The state workers' compensation agency continues to post a fund surplus beyond legal limits.

The audit committee of the board of directors for Workforce Safety and Insurance reviewed its operating budget for the first quarter of the 2008 fiscal year, including a surplus of $1.24 billion.

According to statute, the agency should not retain a surplus of any more than $1.03 billion, which is 140 percent of funds used set aside for unpaid loss liability.

"It's very concerning,"said Ed Grossbauer, board member. "If you read the statute the way it is right now, we are out of compliance."

John Halvorson, interim executive director, said the agency has been operating under the premise that its unrealized investment gains of $80 million should not be included in the fund surplus numbers; that money has been consistently included in surplus reports.

Without the unrealized investment gains, the surplus is still at 157.9 percent; $26 million of that remaining surplus is used for safety education, grants and incentives, and $14.9 million is in the agency's revolving loan fund. More than $90 million is unallocated surplus, while $738 million is for unpaid loss liability.

Board member Mark Jackson cautioned the board not to question the statute, but to make changes to address the problem. No action was taken on the issue.

Other items of note in the operating report were the low numbers for percent of claims adjudicated within 14 days; agency executives attributed the low number - 45 percent, with a goal of 70 percent - to having to train several new employees and to a change in claims processing.

"Timeliness of determination has to come up,"said Tim Wahlin, legal counsel.

The board of directors also voted in a new chair and vice chair:Mark Gjovig will chair the board, and Jackson was voted in as vice chair.

(Reach reporter Crystal R. Reid at 250-8261 or at crystal.reid@bismarcktribune.com.)