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.

This entry was posted on Tuesday, April 7th, 2009 at 5:33 pm and is filed under Abel Tapia, Brandon Shaffer, Budget, Education, Moe Keller. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.