The Funding Commission was established as a result of the 1987
Extraordinary Session of the Kentucky General Assembly to address workers'
compensation issues. In 1986, Governor Martha Layne Collins appointed the Task
Force on Workers’ Compensation to review current conditions, report findings
and recommend solutions. Research by the Task Force indicated that the
outstanding liability for all injuries and disabilities occurring before July
1, 1986, approached $1.6 billion.
The 1987 legislation then created the Commission to establish a
stable funding plan to retire the pre-1986 liabilities and pre-fund a portion
of subsequent liabilities of the special fund and to fund the
administration and operation of the of the Commission and the Kentucky
Labor Cabinet. In 1996, in response to a rise in outstanding liabilities of the
Special Fund to more than $2.5 billion, additional legislative action closed
the Special Fund to future claims and codified December 31, 2018 as the
"sunset" date for funding the outstanding liability. In 2010,
the law was amended to extend the full-funding date to December 31, 2029.
Tasked to administer
the workers’ compensation benefit reserve fund, the Commission is responsible
for performing audits and collection functions associated with the fund. The
resulting assessments provide the financial resources necessary to administer
the benefit reserve fund from which workers’ compensation benefit are paid to
injured workers in claims in which liability has been assessed against the
special fund. As the Funding Commission works toward the 2029 sunset of its
funding strategy, its fiduciary obligations are focused on controlling,
investing, and managing the funds designated to provide for the pre-1996
claims. The Funding Commission is required to determine the annual assessment
rates and investment strategies that will generate sufficient resources to
retire this liability.