Janine Locke

The Public Hearing concerned the 2026 Self-Insurer Rate Development. A staff proposal was presented detailing the historical changes in calculating self-insurer taxes, noting that the Commission codified its own rates in 2023, including various indexes, tables, and loss factors. Discussion covered the introduction of new payroll class codes in 2024, including specific codes for manufacturing, construction, and various volunteer roles previously lumped together. For 2026 rate development, staff recommended Option 6, which utilizes a blended method combining ICA-developed payroll classification rates, a rate from the voluntary schedule, and expected loss rate/discount ratio from Option 5. This option is estimated to result in an average rate decrease of 2.7% from the prior year, aiming to provide rate stability and accurate premium calculations.

Key discussions during the telephonic meeting included a review of the Special Fund Investment Activity, noting that equities were slightly above the target at 48.5% and fixed income was at 46.2%. Market performance for November showed that large cap value stocks outperformed growth, and foreign equities were muted, with emerging markets declining due to renewed concerns regarding China. Fixed income realized positive returns based on anticipated rate cuts. Additionally, the committee reviewed investments where the original cost exceeded current market value by 25% or more, identifying 62 such items. A discussion and action item addressed a potential new property in Tucson where escrow was entered and inspections were pending. Future scheduling included planning for an in-person meeting in January and scheduling the next meeting for January 27, 2026.

The meeting included a public hearing to set Premium Calculation Rates and a Schedule of Deviation Rates for Calendar Year 2026, where the Commission adopted Scenario Six based on staff recommendations. Discussions and actions were also taken regarding proposed citations and penalties from the Arizona Division of Occupational Safety and Health (ADOSH) related to fatality/catastrophe and unprogrammed related inspections involving C S Construction, Inc., Core Construction, Inc., Geronimo Wall Systems, LLC, Toll Brothers AZ Construction Company, and S&R Enterprises - AZ, LLC, primarily concerning trench excavation safety and fall protection violations. Furthermore, there was a presentation on the inaugural Supervisory Academy, an announcement regarding a new ADOSH recognition program (T.H.E.R.M.A.L.), and public comments made in support of establishing a heat standard for Arizona.

The committee discussed updates from the ADOSH Director, including the filling of vacant positions and the progress of alliances such as the Fatality and Injury Reduction Alliance and the Trenching Alliance. An update was given on the Governor's Heat Taskforce, with a recommendation to be published for ADOSH review. There was also discussion regarding a State House Bill related to trenching, which includes updates to training requirements. The committee discussed the structure of the Committee and the number of voting members. New members were approved, and a potential replacement was proposed. A fatality update for the quarter was provided.

The Special Fund Investment Committee convened to discuss several key items. The committee reviewed and approved the regular meeting minutes from October 28, 2025. Discussions included special fund investment activity, asset allocation targets, and ranges, with a note that equities were slightly above the target while fixed income was within acceptable ranges. The markets for October were reviewed, highlighting the impact of the Federal government shutdown and the performance of various investment managers. Additionally, the committee addressed special fund investments where the original cost exceeded the current market value by 25% or greater. They also discussed and took action regarding a potential new property purchase in Tucson, agreeing in principle to a price of no more than $9 million, pending final paperwork and inspections.