HELENA – Executive and employee salaries at the state workers’ compensation fund raised eyebrows at a Senate committee Thursday, as the fund opposed a bill requiring it to use its own assets to cover a pre-1990 debt.
“I find these increases and wages pretty hard to justify in my district,” Sen. Jon Sonju, R-Kalispell, who chairs the Senate Business and Labor Committee, said of incentive payments that averaged 8.4 percent for nearly 260 Montana State Fund employees in 2012.
Salaries and bonuses for Montana State Fund employees were mentioned as the panel examined Senate Bill 173, which would require the quasi-public insurer to use its own assets to pay an estimated $60 million in debt from pre-1990 claims.
The pre-1990 debt is from the state’s “old” work-comp fund, which ran up huge debts and was separated from the “new” State Fund in 1990, when the state assumed the debt.
Right now, the state treasury pays the money to cover old-fund claims, estimated to be $13 million over the next two years.
The Bullock administration supports SB173, saying that money should be used to help balance the state budget, rather than pay off the State Fund’s old debt.
Sen. Jim Keane, D-Butte, the sponsor of the bill, said taxpayers are “getting fleeced out of the general fund” by being forced to pay the bill, when the State Fund has more than $300 million in equity and is able to give its employees incentive payments and raises while other state workers have had their base pay frozen for four years.
Keane produced a spreadsheet showing State Fund President Laurence Hubbard is being paid $320,000 in salary and incentive payments for the current fiscal year, and that Hubbard and other top executives saw compensation increases of 14.5 percent to 30 percent over the past four years. The other top six executives have compensation this year ranging from $149,700 to $217,100.
Hubbard told the committee the State Fund strongly opposes SB173 – and a host of business lobbyists joined him in opposing the bill.
The State Fund sells work-comp insurance to 26,000 Montana companies. Businesses in Montana are required to have work-comp coverage, which insures them against on-the-job injuries to workers.
Hubbard, board members at the State Fund and lobbyists for truckers, insurance agents, private insurers, farmers, ranchers, bankers and small business said SB173 would unfairly force the fund and its policyholders to pay off a debt they had nothing to do with creating.
The new State Fund’s equity is used to pay dividends to policyholders and assure the fund has enough to pay claims, and should not be used to retire the old debt, Hubbard said.
“There is a suggestion that we’re rolling in dough and that it’s there for the having and taking,” he said. “I have to beg to differ. ... This is not extra money, this is protective money.“
Wayne Dykstra, a Billings businessman who sits on the State Fund board, said if the Legislature passes the bill, he would recommend the State Fund file suit to overturn it.
“I am not going to eat $60 million that is not ours,” he said. “We will litigate this law.“
Opponents also said SB173 amounts to “political rate-setting” for the State Fund, which is what led to the old debt in the first place.
Sen. Debby Barrett, R-Dillon, disagreed, saying the Legislature would simply be exercising its oversight of a state agency.
She also asked two work-comp board members who opposed SB173 whether they had paid their business’s employees bonuses at the level paid by the State Fund. Both said no, they hadn’t.
Missoulian State Bureau reporter Mike Dennison can be reached at 1-800-525-4920 or at firstname.lastname@example.org.