SB 281 passes Appropriations Tuesday
DENVER— A prison is closing. The expansion of full-day kindergarten is halted. State employees’ salaries are frozen. We’ve dipped into the statutory reserve. And Colorado is looking at possibly closing some community colleges if legislators can’t find a way to backfill the suggested $300 million in cuts to higher education.
The cuts in the 2009-10 budget are deep and Senate Democrats are working to protect essential services. At the same time higher education is looking at almost $300 million in cuts, Senator Brandon Shaffer (D-Longmont) introduced SB 281 which would spare these serious cuts by transferring a portion of a state entity’s $700 million surplus to the General Fund. SB 281 passed the Senate Appropriations Committee today and will be on second reading on the Senate floor Thursday.
“Cutting $300 million from higher education is entirely unacceptable to me,” said Sen. Shaffer. “It would force layoffs at a time when we need to create as many jobs as possible; it would stunt economic growth at a time when we need it most; and it would nearly price out the middle class from attending our universities and colleges. When we must choose between allowing a state entity to sit on a $700 million surplus or closing colleges in Colorado, the choice is clear. We absolutely must preserve post-secondary education.”
What SB 281 does:
• Provide new, rigorous oversight in two ways:
1) Provides the State Auditor with enhanced powers to review Pinnacol’s operations.
2) Creates an interim committee of the Legislature and charges it with a comprehensive review of the workers’ compensation market in Colorado, including Pinnacol’s executive salary and bonus packages, premium rates, and payments to workers injured on the job.
• Requires Pinnacol Assurance to pay a dividend to small businesses equal to 5% of Pinnacol Assurance’s surplus
NOTE: SB 273 (sponsored by Sen. Al White) Sets up the transfer into the General Fund of almost $500 million in surplus from the state entity, Pinnacol Assurance, which provides workers’ compensation insurance to companies in Colorado. (That surplus is 6 times over and above what the Division of Insurance says is needed to ensure the solvency of Pinnacol’s operations.)
What SB 281 does NOT do:
• SB 281 doesn’t affect Colorado’s stable workers’ compensation market.
• SB 281 doesn’t affect Pinnacol’s ability to meet its current or future obligations to injured workers or the families of workers killed on the job.
• SB 281 doesn’t affect Employer’s premiums (In fact, premiums may go down if Pinnacol realizes that, since they have been accumulating a surplus, they can lower rates to a level commensurate with claims payments without losing money).
The bottom line: Pinnacol is a state entity and the General Assembly can access its excess surplus.
• Pinnacol was created by an act of the legislature, to act as the state’s workers’ compensation insurance provider of last-resort
• Pinnacol is a “political subdivision of the state” under 8-45-101 (1), C.R.S., and does not pay state or federal taxes.
• Unlike any private corporation, Pinnacol’s rates are set in state statute.
• Its Board of Directors is appointed by the Governor and confirmed by the Senate.
Joint Budget Committee members Senators Moe Keller (D-Wheat Ridge), Abel Tapia (D-Pueblo) and Al White (R-Hayden) are co-sponsors of the bill.