January 7, 2026 — An investigation by The Jacobi Journal reports that the RAND Corporation’s 2024 study of California’s Subsequent Injuries Benefits Trust Fund (SIBTF) may have overstated the fund’s projected unfunded liability by approximately $6.75 billion, or about 632%, compared with the Journal’s recalculated estimate. The RAND study’s headline figure of a $7.9 billion unfunded liability has been criticized as creating the appearance of a crisis that helped drive 2025 reform efforts affecting severely disabled workers.
SIBTF Background and RAND’s Role
The SIBTF was established to provide supplemental benefits to severely disabled workers and to encourage their continued participation in the labor force. Employers fund the program through the workers’ compensation system, and benefits are designed to prevent severely disabled workers from relying exclusively on general assistance programs.
To evaluate the fund’s long‑term financial exposure, the California Department of Workers’ Compensation engaged RAND to estimate SIBTF’s future unfunded liability. RAND’s 2024 report concluded that the SIBTF faced approximately $7.9 billion in unfunded obligations, a figure that was subsequently cited in support of legislation introduced in 2025 to narrow eligibility and reduce benefits.
Jacobi Journal’s Audit and Key Findings
The Jacobi Journal of Insurance Investigation conducted an actuarial and financial review of the RAND model and identified what it characterizes as a series of “highly questionable” assumptions that significantly increased the projected liability. The Journal asserts that, when those assumptions are adjusted to align with historical experience and common actuarial parameters, the more reasonable estimate of SIBTF’s future liability is closer to $1.25 billion.
According to the Journal, the magnitude of the discrepancy raises concerns about the reliability of the RAND projections and the use of those projections in policy debates over benefit reductions. “It was a premeditated assault on the disabled community in California,” said Brian Chen of Disabled Veterans of California, referring to the way the liability figure was used to justify proposed cuts.
Alleged “Mathematical Malpractice”: Core Assumptions Challenged
The Journal attributes the $6.75 billion variance primarily to two categories of assumptions in the RAND model: an elevated projected payout rate on open cases and an inflated present value assigned to a 100% disability award.
Projected payout rate on open cases
RAND reportedly applied a prediction algorithm to 14,681 open SIBTF files and concluded that 91% would ultimately result in benefit payments. The Journal notes that this 91% estimate was derived from a small, non‑representative sample of 42 recently resolved cases, when the historical average based on the 25,000 case study was between 24% and 44%.
Present value of a total disability award
RAND’s model is said to imply an average liability of approximately $933,000 per 100% disability award, which the Journal argues is driven by a combination of aggressive financial inputs. The critique focuses on three elements:
- Use of a 3% discount rate, substantially below typical public pension assumptions (around 6.7%) and the 7% rate referenced in the California Labor Code, thereby increasing the present value of long‑term benefits.
- Assumption of a 3.9% annual cost‑of‑living adjustment (COLA), which, when paired with the low 3% discount rate, is described by actuaries cited in the article as “mathematical malpractice” because it maximizes calculated liabilities.
- Limited adjustment for reduced life expectancy, despite RAND acknowledging research suggesting that severely disabled individuals may have shorter lifespans, potentially by up to 17%.
Under alternative assumptions, such as a 7% discount rate, a 2.6% COLA, and reduced life expectancy, the Journal estimates that the present value of a typical 100% disability award would be approximately $418,345, less than half of RAND’s implied figure.
Policy and Fiscal Implications
On the Journal’s recalculated numbers, the SIBTF’s total unfunded liability is estimated at about $1.25 billion, which reframes the issue from a purported fiscal emergency to what the Journal characterizes as a significant but manageable obligation within the workers’ compensation system. The investigation argues that using the $7.9 billion estimate as the foundation for measures such as SB 1329 risked justifying substantial benefit reductions based on what it describes as flawed or overstated projections.
If such reductions were implemented, critics contend that many severely disabled workers would be pushed from an employer‑funded, program‑specific benefit into broader safety‑net programs such as Medi‑Cal and SSI. That shift would transfer long‑term costs from the workers’ compensation system to the general taxpayer and could contribute to increased pressure on California’s budget and social welfare programs.
For the full actuarial breakdown and supporting documentation behind this investigation, readers can review the complete analysis published by The Jacobi Journal of Insurance Investigation at JacobiJournal.com.
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