A few weeks ago Oregon Governor Kate Brown decided the solution to Oregon’s PERS income-outgo shortfall crisis would be to grab money from the State Insurance and Accident Fund’s (SAIF) surplus. The proposal would have taken $486 million from the surplus of $1.9 billion.
The reaction from business and insurance groups was instant. Organizations like the PIA Oregon/Idaho banned together to stop the governor’s ill-conceived plan. The effort worked and a different solution was found.
It involves kicking the problem’s can down the road but at least — for now — SAIF’s surplus has been left out. Meanwhile, in a very astute political move the SAIF board of directors — via SAIF President and CEO Kerry Barnett — has sent a letter to Oregon Senate President Peter Courtney and to House Speaker Tina Kotek.
In the letter Barnett said, “I wanted to inform you that at our board meeting next month, we will recommend that SAIF establish a substantial side account that will offset most, if not all, of the UAL allocated to SAIF.”
Or to put it in other words, SAIF is looking at funding the total PERS liability for its own employees. “We have already conducted some analysis regarding recreation of a side account, and we will be asking PERS to calculate SAIF's portion of the outstanding UAL, which is an initial step in creating a side account,” he wrote. “Based on DAS estimates, we believe the amount is approximately $91 million.”
PIA Oregon Lobbyist Lana Butterfield told Weekly Industry News, “This was a smart political move by SAIF. Leadership wanted something from them. This move to pay down its own PERS obligation helps SAIF itself and also pays down some of their surplus, while satisfying legislators.”
Kelsey Wood of Gordon Wood Insurance and Financial Services in Roseburg, Oregon wonders if consumers will understand what the SAIF board is considering. In his reply to our query, Wood said, “[I] Just hope consumers understand. 1. What surplus is for. 2. Why SAIF’s surplus differs from other insurers, and 3. And the payment on PERS is 100% benefit to Saifs bottom.”