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Layoffs coming to California's state workers compensation fund


SAN FRANCISCO—The California State Compensation Insurance Fund will cut 1,500 to 1,800 jobs, or about 25% of its workforce, next year as part of a $350 million cost-saving plan, the state insurer said Thursday.

In a statement, SCIF said it will “redesign its operations” in order to cut down on expenses and losses. The fund said it plans to close some of its office locations, a move that is expected to save $200 million annually, while the job cuts are expected to save the fund about $150 million per year.

SCIF said much of the restructuring will start next year, with layoffs planned for May or June.

The state insurer decided on the workforce reduction after it hired a research firm to review its operations.

“Based on the benchmarking data and the company's own analysis, the evidence is clear that State Fund needs a fraction of the workforce it employs today,” the statement said. “Even after increasing staffing targets to account for State Fund's unique work associated with legacy claims and state/special contracts, at the end of 2011 State Fund anticipates being overstaffed by more than 30%, approximately 2,000 positions company-wide.”

SCIF noted that it spends 90 cents for every dollar of premium it writes, compared with an industry average of 40 cents per dollar. It also said that its staffing has declined by only 21% since 2004, despite an 87% drop in premium volume and a 70% decline in market share since that time.

The job cuts are expected to include such positions as payroll auditors, workers compensation insurance technicians, office assistants and typists. This will be the first time State Fund has laid off employees since the 1930s, the insurer said.

In a memo to employees, President and CEO Tom Rowe said the insurer will work to assist displaced employees.

“Although painful, I am confident that in the long term the moves we are taking will help stabilize the workers compensation market and State Fund’s position in it as a strong, efficient and fairly priced choice for California’s businesses,” he said in the statement.