Workers' Compensation court warns proposed assessment diversions will deplete cash fund

Laura O'Banion, administrator of the Nebraska Workers' Compensation Court, told the Appropriations Committee the court's operating model is designed to be self‑sustaining through assessments on insurers and self‑insured employers, with an abatement provision that stops assessments when the fund reaches a threshold.

O'Banion warned that a preliminary budget recommendation to divert 40% of self‑insured assessments, combined with proposed cash transfers of $1.5 million in 2026 and $1.0 million in 2027, would have a significant negative impact on the court’s cash fund and could force a request for general‑fund dollars in future years. "If both the 40% diversion of assessments and the cash fund transfers occur, the cash fund will be depleted as soon as December 2027," she said.

She asked the committee to either avoid the transfers or, if the committee proceeds, adopt a sunset provision on the 40% diversion so the court can preserve its statutory purpose of self‑sustainability. The court also requested an additional one‑time cash appropriation of $175,000 to cover lease build‑out costs that the court argues will generate long‑term savings compared with rolling build‑out costs into rent.

Committee members discussed timing, variability of assessment receipts (which are collected in March–May each year), and recent historical transfers that complicated cash‑fund projections. O'Banion emphasized that the court's cash fund balance should not be viewed as "unused cash" because assessments are timed to cover the court through the next collection cycle.

What happens next: the court's projections and sunset request are now part of the committee record as budget decisions move forward.