Senate looks for other budget cuts to spare higher ed
Democrats and Republicans in the Colorado Senate have begun looking for ways to cut spending as they take their first look at the state budget, which includes a controversial proposal to offset cuts to higher education by taking the assets of an insurance company.
A Senate committee has approved a recommendation by the Joint Budget Committee that calls for the Legislature to cut $400 million from higher education and backfill it with $500 million in assets from Pinnacol Assurance, Colorado’s largest seller of workers’ compensation insurance.
Senators are looking for ways to spare funds for higher education without taking the Pinnacol assets.
Democrats are thinking about undoing tax breaks as a way to provide extra revenue that would forestall the cuts to higher education.
Republicans, meanwhile, are proposing furloughs and cuts in pay and benefits for state employees. They also are looking at eliminating metal detectors and officers at public entrances to the state Capitol, and they want to take $100 million intended for public schools and give it to state colleges and universities instead.
The Colorado Attorney General’s Office is looking into the legality of taking Pinnacol Assurance’s assets to supplement spending in higher education and other programs.
Pinnacol Assurance reiterated its opposition to the proposal Wednesday. Ken Ross, president and chief executive of Pinnacol, said officials were looking into the possibility the company might be able to offer some help to the state.
“There may not be anything we can offer,” Ross said.
Taking assets from Pinnacol would have “dire consequences” for the workers’ compensation insurance market in the state and would likely lead to increased policy premiums and reduced dividends to policy holders, Ross said.
Pinnacol was established as a political subdivision of the state and was designed to operate as a mutual insurance company. It pays no state or federal taxes and cannot turn down policyholders.
Pinnacol has $2 billion in assets and $1.3 billion in liabilities with a cushion of $624 million in actual reserves. That margin is the money that was targeted by the budget-drafting committee and without it, Ross said, “It’s questionable whether we can continue” meeting obligations to claimants who have been injured on the job.
Pinnacol, Ross said, will “fight the legislative battle at each level” in the Senate and then the House.