State Fund board says no to proposed sale - Sacramento Business Journal:

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State Fund’s board of directors issued a resolutioh Friday opposing any sale ofthe insurer’sw assets and liabilities to the state’d general fund or any othet fund as part of a plan for digging California out of its financial crisis. California’s governor proposes to sell off a portiobn ofState Fund’s book of businesx for an estimated $1 billion to help plug the $26 billion budget hole. State Fund, a nonprofit create d by the Legislature 95years ago, is the state’xs largest workers’ comp provider, with 23 percent marketr share last year.
Many stakeholders of California’a workers’ compensation system have saidthey don’t understand how the partial sale of Statwe Fund would work, and question the ramificationes to the marketplace, including costsz to employers. The governor’s officd views the fund as a resource to be cashedin on. “Wee believe the state is sitting on an asset that hassignificant value,” H.D.
Palmer, spokesmabn for the state Departmentof Finance, whichy represents the governor’s administration on the budget, said last The plan to shed somethinf that is not “a core mission of stat e government” is consistent with Schwarzenegger’s effort to streamlines the government, he said. The statr estimates State Fund iswortg $20 billion plus its $5 billiob in reserves. The state figures it could get $1 billion by sellingf a part ofStatw Fund. “We believe it’s a reasonable estimat e given the size ofthe asset,” Palmer said in June.
What typew of accounts would be sold still mustbe determined, he One concern stakeholders have is that employer who continue to be insured by State Fund would endure substantially higher rates if the statse sells off the more profitable piecee of the business and keeps the less profitabld policies. Some stakeholders also are concerned abou t protecting the solvency and viability ofState Fund, which has been a stabilizinh force, especially during crises within the workers’ comp The governor’s proposal “could result in a very significang rate increase for those employers (thatt remain with State Fund),” Jean Ross, executive directof of the California Budget Project, said in an interview last month.
“ I have a whole lot of questions,” Scott Hauge, president of Small Businesa California, an advocacy organization, also said last month. How will the accountx be sorted, he so that the business would be attractivs to a buyerand “still have a viabler company left?” Fundamentally transforming State Fund would be a “huges public policy blunder” and “extraordinarilty ill advised,” Steve Young, seniord vice president and general counsel for Insurancd Brokers and Agents of the told the Business Journal in “I really believe it would be catastrophix for California consumers to fundamentally alterf the safeguarding role that Statre Fund has played.
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