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Oregon Governor Raids SAIF — PIA Oregon Reacts

Posted By Staff writer, Tuesday, April 16, 2019

The Professional Insurance Agents of Oregon — PIA Oregon — is just one of many groups in Oregon disturbed over Governor Kate Brown’s decision to grab funds from the quasi-private State Accident Insurance Fund (SAIF) to beef up the PERS retirement system.

Brown’s decision takes $486 million from SAIF’s $1.9 billion surplus.

Negative reaction around the state was immediate. PIA Oregon Lobbyist Lana Butterfield said the governor’s decision is not a good one and she checked off a few reasons why:

  SAIF’s reserves are essential to protecting the safety of Oregon workers and ensuring low rates for employers throughout state. 

  Small businesses, school districts, local governments and non-profits depend on SAIF’s affordable rates and safety programs to ensure a safe and healthy workplace.

  Raiding SAIF’s reserves will negatively impact worker safety and accident prevention.

  Any excess premiums (that created the reserves) should go back to the employers who have paid them.

And the bottom line? SAIF’s funds ought not be used as a piggy bank by Salem politicians trying to cover unsustainable costs in PERS.

 

"Many PIA members serve small businesses. SAIF has stepped up to serve this community of small businesses that often have difficulty securing coverage,” she said. “It provides a very reasonable price for a high level of worker benefits and safety. If SAIF reserves are swept, it is likely employer rates will increase substantially over time.  This is not good for Oregon, small businesses or PIA members.”

 

In her news release on the decisions to shore up PERS, the governor said, “Oregon’s public employee retirement system, or PERS, is first and foremost an essential benefit for our public employees. In exchange for dedicating their lives to public service, Oregon has made a promise to provide them a secure retirement after decades of teaching our kids, fixing our roads, keeping our neighborhoods safe, fighting fires, or helping our children in foster care.”

 

Brown said it’s important to keep the promises the state made to those workers. Anything less is “kicking the can down the road.”

 

The editorial board of Portland, Oregon’s newspaper, The Oregonian published an editorial that urged the governor to reconsider her decision. It said:

 

“While the Legislature in 1982 passed a law expressly authorizing such a transfer, it would be controversial and risks destabilizing an entity that has competently, reliably and efficiently administered workers compensation for public and private employers for years. In trying to address the PERS crisis, Oregon should not do anything to trigger another,” the editorial board wrote.

 

In a story in Weekly Industry News last week, we referenced what happened with the 1982 decision of the Oregon Legislature. It authorized taking $80 million of SAIF’s reserves. A lawsuit followed and the Oregon Supreme Court said the state acted illegally and ordered the money returned.

 

With interest, $225 million was returned to SAIF and its policyholders. The attorneys fees and the cost of the litigation totaled a staggering $20 million.

 

If a decision is made by the Legislature to grant the governor’s decision to take that money, Weekly Industry News assumes lawsuits will be filed.

 

PIA Oregon is part of a coalition of business groups and associations opposing the governor’s decision. The group published a response a couple of weeks ago when the governor began talking seriously about taking the SAIF funds.

 

“SAIF’s revenue’s come via premiums from the 47,000 small businesses, school districts, nonprofits and local governments who depend on the company to cover their workers,” the group wrote. “The system is working well for workers and employers and this could significantly disrupt the balance that exists within the system. Make no mistake that this will impact rates paid by employers as SAIF fights to rebuild it’s reserves.”

 

The group called the governor’s decision, a dangerous game.

 

“They are literally stealing from one pot to cover liabilities in another and hoping that you can pay it back before something bad happens. That’s a dangerous game,” the coalition stated.

 

“Additionally, that would require significant changes to SAIF’s operating structure and should be done after careful study rather than as a hasty bailout strategy for PERS. SAIF is unlike other insurers in that it operates solely within the state of Oregon and is required to focus 100% on workers comp (mono-state and mono-lines).”

 

Republicans immediately criticized the SAIF raid decision. House Republicans said, “While recent Secretary of State audits reveal many agencies are prone to waste, SAIF has built enviable reserves, annually returning dividends to clients and covering thousands of claims. Ironically, cash reserves built on years of workplace safety and sound fiscal practice are viewed as easy pickings to shovel into the ever-deepening PERS pit.”

 

Mike Salsgiver is the Executive Director of the Associated General Contractors. He agrees and said SAIF’s reserves should be off limits. “You can be certain that raiding hundreds of millions of dollars from SAIF's reserves will negatively impact worker safety and accident prevention. That means higher rates for employers, reduced benefits for workers, or fewer investments in accident prevention. Any way you cut it, Oregon small businesses and workers lose,” he said.

 

Oregon Business & Industry represents Oregon’s largest employers. Spokeswoman Samantha Tipler said her group agrees that the SAIF raid is a bad idea. “We will strongly oppose this effort to raid SAIF to bail out PERS. The PERS solution should stand on its own.”

 

The governor’s PERS rescue plan has a couple of other components:

  After giving each family $100, the state will keep — one time — the income tax kicker. Brown hopes it will raise $400 million to 500 million.

  Repatriation funds already dedicated under 2018 Senate Bill 1566 (and Senate Bill 1529) for a total of $83.3 million.

  Windfall revenue from variable sources, including direct, above-trend revenues from capital gains and estate taxes to the account.

 

Keeping the kicker — funds returned to Oregonians if tax collections exceed income projections by 2% — will require a two-thirds vote by the Legislature to happen. It has no chance since the idea has to get support from both parties.

 

In last week’s Weekly Industry News, we covered a letter to The Oregonian from former PIA Oregon/Idaho president Rich Kingsley. He hit the nail on the head with his description of the governor’s decision.

 

“It was a stupid stunt then,” Kingsley wrote. “And to think of doing it again is still stupid, and reckless.”

 

Source links: Governor Kate Brown, Weekly Industry News — link 1, link 2, link 3OregonLive.com, Willamette Week

Tags:  insurance content  insurance news 2019  PERS  PIA Western Alliance 

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Feedback — No to Oregon Governor’s SAIF Raid Plan

Posted By Staff writer, Tuesday, April 9, 2019

Rich Kingsley was PIA Oregon/Idaho’s president from 2004 to 2005. He was, and still is very savvy politically. He recently sent Portland, Oregon’s daily newspaper, The Oregonian, a letter to the editor.

 

His concern? Governor Kate Brown’s plan to raid the reserves of the State Accident Insurance Fund Corporation (SAIF) to pay for the shortfall in the state’s PERS fund. PERS — as we all know — is not properly funded and the state is desperate to find a way to give the money promised by PERS to retired public employees.

 

The governor — and her SAIF fund-grabbing supporters — say SAIF has $1.4 billion in surplus that can be used to shore up PERS. 

 

Here are parts of Rich Kingsley’s letter to the editor. He asks some great questions. Some of which we will answer after you read what he wrote.

 

I was an Independent Insurance Agent in the insurance business for 37 years, writing mostly commercial policies for clients. I not only feel frustration, but extreme anger with the Democrats who want to raid SAIF.

 

In the late 1980's the legislature did just this same stupid “Raid SAIF” stunt. I think it was in 1996 or 1997 that a lawsuit against the State for ‘robbing’ funds from SAIF was settled, and the State was found culpable for taking money from SAIF. The State had to refund money to SAIF AND refund money to commercial clients that had to pay higher work comp rates thru SAIF, due to the State's robbing of those funds in the 1980's. The State not only had to return the funds, but interest for all the years the lawsuit went on.

 

When the funds were sent to be repaid back to commercial clients who had paid higher premiums, SAIF sent the checks to the agents who had assigned our work comp clients to SAIF, and we hand delivered the checks to our clients, who knew that we and our agent association [PIA Oregon/Idaho] had been highly in favor of penalizing the State for their act of stupidity in 'robbing' SAIF. Those businesses that had bought their work comp directly from SAIF received their checks in the mail.

 

It was a stupid stunt then, and to think of doing it again is still stupid, and reckless.

 

He then praises the newspaper for bringing to light the problems with this blatant theft of money that belongs to the state’s employers.

 

Kingsley is correct that the dollars in the fund that aren’t used for claims belong to employers. Many governor and Legislatures in states around the country are looking at their own versions of SAIF and those surplus funds to balance budgets.

 

The PIA Western Alliance state of Montana is the other state in our association where the Legislature has made a grab. PIA Montana and other groups and employers in the state oppose the taking of those surplus funds and a lawsuit was filed.

 

It will be heard in the Montana Supreme Court later this year or early next. Experts in Montana law believe the taking of the money from the Montana State Fund will be found unconstitutional and it will have to be returned.

 

To answer Rich Kingsley’s question. In the early 1980s, the Oregon Legislature had a budget crisis. It grabbed $80 million of SAIF’s reserves. A lawsuit followed and the Oregon Supreme Court said the state acted illegally and ordered the money returned.

 

With interest, $225 million was returned to SAIF and its policyholders. The attorneys fees and the cost of the litigation totaled a staggering $20 million.

 

The group opposing the Oregon governor’s SAIF funds plan includes PIA Oregon/Idaho. In their response to Brown’s plan the group said, “Doing so is nothing more than a Ponzi scheme. They [the governor and the Legislature] are literally stealing from one pot to cover liabilities in another and hoping that you can pay it back before something bad happens. That’s a dangerous game.”

 

In its response document, the group pointed out that those reserve funds are good for Oregon’s employers and Oregon’s economy.

 

“The premiums paid by Oregon employers are some of the lowest in the nation thanks to SAIF. It’s one of Oregon’s few competitive advantages. SAIF’s board and leadership are 100% local,” the group wrote. “They don’t operate like big corporate insurers and that’s proven to be a good thing for Oregon workers and employers alike.”

 

In addition to PIA Oregon/Idaho, these are the groups opposing Governor Brown’s plan.

Professional Land Surveyors of Oregon

Oregon Columbia Chapter of the Associated General Contractors

Oregon Economic Development Association

National Federation of Independent Businesses

Oregon Business & Industry

Economic Development for Central Oregon

Oregon Farm Bureau

Plumbing-Heating-Cooling Contractors Association

Oregon School Boards Association

Oregon Trucking Association

Oregon Home Building Association

Oregon Vehicle Dealer Association

Northwest Grocery Association

Oregon Metals Industry Council

Oregon State Chamber of Commerce

Oregon Wheat Growers

Oregon Seed Council

Columbia Gorge Fruit Growers

Oregon Power Sports Association

Northwest Automotive Trades Association

Oregon Manufacturers and Commerce

Far West Agribusiness Association

Oregon Association of Nurseries

Oregon Concrete & Aggregate Producers Association

Associated Oregon Loggers

Tags:  insurance content  insurance industry  insurance news  PERS  Raid the reserves of SAIF  SAIF 

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