Ohio BWC Dividend 2026: What Not-for-Profits Need to Know

The board of directors of Ohio's Bureau of Workers' Compensation (BWC) approved a dividend of approximately $1 billion on August 28, 2026, equal to about 90% of each eligible employer's 2022 policy year premium base (premiums net of credits already earned). For most private employers, that policy year ran July 1, 2022 through June 30, 2023. For many Ohio not-for-profits, that check is welcome news. But for agencies that charged workers' compensation premiums to federal grants, part of it may not be theirs to keep, and a long-standing federal rule says so even if the grant has since closed.

Federal grants come with a rulebook known as the Uniform Guidance. One section, 2 CFR 200.406(a)-(b), deals with "applicable credits," which are refunds, rebates, and similar payments that reduce a cost already charged to a grant. Insurance refunds and rebates are named as examples. If the refund relates to a cost the grant rules allowed, it goes back to the grant, either by reducing the cost or by returning cash.

Workers' compensation premiums often sit inside the employee benefit costs that grants pay for, and a BWC dividend returns a share of those premiums. That connection means the dividend deserves a closer look before it lands in general operating cash.

A grant that has already closed doesn't change the picture. The dividend is based on 2022 policy year premiums, so some of the grants that carried those costs may have ended. Section 200.345(a) says that closing out a grant does not erase the requirement to return money that becomes due because of a later refund, and it lets the funder adjust a grant that was already closed. The funder may be the federal agency itself or, for the many agencies that receive federal money through the state or a county, the pass-through entity.

Federal rules (2 CFR 200.334) generally call for keeping grant records for three years after the final financial report is submitted, or after each annual report for grants renewed yearly. That clock can run longer if an audit, claim, or lawsuit is still open, or if a funder notifies the agency in writing to keep records longer. For grants that closed in recent years, the supporting paperwork is often still available. Payroll records, BWC premium statements, and the final financial reports are the usual places to start.

Start by listing the grants, open or closed, that helped pay workers' compensation premiums during the 2022 policy year, and note how those costs were recorded. Some agencies assign premiums to each grant based on payroll. Others spread them across all programs through a shared benefits or overhead rate. If the agency uses a negotiated indirect or fringe rate, the credit reduces that cost pool and flows through the rate. If it uses the de minimis indirect rate or fixed-amount awards, costs may not be tied to actual premiums, so confirm the treatment with the funder.

Three BWC details shape the starting point. First, the private-employer policy year can span two fiscal years and several grant periods. Second, BWC applies any outstanding balance against the dividend and mails paper checks only, from September through the end of October, valid for 90 days. Start from the dividend declared, not the check amount. Third, employers that used a Professional Employer Organization (PEO), canceled coverage, or reported zero payroll for the period may be treated differently or may not be eligible, so confirm who actually received the dividend.

From there, the math is proportional. Only the part of the dividend traced to premiums that federal grants covered, and that qualified as eligible costs, returns to those grants. If federal grants covered roughly 20% of your 2022 premium, roughly 20% of the dividend is a reasonable first estimate. That estimate assumes the federal share of the premium base matches the federal share of premium, and it should be adjusted for premium credits already earned. The refund is also split between federal funds and any required match, and a reduction in match could create a match shortfall to address.

How the money goes back isn't always the agency's decision. For a grant that is still open, the usual approach is to lower the costs reported. For a closed grant, a cash payment is more common, and pass-through entities may have their own forms or instructions. Contacting the funder before making any adjustment avoids a fix that doesn't match what the funder expects. State and local funding agreements may carry similar terms, so those deserve a read as well.

Documentation matters even when the answer is that nothing is owed, perhaps because premiums were never charged to federal grants. A short written explanation of how that conclusion was reached can save time later. In a Single Audit, a refund tied to federal costs that was never returned can be flagged as a questioned cost, meaning a cost the auditor questions because it may break the grant rules or lacks support. A written review is much easier to defend than an assumption.

Clark Schaefer Hackett's dedicated Not-for-Profit practice serves more than 700 not-for-profit clients and helps agencies with grant compliance and Single Audits, including the cost-splitting questions a dividend like this raises. Whether you want to walk through how premiums were recorded or prepare a written analysis, our Not-for-Profit team can work alongside you.