December 19, 2025 | SIBTF.org – SIBTF reform is back in the spotlight as California’s Subsequent Injuries Benefits Trust Fund (SIBTF) faces systemic changes directed by Governor Gavin Newsom following his veto of Assembly Bill 1329 (AB 1329).
The veto emphasizes that incremental changes are not enough to stabilize the fund, which continues to impose growing costs on California employers and threatens the sustainability of the workers’ compensation system.
AB 1329 Veto Signals Urgent Reform
Governor Newsom vetoed AB 1329 on October 7, 2025, stating the bill failed to address the fundamental structural issues driving SIBTF liabilities. The governor tasked the Department of Industrial Relations (DIR) to develop a comprehensive reform proposal for inclusion in the 2026‑27 state budget cycle.
This action underscores the administration’s commitment to long-term reform rather than temporary fixes, aiming to reduce escalating employer assessments and ensure program stability.
The upcoming SIBTF reform plan is expected to focus on improving claims efficiency, refining eligibility criteria, and aligning benefit structures with fiscal sustainability goals. By taking a more strategic approach, policymakers hope to address the long-standing challenges within the fund while balancing the interests of employers, insurers, and injured workers.
Why SIBTF Reform Matters Now
The SIBTF has grown far beyond its original purpose of protecting employers hiring workers with pre-existing disabilities. Analysts warn that, without meaningful reform, employer assessments could surge significantly over the next decade, placing an increasing financial burden on California businesses and taxpayers.
Comprehensive SIBTF reform is expected to address both financial sustainability and program efficiency. By modernizing claims processing, clarifying eligibility standards, and restructuring benefits, the reform aims to reduce long-term liabilities while maintaining fair support for injured workers. This strategic approach ensures that the fund can continue to serve its intended purpose without overwhelming employers or the state budget.
What to Expect in 2026
- DIR will draft a full reform plan aligned with the 2026-27 budget.
- Proposed reforms may include updated eligibility rules, streamlined claims processing, and benefit adjustments.
- Employers, insurers, and injured workers can expect enhanced stakeholder engagement during the legislative review.
- For further details on the governor’s reform directive, see the official report here: Bradford & Barthel – SIBTF Reform Plans.
As California moves toward comprehensive SIBTF reform, stakeholders across the state—including employers, insurers, and injured workers—should stay informed and engaged. The 2026‑27 reform plan promises to address long-standing challenges while ensuring the program remains sustainable and fair. Keeping up with developments now will help all parties prepare for the changes and understand their impact on claims, costs, and benefits.
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Read More from SIBTF.org:
- Court of Appeal Confirms SIBTF Must Meet Burden of Proof for Benefit Reductions
- SIBTF Reform Outlook: Gov. Newsom’s 2026 Plan After 2025 Delays
- WCAB Rulings Continue to Reshape SIBTF Claim Outcomes in 2025
FAQs: About the SIBTF Reform Update
What prompted Governor Newsom to veto AB 1329?
The governor determined that AB 1329 did not go far enough to stabilize SIBTF liabilities, which have continued to grow and place a significant financial burden on employers and the state. In response, he directed the development of a comprehensive SIBTF reform plan for 2026 aimed at addressing long-standing structural challenges. This reform plan is expected to include improvements in claims processing, clearer eligibility standards, and adjustments to benefit structures, all designed to ensure the fund remains sustainable while continuing to provide fair support to injured workers. By taking a strategic, system-wide approach, the administration intends to prevent future liabilities from escalating and to create a more predictable and balanced framework for all stakeholders.
How will this impact employers?
Employers could see reduced or stabilized assessments over time if reforms are implemented, helping control rising costs associated with SIBTF.
What changes are being considered in the reform plan?
Potential reforms include eligibility adjustments, streamlined claims processing, and restructuring benefit payments to ensure the program’s sustainability.
When will the new reforms take effect?
Reforms are expected to be proposed in the 2026‑27 state budget cycle, with implementation timelines dependent on legislative approval.