Colo. lawmakers consider selling off Pinnacol
DENVER ” Colorado lawmakers are considering selling or taking millions of dollars from the state’s workers’ compensation insurer to help plug a $786 million shortfall in next year’s budget.
The insurer, Pinnacol Assurance, is owned by the state but operates largely independently of the Legislature. State lawmakers have previously criticized the company, which pays no state or federal taxes and participates in the state pension program, for paying its executives up to $419,000 a year. That figure came from a 2003 state audit, but Pinnacol is now audited by a private company. No compensation figures were listed in the 2007 audit, the latest one available.
Senate Majority Leader Brandon Shaffer also cited previous press reports about the company buying a sky box at Invesco Field when he brought up the idea of possibly selling the company at a meeting Tuesday with fellow Democrats. He’s working on a proposal to study either selling the company, and giving the state an estimated $1.6 billion, or bringing the company back under direct government control. A previous bipartisan attempt to sell Pinnacol failed during the 2001 Legislature.
“In light of what’s been going on with AIG and some of the revelations about how taxpayer money has been used for bonuses, that’s certainly something we want to get the bottom of, as well,” said Shaffer, D-Longmont.
The Joint Budget Committee is also considering taking $250 million from Pinnacol’s reserve account ” listed at $722 million in the 2007 audit ” to balance the budget for the fiscal year starting July 1. According to the audit, that account had grown by more than $100 million from the previous year.
Pinnacol spokeswoman Suzi Stolte said the money belongs to businesses that have purchased workers’ compensation insurance, which is required under Colorado law. She declined further comment on the proposals, saying company officials haven’t seen any details.
“This is all being done without Pinnacol being in the loop,” Stolte said.
Stolte said she didn’t immediately have access to the list of what company executives are being paid.
The company that became Pinnacol was set up to provide workers’ compensation insurance to companies in high-risk fields, such as construction. It can’t refuse to insure anyone and is controlled by a nine-member board appointed by the governor with the Senate’s consent.
Some Democratic lawmakers wonder whether the company would continue to insure high-risk workers if it was sold.
Democratic Sen. Morgan Carroll, a lawyer who has represented injured workers, said the state has oversight over the company’s rates now, and she feared a sale could lead to higher premiums and reduced benefits.
“I think the sale of Pinnacol would be a disaster for injured workers,” said Carroll, of Aurora.
Members of the Joint Budget Committee have given themselves until noon Wednesday to come up with the rest of the cuts needed to close the $786 million shortfall.
Some of the other ideas include cutting $150 million from kindergarten through 12th grade schools to protect state colleges and universities from further cuts. Senate President Peter Groff warned that could put the state at risk of losing the race for extra federal stimulus dollars for education reform.
The committee has already recommended cutting $50 million from higher education next year, which members say will be made up with $50 million in federal stimulus money, putting schools back at the same funding they had in 2007.
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