To amend sections 121.03, 2317.45, 4121.12, 4121.121, 4121.125, and 4123.511 and to enact section 4123.49 of the Revised Code to make appropriations for the Bureau of Workers' Compensation for the biennium beginning July 1, 1997, and ending June 30, 1999, and to provide authorization and conditions for the operation of Bureau of Workers' Compensation programs.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Sec. 121.03. The following administrative department heads shall be appointed by the governor, with the advice and consent of the senate, and shall hold their offices during the term of the appointing governor, except as provided in division (W) of this section, and are subject to removal at the pleasure of the governor.

(A) The director of budget and management;

(B) The director of commerce;

(C) The director of transportation;

(D) The director of agriculture;

(E) The director of human services;

(F) Until July 1, 1997, the director of liquor control;

(G) The director of public safety;

(H) The superintendent of insurance;

(I) The director of development;

(J) The tax commissioner;

(K) The director of administrative services;

(L) The administrator of the bureau of employment services;

(M) The director of natural resources;

(N) The director of mental health;

(O) The director of mental retardation and developmental disabilities;

(P) The director of health;

(Q) The director of youth services;

(R) The director of rehabilitation and correction;

(S) The director of environmental protection;

(T) The director of aging;

(U) The director of alcohol and drug addiction services;

(W)(V) The administrator of workers' compensation who meets the qualifications required under division (A) of section 4121.121 of the Revised Code, who shall serve as administrator, subject to removal at the pleasure of the governor, until the date the workers' compensation oversight commission appoints the administrator as provided in division (F)(10) of section 4121.12 of the Revised Code.

Sec. 2317.45. (A) As used in this section:

(1) "Collateral benefits" means benefits that are paid by any source, including workers' compensation benefits, to or on behalf of the plaintiff as a result of an injury or loss to person or property, regardless of whether there is an obligation to pay back the money or other benefits, in whole or in part, upon recovery in a tort action. "Collateral benefits" does not include life insurance proceeds.

(2) "Tort action" means a civil action for damages for injury, death, or loss to person or property. "Tort action" includes a product liability claim but does not include a civil action for damages for a breach of contract or another agreement between persons.

(3) "Trier of fact" means the jury or, in a nonjury action, the court.

(B) In determining the amount of the compensatory damages that are recoverable by the plaintiff in a tort action, the trier of fact shall consider, if presented in the tort action, relevant collateral benefits that have been paid, or that the source of the benefits has acknowledged are payable, from insurance other than insurance for which the plaintiff, spouse of the plaintiff, or parent of the plaintiff if the plaintiff is a minor, has paid a premium, insurance that is subject to a right of subrogation, WORKERS' COMPENSATION BENEFITS THAT ARE SUBJECT TO A RIGHT OF SUBROGATION, or insurance that has any other obligation of repayment, including, but not limited to, evidence of the amount of the collateral benefit and of the costs, premiums, or charges for the collateral benefits.

(C) This section does not apply as follows:

(1) In tort actions against the state in the court of claims. Division (D) of section 2743.02 or division (B)(2) of section 3345.40 of the Revised Code applies to collateral recoveries or sources of plaintiffs in those tort actions.

(2) In tort actions against political subdivisions of this state that are commenced under or are subject to Chapter 2744. of the Revised Code. Division (B) of section 2744.05 of the Revised Code applies to collateral sources of plaintiffs in those tort actions.

(D) This section shall be considered to be purely remedial in operation and shall be applied in a remedial manner in any civil action commenced on or after the effective date of the amendment to this section JANUARY 27, 1997, in which this section is relevant, regardless of when the cause of action accrued and notwithstanding any other section of the Revised Code or prior rule of law of this state, but shall not be construed to apply to any civil action pending prior to the effective date of the amendment to this section JANUARY 27, 1997.

Sec. 4121.12. (A) There is hereby created the workers' compensation oversight commission consisting of nine members, of which members the governor shall appoint five with the advice and consent of the senate. Of the five members the governor appoints, two shall be individuals who, on account of their previous vocation, employment, or affiliations, can be classed as representative of employees, at least one of whom is representative of employees who are members of an employee organization; two shall be individuals who, on account of their previous vocation, employment, or affiliations, can be classed as representative of employers, one of whom represents self-insuring employers and one of whom has experience as an employer in compliance with section 4123.35 of the Revised Code other than a self-insuring employer, and one of those two representatives also shall represent employers whose employees are not members of an employee organization; and one shall represent the public and also be an individual who, on account of the individual's previous vocation, employment, or affiliations, cannot be classed as either predominantly representative of employees or of employers. The governor shall select the chairperson of the commission who shall serve as chairperson at the pleasure of the governor. No more than three members appointed by the governor shall belong to or be affiliated with the same political party.

Each of these five members shall have at least three years' experience in the field of insurance, finance, workers' compensation, law, accounting, actuarial, personnel, investments, or data processing, or in the management of an organization whose size is commensurate with that of the bureau of workers' compensation. At least one of these five members shall be an attorney licensed under Chapter 4705. of the Revised Code to practice law in this state.

(B) Of the initial appointments made to the commission, the governor shall appoint one member who represents employees to a term ending one year after September 1, 1995, one member who represents employers to a term ending two years after the effective date of this section, the member who represents the public to a term ending three years after September 1, 1995, one member who represents employees to a term ending four years after September 1, 1995, and one member who represents employers to a term ending five years after September 1, 1995. Thereafter, terms of office shall be for five years, with each term ending on the same day of the same month as did the term that it succeeds. Each member shall hold office from the date of his appointment until the end of the term for which the member was appointed.

The governor shall not appoint any person to more than two full terms of office on the commission. This restriction does not prevent the governor from appointing a person to fill a vacancy caused by the death, resignation, or removal of a commission member and also appointing that person twice to full terms on the commission, or from appointing a person previously appointed to fill less than a full term twice to full terms on the commission. Any member appointed to fill a vacancy occurring prior to the expiration date of the term for which the member's predecessor was appointed shall hold office as a member for the remainder of that term. A member shall continue in office subsequent to the expiration date of the member's term until a successor takes office or until a period of sixty days has elapsed, whichever occurs first.

(C) In making appointments to the commission, the governor shall select the members from the list of names submitted by the workers' compensation oversight commission nominating committee pursuant to this division. Within fourteen days after the governor calls the initial meeting of the nominating committee pursuant to division (C) of section 4121.123 of the Revised Code, the nominating committee shall submit to the governor, for the initial appointments, a list containing four separate names for each of the members on the commission. Within fourteen days after the submission of the list, the governor shall appoint individuals from the list.

For the appointment of the member who is representative of employees who are members of an employee organization, both for initial appointments and for the filling of vacancies, the list of four names submitted by the nominating committee shall be comprised of four individuals who are members of the executive committee of the largest statewide labor federation.

Thereafter, within sixty days after a vacancy occurring as a result of the expiration of a term and within thirty days after other vacancies occurring on the commission, the nominating committee shall submit a list containing four names for each vacancy. Within fourteen days after the submission of the list, the governor shall appoint individuals from the list. With respect to the filling of vacancies, the nominating committee shall provide the governor with a list of four individuals who are, in the judgment of the nominating committee, the most fully qualified to accede to membership on the commission. The nominating committee shall not include the name of an individual upon the list for the filling of vacancies if the appointment of that individual by the governor would result in more than three members of the commission belonging to or being affiliated with the same political party. The committee shall include on the list for the filling of vacancies only the names of attorneys admitted to practice law in this state if, to fulfill the requirement of division (A) of section 4121.12 of the Revised Code, the vacancy must be filled by an attorney.

In order for the name of an individual to be submitted to the governor under this division, the nominating committee shall approve the individual by an affirmative vote of a majority of its members.

(D) The remaining four members of the commission shall be the chairperson and ranking minority member of the standing committees of the house of representatives and of the senate to which legislation concerning this chapter and Chapters 4123., 4127., and 4131. of the Revised Code normally are referred, or a designee of the chairperson or ranking minority member, provided that the designee is a member of the standing committee. Legislative members shall serve during the session of the general assembly to which they are elected and for as long as they are members of the general assembly. Legislative members shall serve in an advisory capacity to the commission and shall have no voting rights on matters coming before the commission. Membership on the commission by legislative members shall not be deemed as holding a public office.

(E) All members of the commission shall receive their reasonable and necessary expenses pursuant to section 126.31 of the Revised Code while engaged in the performance of their duties as members. Legislative members also shall receive fifty dollars per meeting that they attend. Members appointed by the governor also shall receive an annual salary as follows:

(a)(1) On and before August 31, 1998, not to exceed six thousand dollars payable at the rate of five hundred dollars per month. A member shall receive the monthly five hundred dollar salary only if the member has attended at least one meeting of the commission during that month. A member may receive no more than the monthly five hundred dollar salary regardless of the number of meetings held by the commission during a month or the number of meetings in excess of one within a month that the member attends.

(b)(2) After August 31, 1998, not to exceed eighteen thousand dollars payable at the rate of fifteen hundred dollars per month. A member shall receive the monthly fifteen hundred dollar salary only if the member has attended at least one meeting of the commission during that month. A member may receive no more than the monthly fifteen hundred dollar salary regardless of the number of meetings held by the commission during the month or the number of meetings in excess of one within a month that the member attends.

The administrator of workers' compensation shall provide professional and clerical assistance to the commission, as the commission considers appropriate.

(F) The commission shall:

(1) Review progress of the bureau in meeting its cost and quality objectives and in complying with this chapter and Chapters 4123., 4127., and 4131. of the Revised Code;

(2) Issue an annual report on the cost and quality objectives of the bureau to the president of the senate, the speaker of the house of representatives, and the governor;

(3) Review all independent financial audits of the bureau. The administrator shall provide access to records of the bureau to facilitate the review required under this division.

(4) Study issues as requested by the administrator or the governor;

(5) Contract with an independent actuarial firm to assist the commission in making recommendations to the administrator regarding premium rates;

(6) Establish objectives, policies, and criteria for the administration of the investment program that include asset allocation targets and ranges, risk factors, asset class benchmarks, time horizons, total return objectives, and performance evaluation guidelines, and monitor the administrator's progress in implementing the objectives, policies, and criteria on a quarterly basis. The commission shall publish the objectives, policies, and criteria no less than annually and shall make copies available to interested parties. The commission shall prohibit, on a prospective basis, specific investment activity it finds to be contrary to its investment objectives, policies, and criteria.

The investment policy in existence on the effective date of this amendment shall continue until the commission approves objectives, policies, and criteria for the administration of the investment program pursuant to this section.

(7) Advise and consent on all of the following:

(a) Administrative rules the administrator submits to it pursuant to division (B)(5) of section 4121.121 of the Revised Code for the classification of occupations or industries, for premium rates and contributions, for the amount to be credited to the surplus fund, for rules and systems of rating, rate revisions, and merit rating;

(b) The overall policy of the bureau of workers' compensation as set by the administrator;

(c) The duties and authority conferred upon the administrator pursuant to section 4121.37 of the Revised Code;

(d) Rules the administrator adopts for the health partnership program and the qualified health plan system, as provided in sections 4121.44, 4121.441, and 4121.442 of the Revised Code.

(8) Perform all duties required under section 4121.125 of the Revised Code;

(9) After August 31, 1998, appoint an administrator who meets the qualifications required under section 4121.121 of the Revised Code and fix the salary of the administrator, the amount of which the commission shall base upon the experience of the administrator and the responsibilities and duties of the administrator pursuant to this chapter and Chapters 4123., 4127., and 4131. of the Revised Code.

(G) The commission may enter into an employment contract with an administrator it appoints, provided that the contract does not exceed two years in length.

(H) As used in this section, "employee organization" means any labor or bona fide organization in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, hours, terms and other conditions of employment.

Sec. 4121.121. (A) There is hereby created the bureau of workers' compensation, which shall be administered by the administrator of workers' compensation. A person appointed to the position of administrator shall possess significant management experience in effectively managing an organization or organizations of substantial size and complexity. Before September 1, 1998, the THE governor shall appoint the administrator as provided in section 121.03 of the Revised Code, and the administrator shall serve at the pleasure of the governor. The governor shall fix the administrator's salary on the basis of the administrator's experience and the administrator's responsibilities and duties under this chapter and Chapter CHAPTERS 4123., 4127., and 4131. of the Revised Code. The governor shall not appoint to the position of administator any person who has, or whose spouse has, given a contribution to the campaign committee of the governor in an amount greater than one thousand dollars during the two-year period immediately preceding the date of the appointment of the administrator. After August 31, 1998, the workers' compensation oversight commission shall appoint the administrator as provided in division (F)(9) of section 4121.12 of the Revised Code, and the administrator shall serve at the pleasure of the oversight commission. The oversight commission shall fix the administrator's salary on the basis of the administrator's experience and the administrator's responsibilities and duties under this chapter and Chapters 4123., 4127., and 4131. of the Revised Code.

The administrator shall hold no other public office and shall devote full time to the duties of administrator. Before entering upon the duties of the office, the administrator shall take an oath of office as required by sections 3.22 and 3.23 of the Revised Code, and shall file in the office of the secretary of state, a bond signed by the administrator and by surety approved by the governor, for the sum of fifty thousand dollars payable to the state, conditioned upon the faithful performance of the administrator's duties.

(B) The administrator is responsible for the management of the bureau of workers' compensation and for the discharge of all administrative duties imposed upon the administrator in this chapter and Chapters 4123., 4127., and 4131. of the Revised Code, and in the discharge thereof shall do all of the following:

(1) Establish the overall administrative policy of the bureau for the purposes of this chapter and Chapters 4123., 4127., and 4131. of the Revised Code, and perform all acts and exercise all authorities and powers, discretionary and otherwise that are required of or vested in the bureau or any of its employees in this chapter and Chapters 4123., 4127., and 4131. of the Revised Code, except the acts and the exercise of authority and power that is required of and vested in the oversight commission or the industrial commission pursuant to those chapters. The treasurer of state shall honor all warrants signed by the administrator, or by one or more of the administrator's employees, authorized by the administrator in writing, or bearing the facsimile signature of the administrator or such employee under sections 4123.42 and 4123.44 of the Revised Code.

(2) Employ, direct, and supervise all employees required in connection with the performance of the duties assigned to the bureau by this chapter and Chapters 4123., 4127., and 4131. of the Revised Code, and may establish job classification plans and compensation for all employees of the bureau provided that this grant of authority shall not be construed as affecting any employee for whom the state employment relations board has established an appropriate bargaining unit under section 4117.06 of the Revised Code. All positions of employment in the bureau are in the classified civil service except those employees the administrator may appoint to serve at the administrator's pleasure in the unclassified civil service pursuant to section 124.11 of the Revised Code. The administrator shall fix the salaries of employees the administrator appoints to serve at the administrator's pleasure, including the chief operating officer, staff physicians, ATTORNEYS OF THE BUREAU'S LEGAL SECTION AND THEIR IMMEDIATE SUPERVISORS, and other senior management personnel of the bureau.

THE ADMINISTRATOR MAY APPOINT A PERSON HOLDING A CERTIFIED POSITION IN THE CLASSIFIED SERVICE TO ANY STATE POSITION IN THE UNCLASSIFIED SERVICE OF THE BUREAU OF WORKERS' COMPENSATION. A PERSON SO APPOINTED SHALL RETAIN THE RIGHT TO RESUME THE POSITION AND STATUS HELD BY THE PERSON IN THE CLASSIFIED SERVICE IMMEDIATELY PRIOR TO THE PERSON'S APPOINTMENT IN THE UNCLASSIFIED SERVICE. IF THE POSITION THE PERSON PREVIOUSLY HELD HAS BEEN FILLED OR PLACED IN THE UNCLASSIFIED SERVICE, OR IS OTHERWISE UNAVAILABLE, THE PERSON SHALL BE APPOINTED TO A POSITION IN THE CLASSIFIED SERVICE WITHIN THE BUREAU THAT THE ADMINISTRATOR CERTIFIES IS COMPARABLE IN COMPENSATION TO THE POSITION THE PERSON PREVIOUSLY HELD. REINSTATEMENT TO A POSITION IN THE CLASSIFIED SERVICE SHALL BE TO A POSITION SUBSTANTIALLY EQUAL TO THAT HELD PREVIOUSLY, AS CERTIFIED BY THE ADMINISTRATOR. SERVICE IN THE POSITION IN THE UNCLASSIFIED SERVICE SHALL BE COUNTED AS SERVICE IN THE POSITION IN THE CLASSIFIED SERVICE HELD BY THE PERSON IMMEDIATELY PRIOR TO THE PERSON'S APPOINTMENT IN THE UNCLASSIFIED SERVICE. WHEN A PERSON IS REINSTATED TO A POSITION IN THE CLASSIFIED SERVICE AS PROVIDED IN THIS SECTION, THE PERSON IS ENTITLED TO ALL RIGHTS, STATUS, AND BENEFITS ACCRUING TO THE POSITION DURING THE PERSON'S TIME OF SERVICE IN THE POSITION IN THE UNCLASSIFIED SERVICE.

(3) Reorganize the work of the bureau, its sections, departments, and offices to the extent necessary to achieve the most efficient performance of its functions and to that end may establish, change, or abolish positions and assign and reassign duties and responsibilities of every employee of the bureau. All persons employed by the commission in positions that, after November 3, 1989, are supervised and directed by the administrator under this section are transferred to the bureau in their respective classifications but subject to reassignment and reclassification of position and compensation as the administrator determines to be in the interest of efficient administration. The civil service status of any person employed by the commission is not affected by this section. Personnel employed by the bureau or the commission who are subject to Chapter 4117. of the Revised Code shall retain all of their rights and benefits conferred pursuant to that chapter as it presently exists or is hereafter amended and nothing in this chapter or Chapter 4123. of the Revised Code shall be construed as eliminating or interfering with Chapter 4117. of the Revised Code or the rights and benefits conferred under that chapter to public employees or to any bargaining unit.

(4) Provide offices, equipment, supplies, and other facilities for the bureau. The administrator also shall provide suitable office space in the service offices for the district hearing officers, the staff hearing officers, and commission employees as requested by the commission.

(5) Prepare and submit to the oversight commission information the administrator considers pertinent or the oversight commission requires, together with the administrator's recommendations, in the form of administrative rules, for the advice and consent of the oversight commission, for classifications of occupations or industries, for premium rates and contributions, for the amount to be credited to the surplus fund, for rules and systems of rating, rate revisions, and merit rating. The administrator shall obtain, prepare, and submit any other information the oversight commission requires for the prompt and efficient discharge of its duties.

(6) Keep the accounts required by division (A) of section 4123.34 of the Revised Code and all other accounts and records necessary to the collection, administration, and distribution of the workers' compensation funds and shall obtain the statistical and other information required by section 4123.19 of the Revised Code.

(7) Exercise the investment powers vested in the administrator by section 4123.44 of the Revised Code in accordance with the investment objectives, policies, and criteria established by the oversight commission pursuant to section 4121.12 of the Revised Code. The administrator shall not engage in any prohibited investment activity specified by the oversight commission pursuant to division (F)(6) of section 4121.12 of the Revised Code. All business shall be transacted, all funds invested, all warrants for money drawn and payments made, and all cash and securities and other property held, in the name of the bureau, or in the name of its nominee, provided that nominees are authorized by the administrator solely for the purpose of facilitating the transfer of securities, and restricted to the administrator and designated employees.

(8) Make contracts for and supervise the construction of any project or improvement or the construction or repair of buildings under the control of the bureau.

(9) Purchase supplies, materials, equipment, and services; make contracts for, operate, and superintend the telephone, other telecommunication, and computer services for the use of the bureau; and make contracts in connection with office reproduction, forms management, printing, and other services.

(10) Separately from the budget the industrial commission submits, prepare and submit to the director of budget and management a budget for each biennium. The budget submitted shall include estimates of the costs and necessary expenditures of the bureau in the discharge of any duty imposed by law as well as the costs of furnishing office space to the district hearing officers, staff hearing officers, and commission employees under division (D) of this section.

(11) As promptly as possible in the course of efficient administration, decentralize and relocate such of the personnel and activities of the bureau as is appropriate to the end that the receipt, investigation, determination, and payment of claims may be undertaken at or near the place of injury or the residence of the claimant and for that purpose establish regional offices, in such places as the administrator considers proper, capable of discharging as many of the functions of the bureau as is practicable so as to promote prompt and efficient administration in the processing of claims. All active and inactive lost-time claims files shall be held at the service office responsible for the claim. A claimant, at the claimant's request, shall be provided with information by telephone as to the location of the file pertaining to claim. The administrator shall ensure that all service office employees report directly to the director for their service office.

(12) Provide a written binder on new coverage where the administrator considers it to be in the best interest of the risk. The administrator, or any other person authorized by the administrator, shall grant the binder upon submission of a request for coverage by the employer. A binder is effective for a period of thirty days from date of issuance and is nonrenewable. Payroll reports and premium charges shall coincide with the effective date of the binder.

(13) Set standards for the reasonable and maximum handling time of claims payment functions, ensure, by rules, the impartial and prompt treatment of all claims and employer risk accounts, and establish a secure, accurate method of time stamping all incoming mail and documents hand delivered to bureau employees.

(14) Ensure that all employees of the bureau follow the orders and rules of the commission as such orders and rules relate to the commission's overall adjudicatory policy-making and management duties under this chapter and Chapters 4123., 4127., and 4131. of the Revised Code.

(15) Manage and operate a data processing system with a common data base for the use of both the bureau and the commission and, in consultation with the commission, using electronic data processing equipment, shall develop a claims tracking system that is sufficient to monitor the status of a claim at any time and that lists appeals that have been filed and orders or determinations that have been issued pursuant to section 4123.511 or 4123.512 of the Revised Code, including the dates of such filings and issuances.

(16) Establish and maintain a medical section within the bureau. The medical section shall do all of the following:

(a) Assist the administrator in establishing standard medical fees, approving medical procedures, and determining eligibility and reasonableness of the compensation payments for medical, hospital, and nursing services, and in establishing guidelines for payment policies which recognize usual, customary, and reasonable methods of payment for covered services;

(b) Provide a resource to respond to questions from claims examiners for employees of the bureau;

(c) Audit fee bill payments;

(d) Implement a program to utilize, to the maximum extent possible, electronic data processing equipment for storage of information to facilitate authorizations of compensation payments for medical, hospital, drug, and nursing services;

(e) Perform other duties assigned to it by the administrator.

(17) Appoint, as the administrator determines necessary, panels to review and advise the administrator on disputes arising over a determination that a health care service or supply provided to a claimant is not covered under this chapter or Chapter 4123. of the Revised Code or is medically unnecessary. If an individual health care provider is involved in the dispute, the panel shall consist of individuals licensed pursuant to the same section of the Revised Code as such health care provider.

(18) Pursuant to section 4123.65 of the Revised Code, approve applications for the final settlement of claims for compensation or benefits under this chapter and Chapters 4123., 4127., and 4131. of the Revised Code as the administrator determines appropriate, except in regard to the applications of self-insuring employers and their employees;

(19) Comply with section 3517.13 of the Revised Code, and except in regard to contracts entered into pursuant to the authority contained in section 4121.44 of the Revised Code, comply with the competitive bidding procedures set forth in the Revised Code for all contracts into which the administrator enters provided that those contracts fall within the type of contracts and dollar amounts specified in the Revised Code for competitive bidding and further provided that those contracts are not otherwise specifically exempt from the competitive bidding procedures contained in the Revised Code.

(20) Adopt, with the advice and consent of the oversight commission, rules for the operation of the bureau.

(21) Prepare and submit to the oversight commission information the administrator considers pertinent or the oversight commission requires, together with the administrator's recommendations, in the form of administrative rules, for the advice and consent of the oversight commission, for the health partnership program and the qualified health plan system, as provided in sections 4121.44, 4121.441, and 4121.442 of the Revised Code.

(C) The administrator, with the advice and consent of the senate, shall appoint a chief operating officer who has significant experience in the field of workers' compensation insurance or other similar insurance industry experience if the administrator does not possess such experience. The chief operating officer shall not commence the chief operating officer's duties until after the senate consents to the chief operating officer's appointment. The chief operating officer shall serve in the unclassified civil service of the state.

Sec. 4121.125. (A) The workers' compensation oversight commission may contract with one or more outside actuarial firms and other professional persons, as the oversight commission determines necessary, to assist the oversight commission in measuring the performance of Ohio's workers' compensation system and in comparing Ohio's workers' compensation system to other state and private workers' compensation systems. The oversight commission, actuarial firm or firms, and professional persons shall make such measurements and comparisons using accepted insurance industry standards, including, but not limited to, standards promulgated by the National Council on Compensation Insurance.

(B) The oversight commission may contract with one or more outside firms to conduct management and financial audits of the workers' compensation system, including audits of the reserve fund belonging to the state insurance fund, and to establish objective quality management principles and methods by which to review the performance of the workers' compensation system.

(C) The oversight commission shall include any actuarial, managerial, or financial report completed under its authority pursuant to division (A) or (B) of this section in the next regularly published report of the oversight commission.

(D) The oversight commission shall publish monthly reports that include, but are not limited to, all of the following:

(1) Comparative and competitive data concerning Ohio's workers' compensation system and the workers' compensation system of other states on all of the following subjects:

(a) Average length of time to process contested and uncontested claims;

(b) Length of time to investigate claims that raise suspicion of fraudulent activity;

(c) Average indemnity cost of claims;

(d) Average medical costs of claims reported according to the types of awards and separately reported according to the types of injuries;

(e) Comparisons of Ohio classification manual rates with comparable rates in other states, and after the administrator of workers' compensation classifies occupations and industries and determines risks of different classes according to the National Council on Compensation Insurance, comparisons of rates in Ohio with rates of other states that use National Council on Compensation Insurance codes;

(f) Effectiveness of rehabilitation, both private and within the state's workers' compensation system, including the number of individuals referred, the percentage completing a rehabilitation program, and the percentage of those finding employment after successful completion of a rehabilitation program.

(2) Data concerning Ohio's workers' compensation system concerning all of the following:

(a) Performance of the investments of the bureau of workers' compensation;

(b) Effectiveness of the bureau in collecting delinquent payments that are due from employers pursuant to Chapters 4121., 4123., 4127., and 4131. of the Revised Code, including a crosscheck with other state agencies to which employers are required under law to make payments;

(c) Effectiveness of the bureau in subrogation claims;

(d) Performance measurements of managed care organizations within the health partnership program and the qualified health plan system;

(e) Return-to-work rates, medical outcome measures, and other measures that the oversight commission or general assembly determines;

(f) Adequacy of the reserve fund to cover indemnity costs of the state insurance fund;

(g) The total number of claims filed in the time period occurring subsequent to publication of the report that immediately precedes publication of the report for which the information is being compiled according to the type of claim, employer classification, and claim result;

(h) The effectiveness of the bureau in identifying and eliminating fraud in the workers' compensation system and in recovering workers' compensation resources.

The reports published under this division shall include data from the bureau and the industrial commission regarding state fund, self-insuring, and public employers.

(E) The administrator and the industrial commission shall compile information and provide access to records of the bureau and the industrial commission to the oversight commission to the extent necessary for fulfillment of all BOTH of the following requirements:

(1) Conduct of the measurements and comparisons described in division (A) of this section;

(2) Conduct of the management and financial audits and establishment of the principles and methods described in division (B) of this section;

(3) Publishing of the reports described in divisions (C) and (D) of this section.

(F)(D) The administrator shall pay the expenses incurred by the oversight commission to effectively fulfill its duties and exercise its powers under this section as the administrator pays other operating expenses of the bureau.

Sec. 4123.49. (A) IF THE ADMINISTRATOR OF WORKERS' COMPENSATION DETERMINES PURSUANT TO AN AUDIT OR RECONCILIATION CONDUCTED UNDER THIS CHAPTER OR CHAPTER 4121. of the Revised Code THAT MONEY IS OWED TO THE BUREAU OF WORKERS' COMPENSATION BY AN EMPLOYER OR EMPLOYEE, OR BY A HEALTH CARE PROVIDER OR MANAGED CARE ORGANIZATION DOING BUSINESS WITH THE BUREAU, THE BUREAU MAY ENTER INTO A PAYMENT AGREEMENT WITH THE INDEBTED EMPLOYER, EMPLOYEE, HEALTH CARE PROVIDER, OR MANAGED CARE ORGANIZATION. THE AGREEMENT SHALL INCLUDE ALL OF THE FOLLOWING:

(1) A SCHEDULE OF INSTALLMENT PAYMENTS WHEREBY THE MONEY OWED TO THE BUREAU IS TO BE PAID IN FULL WITHIN A PERIOD NOT TO EXCEED ONE YEAR;

(2) A PROVISION SPECIFYING THAT THE INDEBTED EMPLOYER, EMPLOYEE, HEALTH CARE PROVIDER, OR MANAGED CARE ORGANIZATION MAY PAY THE ENTIRE BALANCE OWED AT ANY TIME DURING THE TERM OF THE AGREEMENT;

(3) A PROVISION SPECIFYING THAT IF ANY INSTALLMENT IS NOT PAID IN FULL WITHIN FORTY-FIVE DAYS AFTER IT IS DUE, THE ENTIRE BALANCE OWED IS IMMEDIATELY DUE AND PAYABLE;

(4) ANY OTHER TERMS OR CONDITIONS DETERMINED BY THE ADMINISTRATOR.

(B) THE ADMINISTRATOR MAY REQUIRE AN INDEBTED EMPLOYER, EMPLOYEE, HEALTH CARE PROVIDER, OR MANAGED CARE ORGANIZATION TO PAY INTEREST ON THE MONEY OWED TO THE BUREAU. THE ADMINISTRATOR MAY DETERMINE THE RATE OF, AND INCLUDE A PROVISION IN A PAYMENT AGREEMENT REQUIRING THE PAYMENT OF, SUCH INTEREST. NEITHER THE OBLIGATION TO PAY INTEREST NOR THE RATE OF INTEREST IS SUBJECT TO NEGOTIATION BETWEEN THE ADMINISTRATOR AND THE INDEBTED EMPLOYER, EMPLOYEE, HEALTH CARE PROVIDER, OR MANAGED CARE ORGANIZATION.

(C) IF THE INDEBTED EMPLOYER, EMPLOYEE, HEALTH CARE PROVIDER, OR MANAGED CARE ORGANIZATION FAILS TO PAY ANY INSTALLMENT IN FULL WITHIN FORTY-FIVE DAYS AFTER ITS DUE DATE, THE ADMINISTRATOR SHALL CERTIFY TO THE ATTORNEY GENERAL THE ENTIRE BALANCE OWED, FOR COLLECTION UNDER SECTION 131.02 of the Revised Code. THE ADMINISTRATOR MAY WITHHOLD FUNDS FROM PAYMENTS MADE TO AN INDEBTED EMPLOYER, EMPLOYEE, HEALTH CARE PROVIDER, OR MANAGED CARE ORGANIZATION UNDER THIS CHAPTER OR CHAPTER 4121. of the Revised Code TO SATISFY A JUDGMENT SECURED BY THE ATTORNEY GENERAL.

(D) THE ADMINISTRATOR SHALL DEPOSIT ALL MONEY COLLECTED UNDER THIS SECTION INTO THE STATE INSURANCE FUND.

Sec. 4123.511. (A) Within seven days after receipt of any claim under this chapter, the bureau of workers' compensation shall notify the claimant and the employer of the claimant of the receipt of the claim and of the facts alleged therein. If the bureau receives from a person other than the claimant written or telecommunicated information indicating that an injury or occupational disease has occurred or been contracted which may be compensable under this chapter, the bureau shall notify the employee and the employer of the information. If the information is provided by any method of telecommunication, the person providing the information shall provide written verification of the information to the bureau according to division (E) of section 4123.84 of the Revised Code. The receipt of the information in writing, or if by a method of telecommunications, the written verification, and the notice by the bureau shall be considered an application for compensation under section 4123.84 or 4123.85 of the Revised Code provided that the conditions of division (E) of section 4123.84 of the Revised Code apply to information provided by a method of telecommunication. Upon receipt of a claim, the bureau shall advise the claimant of the claim number assigned and the claimant's right to representation in the processing of a claim or to elect no representation. If the bureau determines that a claim is determined to be a compensable lost time claim, the bureau shall notify the claimant and the employer of the availability of rehabilitation services. No bureau or industrial commission employee shall directly or indirectly convey any information in derogation of this right. This section shall in no way abrogate the bureau's responsibility to aid and assist a claimant in the filing of a claim and to advise the claimant of the claimant's rights under the law.

The administrator of workers' compensation shall assign all claims and investigations to the bureau service office from which investigation and determination may be made most expeditiously.

The bureau shall investigate the facts concerning an injury or occupational disease and ascertain such facts in whatever manner is most appropriate and may obtain statements of the employee, employer, attending physician, and witnesses in whatever manner is most appropriate.

(B)(1) Except as provided in division (B)(2) of this section, in claims other than those in which the employer is a self-insuring employer, if the administrator determines under division (A) of this section that a claimant is or is not entitled to an award of compensation or benefits, the administrator shall issue an order, no sooner than twenty-one days but no later than twenty-eight days after the sending of the notice under division (A) of this section, granting or denying the payment of the compensation or benefits, or both as is appropriate to the claimant. Notwithstanding the time limitation specified in this division for the issuance of an order, if a medical examination of the claimant is required by statute, the administrator promptly shall schedule the claimant for that examination and shall issue an order no later than twenty-eight days after receipt of the report of the examination. The administrator shall notify the claimant and the employer of the claimant and their respective representatives in writing of the nature of the order and the amounts of compensation and benefit payments involved. The employer or claimant may appeal the order pursuant to division (C) of this section within fourteen days after the date of the receipt of the order. The employer and claimant may waive, in writing, their rights to an appeal under this division.

(2) Notwithstanding the time limitation specified in division (B)(1) of this section for the issuance of an order, if the employer certifies a claim for payment of compensation or benefits, or both, to a claimant, and the administrator has completed the investigation of the claim, the payment of benefits or compensation, or both, as is appropriate, shall commence upon the later of the date of the certification or completion of the investigation and issuance of the order by the administrator, provided that the administrator shall issue the order no later than the time limitation specified in division (B)(1) of this section.

(3) If an appeal is made under division (B)(1) or (2) of this section, the administrator shall forward the claim file to the appropriate district hearing officer within seven days of the appeal. In contested claims other than state fund claims, the administrator shall forward the claim within seven days of the administrator's receipt of the claim to the commission, which shall refer the claim to an appropriate district hearing officer for a hearing in accordance with division (C) of this section.

(C) If an employer or claimant timely appeals the order of the administrator issued under division (B) of this section or in the case of other contested claims other than state fund claims, the commission shall refer the claim to an appropriate district hearing officer according to rules the commission adopts under section 4121.36 of the Revised Code. The district hearing officer shall notify the parties and their respective representatives of the time and place of the hearing.

The district hearing officer shall hold a hearing on a disputed issue or claim within forty-five days after the filing of the appeal under this division and issue a decision within seven days after holding the hearing. The district hearing officer shall notify the parties and their respective representatives in writing of the order. Any party may appeal an order issued under this division pursuant to division (D) of this section within fourteen days after receipt of the order under this division.

(D) Upon the timely filing of an appeal of the order of the district hearing officer issued under division (C) of this section, the commission shall refer the claim file to an appropriate staff hearing officer according to its rules adopted under section 4121.36 of the Revised Code. The staff hearing officer shall hold a hearing within forty-five days after the filing of an appeal under this division and issue a decision within seven days after holding the hearing under this division. The staff hearing officer shall notify the parties and their respective representatives in writing of his THE STAFF HEARING OFFICER'S order. Any party may appeal an order issued under this division pursuant to division (E) of this section within fourteen days after receipt of the order under this division.

(E) Upon the filing of a timely appeal of the order of the staff hearing officer issued under division (D) of this section, the commission or a designated staff hearing officer, on behalf of the commission, shall determine whether the commission will hear the appeal. If the commission or the designated staff hearing officer decides to hear the appeal, the commission or the designated staff hearing officer shall notify the parties and their respective representatives in writing of the time and place of the hearing. The commission shall hold the hearing within forty-five days after the filing of the notice of appeal and, within seven days after the conclusion of the hearing, the commission shall issue its order affirming, modifying, or reversing the order issued under division (D) of this section. The commission shall notify the parties and their respective representatives in writing of the order. If the commission or the designated staff hearing officer determines not to hear the appeal, within fourteen days after the filing of the notice of appeal, the commission or the designated staff hearing officer shall issue an order to that effect and notify the parties and their respective representatives in writing of that order.

Except as otherwise provided in this chapter and Chapters 4121., 4127., and 4131. of the Revised Code, any party may appeal an order issued under this division to the court pursuant to section 4123.512 of the Revised Code within sixty days after receipt of the order, subject to the limitations contained in that section.

(F) Every notice of an appeal from an order issued under divisions (B), (C), (D), and (E) of this section shall state the names of the claimant and employer, the number of the claim, the date of the decision appealed from, and the fact that the appellant appeals therefrom.

(G) All of the following apply to the proceedings under divisions (C), (D), and (E) of this section:

(1) The parties shall proceed promptly and without continuances except for good cause;

(2) The parties, in good faith, shall engage in the free exchange of information relevant to the claim prior to the conduct of a hearing according to the rules the commission adopts under section 4121.36 of the Revised Code;

(3) The administrator is a party and may appear and participate at all administrative proceedings on behalf of the state insurance fund. However, in cases in which the employer is represented, the administrator shall neither present arguments nor introduce testimony that is cumulative to that presented or introduced by the employer or the employer's representative. The administrator may file an appeal under this section on behalf of the state insurance fund; however, except in cases arising under section 4123.343 of the Revised Code, the administrator only may appeal questions of law or issues of fraud when the employer appears in person or by representative.

(H) Except as provided in division (J) of this section, payments of compensation to a claimant or on behalf of a claimant as a result of any order issued under this chapter shall commence upon the earlier of the following:

(1) Fourteen days after the date the administrator issues an order under division (B) of this section, unless that order is appealed;

(2) The date when the employer has waived the right to appeal a decision issued under division (B) of this section;

(3) If no appeal of an order has been filed under this section or to a court under section 4123.512 of the Revised Code, the expiration of the time limitations for the filing of an appeal of an order;

(4) The date of receipt by the employer of an order of a district hearing officer, a staff hearing officer, or the industrial commission issued under division (C), (D), or (E) of this section.

(I) No medical benefits payable under this chapter or Chapter 4121., 4127., or 4131. of the Revised Code are payable until the earlier of the following:

(1) The date of the issuance of the staff hearing officer's order under division (D) of this section;

(2) The date of the final administrative or judicial determination.

(J) Upon the final administrative or judicial determination UNDER THIS SECTION OR SECTION 4123.512 of the Revised Code OF AN APPEAL OF AN ORDER TO PAY COMPENSATION, if a claimant is found to have received compensation PURSUANT to A PRIOR ORDER which the claimant was not entitled IS REVERSED UPON SUBSEQUENT APPEAL, the claimant's employer, if a self-insuring employer, or the bureau, shall withhold from any amount to which the claimant becomes entitled pursuant to any claim, past, present, or future, under Chapter 4121., 4123., 4127., or 4131. of the Revised Code, the amount OF PREVIOUSLY PAID COMPENSATION to which the claimant was WHICH, DUE TO REVERSAL UPON APPEAL, THE CLAIMANT IS not entitled, pursuant to the following criteria:

(1) No withholding for the first twelve weeks of temporary total disability compensation pursuant to section 4123.56 of the Revised Code shall be made;

(2) Forty per cent of all awards of compensation paid pursuant to sections 4123.56 and 4123.57 of the Revised Code, until the amount overpaid is refunded;

(3) Twenty-five per cent of any compensation paid pursuant to section 4123.58 of the Revised Code until the amount overpaid is refunded;

(4) If, pursuant to an appeal under section 4123.512 of the Revised Code, the court of appeals or the supreme court reverses the allowance of the claim, then no amount of any compensation will be withheld.

THE ADMINISTRATOR AND SELF-INSURING EMPLOYERS, AS APPROPRIATE, ARE SUBJECT TO THE REPAYMENT SCHEDULE OF THIS DIVISION ONLY WITH RESPECT TO AN ORDER TO PAY COMPENSATION THAT WAS PROPERLY PAID UNDER A PREVIOUS ORDER, BUT WHICH IS SUBSEQUENTLY REVERSED UPON AN ADMINISTRATIVE OR JUDICIAL APPEAL. THE ADMINISTRATOR AND SELF-INSURING EMPLOYERS ARE NOT SUBJECT TO, BUT MAY UTILIZE, THE REPAYMENT SCHEDULE OF THIS DIVISION, OR ANY OTHER LAWFUL MEANS, TO COLLECT PAYMENT OF COMPENSATION MADE TO A PERSON WHO WAS NOT ENTITLED TO THE COMPENSATION DUE TO FRAUD OR HUMAN ERROR.

(K) If a staff hearing officer or the commission fails to issue a decision or the commission fails to refuse to hear an appeal within the time periods required by this section, payments to a claimant shall cease until the staff hearing officer or commission issues a decision or hears the appeal, unless the failure was due to the fault or neglect of the employer or the employer agrees that the payments should continue for a longer period of time.

(L) Except as provided in section 4123.522 of the Revised Code, no appeal is timely filed under this section unless the appeal is filed with the time limits set forth in this section.

(M) No person who is not an employee of the bureau or commission or who is not by law given access to the contents of a claims file shall have a file in the person's possession.

(A) The premium cost per worker, which reports the average annual cost a state fund employer pays to provide workers' compensation coverage for its employees. The premium cost per worker is calculated by adding together an employer's total amounts of premiums and assessments paid during a calendar year and dividing that sum by the employer's average number of workers.

(B) The claims cost per worker, which reports the average annual benefit cost paid for each worker who is employed by a state fund employer during the preceding twelve months. The claims cost per worker is calculated by dividing an employer's total claim expenses paid during the preceding twelve months by the employer's average number of workers.

(C) The administrative cost per claim, which reports the average annual administrative expense a state fund employer pays to process a claim. The administrative cost per claim is calculated by dividing an employer's total amount of administrative expenses incurred during the preceding twelve months by the total number of claims the employer processed.

(D) The direct loss ratio, which measures the relationship between an employer's revenues and workers' compensation benefits paid to an injured worker during the preceding twelve months;

(E) The rate of return generated by investments of the Bureau of Workers' Compensation;

(F) The customer service index, which accounts for various statistical measures reflecting the Bureau's customer service levels;

(G) The Health Partnership Program performance index, which measures the effectiveness of managed care organizations working for the Bureau and reflects the quality of care, customer satisfaction, and cost of care provided by the managed care organizations;

(H) The rate of injury in the state per 1,000 workers;

(I) The average number of days the Bureau takes to adjudicate an injured worker's medical bill fee;

(J) The return-to-work rate of state fund employers' injured workers who do not receive workers' compensation benefits for at least ninety days following their injury, which reports the number of injured workers who returned to work as a percentage of total injuries;

(K) The average number of days it takes for an employer or injured worker to report an injury to the Bureau, which is calculated by taking the average number of days between the date of injury and the date the claim was filed with the Bureau;

(L) The percentage of indemnity claims adjudicated by the Bureau within fourteen days of the injury.

FND	ALI	ALI TITLE		FY 1998		FY 1999

Workers' Compensation Fund Group

023	855-401	William Green Lease Payments to OBA	$	14,665,000	$	15,465,000
4Y6	855-611	J.L. Camera Center Rent	$	1,592,800	$	1,681,997
4Y6	855-612	J.L. Camera Center Operating	$	7,381,302	$	7,345,026
023	855-407	Claims, Risk & Medical Management	$	129,400,786	$	123,784,337
023	855-408	Fraud Prevention	$	8,200,705	$	8,111,383
023	855-409	Administrative Services	$	111,629,196	$	114,654,976
023	855-410	Attorney General Payments	$	3,017,914	$	3,227,422
825	855-605	DWRF	$	635,629	$	651,961
822	855-606	Coal Workers' Fund	$	73,684	$	75,545
823	855-608	Marine Industry	$	42,536	$	43,599
826	855-609	Safety & Hygiene	$	17,981,552	$	17,991,764
TOTAL WCF Workers' Compensation
Fund Group			$	294,621,104	$	293,033,010
TOTAL ALL BUDGET FUND GROUPS			$	294,621,104	$	293,033,010

Workers' Compensation Fraud Unit

The Workers' Compensation Section Fund (Fund 195) shall receive payments from the Bureau of Workers' Compensation at the beginning of each quarter of each fiscal year to fund expenses of the Workers' Compensation Fraud Unit of the Attorney General's Office. Of the foregoing appropriation item 855-410, Attorney General Payments, $659,151 in fiscal year 1998 and $676,002 in fiscal year 1999 shall be used to provide such payments.

William Green Lease Payments

The foregoing appropriation item 855-401, William Green Lease Payments to OBA, shall be used for lease payments to the Ohio Building Authority, and these appropriations shall be used to meet all payments at the times they are required to be made during the period from July 1, 1997, to June 30, 1999, by the Bureau of Workers' Compensation to the Ohio Building Authority pursuant to leases and agreements made under Chapter 152. of the Revised Code and Section 6 of Am. Sub. H.B. 743 of the 118th General Assembly. Of the amounts received in Fund 023, appropriation line item 855-401, up to $30,130,000 shall be restricted for lease rental payments to the Ohio Building Authority. If it is determined that additional appropriations are necessary for such purpose, such amounts are hereby appropriated.

Notwithstanding any other provision of law to the contrary, all tenants of the William Green Building not funded by the Workers' Compensation Fund (Fund 023) shall pay their fair share of the costs of lease payments to the Workers' Compensation Fund (Fund 023) by intrastate transfer voucher.

Camera Center

The Camera Center Fund (Fund 4Y6) created in division (F) of section 4121.62 of the Revised Code shall receive revenues raised by the fees Camera Center charges for its services and rent paid by tenants of the Center's facilities. The foregoing appropriation item 855-611, J.L. Camera Center Rent, shall be used to pay rent, including building operating expenses, of the J. Leonard Camera Rehabilitation Center in Columbus. The foregoing appropriation item 855-612, J.L. Camera Center Operating, shall be used for all other expenses for the Center.

The Bureau of Workers' Compensation shall not consider appropriations made to the Camera Center Fund (Fund 4Y6) when establishing administrative cost rates.

Balances

Notwithstanding any provision of law to the contrary, the Director of Budget and Management shall make any transfers of cash balances between funds made necessary by the creation of new funds, or the consolidation of funds as authorized by the General Assembly. Within the first five days after the effective date of this section, the administering agency head shall certify to the Director an estimate of the amount of the cash balance to be transferred to the receiving fund. The Director may transfer the estimated amount when needed to make payments. Within thirty days after the effective date of this section, the administering agency head shall certify the final amount to the Director. The Director shall transfer the difference between any estimated amount previously transferred and such certified final amount.

To implement such funding changes as described above pertaining to prior year encumbrance balances and commensurate appropriation authority, in fiscal year 1998 the Director of Budget and Management may cancel encumbrances outstanding on June 30, 1997, and reestablish such prior year encumbrances or parts of encumbrances as needed in fiscal year 1998 in the appropriate fund or appropriation line item as authorized in this act for the same purpose and to the same vendor. As determined by the Director, the appropriation authority necessary to reestablish such prior year encumbrances in fiscal year 1998 in a different fund or appropriation line item within an agency or between agencies is hereby authorized. The Director shall reduce each prior year's appropriation authority by the amount of the encumbrances canceled in their respective funds and appropriation line items.

Vocational Rehabilitation

The Bureau of Workers' Compensation and the Rehabilitation Services Commission shall enter into an interagency agreement for the provision of vocational rehabilitation services and staff to mutually eligible clients. The Bureau shall provide $519,608 in fiscal year 1998 and $534,157 in fiscal year 1999 from the State Insurance Fund to fund vocational rehabilitation services and staff in accordance with the interagency agreement.

Fund Balance

Any unencumbered cash balance in excess of $45,000,000 in the Workers' Compensation Fund (Fund 023) on the thirtieth day of June of each fiscal year shall be used to reduce the administrative cost rate charged to employers to cover appropriations for Bureau of Workers' Compensation and Industrial Commission operations.

Within the limits set forth in this act, the Director of Budget and Management shall establish accounts indicating the source and amount of funds for each appropriation made in this act, and shall determine the form and manner in which appropriation accounts shall be maintained.

The appropriations made in this act are subject to all provisions of the main operating appropriations act of the 122nd General Assembly that are generally applicable to such appropriations.

In order to provide funds for the reissuance of voided warrants pursuant to section 117.47 of the Revised Code, there is hereby appropriated, out of moneys in the state treasury from the fund credited as provided in section 117.47 of the Revised Code, that amount sufficient to pay such warrants when approved by the Office of Budget and Management.

Any appropriations contained in this act, except those to be applied to or used for payment of guarantees by or on behalf of the state or for debt service on bonds, notes, or certificates of participation, may be used pursuant to section 2743.15, 2743.19, or 2743.191 of the Revised Code for the purpose of satisfying judgments, settlements, or administrative awards ordered or approved by the Court of Claims in connection with civil actions against the state.

Notwithstanding section 131.33 of the Revised Code, unexpended balances of appropriations and reappropriations against which encumbrances have been lawfully incurred by a state agency are, at the close of fiscal year 1997, to the extent of such encumbrances, hereby reappropriated from the funds from which they were originally appropriated and reappropriated and, except for encumbrances for items of special order manufacture not available on term contract or open market, made available for the purpose of discharging such encumbrances for a period of five months from the end of the fiscal year. Unexpended balances of appropriations and reappropriations against which encumbrances for items of special order manufacture not available on term contract or in the open market have been lawfully incurred are, at the close of the fiscal year, to the extent of such encumbrances, hereby reappropriated and made available for the purpose of discharging such encumbrances for a period of five months from the end of the fiscal year or, if the Director of Budget and Management approves, for a period of not more than twelve months from the end of the fiscal year.

Any items for which unexpended balances are reappropriated beyond a five-month period from the end of the fiscal year shall be reported to the Controlling Board by the Director of Budget and Management. The report on each such item shall include the item, the cost of the item, the vendor involved, and the delivery date. Such reports to the board shall be updated on a quarterly basis while the encumbrance remains open.

After any such period, reappropriations made for the purpose of discharging encumbrances for operating expenses, defined as those encumbrances incurred for personal services, maintenance, and equipment, are canceled. Reappropriations for encumbrances other than operating expenses or items of special manufacture not available on term contract or in the open market may be extended by obtaining the approval of the Director of Budget and Management.