
AUSTIN — The State Office of Risk Management (SORM) told the Senate Finance Committee on Feb. 11 it expects higher workers’ compensation payments in the next biennium and asked the committee to fund increases tied to rising medical costs and indemnity payments.
LBB recommended roughly $116.5 million in all funds for SORM’s allocation program for 2026‑27, largely paid through interagency contracts, an increase of about $9.5 million above the current biennium. LBB cited a projected Medicare economic index increase and higher indemnity costs tied to statewide salary increases as drivers.
SORM Executive Director and State Risk Manager Steven Volpe explained SORM’s mission: long‑standing workers’ compensation management for state employees, continuity of operations planning, enterprise risk management guidelines and negotiation of insurance contracts for state liability and property coverage. Volpe said the agency had reduced state workers’ compensation costs in the late 1990s and continues efforts to return injured employees to work promptly.
Volpe and board chair Gerald Ladner also discussed a program of continuity planning created after 9/11 and an active portfolio of risk transfer products the agency negotiates on behalf of the state. SORM asked for authority to address higher medical and indemnity costs, noting a projected 4.6% increase in medical cost indices and a significant portion of indemnity rising from statewide salary movements.
The agency also flagged an unusual contingent exposure: a set of air‑ambulance billing disputes that, if decided against the state, could represent several million dollars in liabilities. Volpe said current statutory fee guidelines and a dispute over whether the federal Airline Deregulation Act preempts state fee rules had led to litigation and a potential exposure reported in SORM materials.
Committee members asked for further detail; SORM agreed to follow up with additional data and claimed the agency is addressing risk areas and continuity responsibilities that go beyond workers' compensation to support statewide resilience.
No committee votes were taken; SORM will provide further claims and cost trend information to staff as the budget process continues.
