Insurance firm fights to keep its assets safe
Legislators eye $500 million to patch big holes in budget
By GARY HARMON
The state’s biggest provider of workers’ compensation insurance will fight to keep state legislators from raiding its assets, company officials said Friday.
The Legislature’s budget-writing committee has taken aim at $500 million of the reserves of Pinnacol Assurance, hoping to use that money to offset cuts the committee made to spending for Colorado’s colleges and universities.
“Our position is very clear,” said Suzi Stolte, spokeswoman for Pinnacol. “Pinnacol’s assets belong to Pinnacol, and Pinnacol’s assets cannot revert to the state.”
Pinnacol is a quasi-governmental agency that operates as a mutual insurance company, offering workers’ compensation insurance to Colorado employers.
It has 58,000 policy holders, covers 40,000 small businesses and covers 1.5 million employees. As the state’s insurer of last resort, it can’t refuse coverage. Its reserves are used to provide benefits to workers who are injured on the job.
Pinnacol officials were surprised when members of the Joint Budget Committee last month broached the idea of using the company’s reserves to balance the state budget.
“That was the first we had heard of it,” Stolte said. “No one had reached out to us prior to that.”
Taking the Pinnacol assets would require changing state statutes “and carries various other uncertainties,” the state Department of Higher Education wrote in a budget update.
Even if the budget committee is able to use $300 million in Pinnacol reserves, it
would be only a one-time measure, and the Legislature would have to grapple again with how to fund higher education.
The JBC has discussed using $102 million in federal stimulus money for higher education, but that also would be one-time money, meaning the Legislature would confront a higher-education budget reduced by 65 percent, the budget update said.
“This takes us back 30 years,” Mesa State College President Tim Foster said of the higher-education budget.
Mesa State and other colleges have said the cuts could require tuition increases, prompting students statewide to plan rallies on Monday at the state Capitol. Some
Mesa State students plan to drive Sunday to Denver to attend the rally.
Legislators are beginning to have doubts about the plan, which is to be presented Monday at the Legislature, said Sen. Josh Penry, R-Grand Junction.
“There’s a lot of talking behind the scenes,” Penry said. “There seems to be increasing recognition that their plan isn’t going to cut it. It’s getting a lot of pushback because it’s so irresponsible.”
The Joint Budget Committee is ignoring opportunities for budget cuts elsewhere, Penry said.
Pinnacol, in the meantime, won’t surrender its reserves, Stolte said.
“This is not a fight we want, but legally we are responsible to our policy holders,”
Stolte said. “It would be illegal for us to give them $1, much less $400 million.”