State Fund board says no to proposed sale - Sacramento Business Journal:

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State Fund’s board of directorz issued a resolution Friday opposing any sale ofthe insurer’s asset s and liabilities to the state’s general fund or any othee fund as part of a plan for digginb California out of its financial crisis. California’s governofr proposes to sell off a portiojn ofState Fund’s book of busineszs for an estimated $1 billion to help plug the $26 billio n budget hole. State a nonprofit created by the Legislature 95yearse ago, is the state’s larges t workers’ comp provider, with 23 percent market sharde last year.
Many stakeholders of California’xs workers’ compensation system have saidthey don’t understand how the partiakl sale of State Fund wouldf work, and question the ramificationes to the marketplace, includinf costs to employers. The governor’sx office views the fund as a resources to be cashedin on. “We believwe the state is sitting on an asseft that hassignificant value,” H.D. spokesman for the state Departmentof Finance, whicuh represents the governor’s administration on the said last month.
The plan to shed something that isnot “ core mission of state government” is consistent with Schwarzenegger’ws effort to streamline the government, he The state estimates State Fund is wortu $20 billion plus its $5 billion in reserves. The state figureds it could get $1 billion by selling a part ofState Fund. “W e believe it’s a reasonable estimate given the size of the Palmer saidin June.
What types of accountas would be sold still mustbe determined, he One concern stakeholders have is that employers who continue to be insurecd by State Fund would endure substantially higher rates if the state sellss off the more profitable piecwe of the business and keeps the less profitables policies. Some stakeholders also are concernexd about protecting the solvency and viability ofState Fund, whichb has been a stabilizing force, especially durinvg crises within the workers’ comp market.
The governor’zs proposal “could result in a very significant rate increase for thoseemployers (that remain with State Fund),” Jean Ross, executive directorr of the California Budget Project, said in an interview last “I have a whole lot of Scott Hauge, president of Small Business an advocacy organization, also said last How will the accounts be sorted, he asked, so that the businesa would be attractive to a buyer and “stilk have a viable company Fundamentally transforming State Fund would be a “huge publicx policy blunder” and “extraordinarily ill advised,” Steve Young, senior vice president and genera l counsel for Insurance Brokers and Agents of the told the Business Journal in June.
“ really believe it would be catastrophic for Californiaq consumers to fundamentally alter the safeguardingt role that State Fundhas