It is as predictable as time itself. A state fund providing workers’ compensation insurance accumulates a significant cash surplus. Then politicians who see the money as a free resource to solve problems they are incapable of addressing try to take it. It happened recently in Colorado, although Pinnacol Assurance, the state fund there, successfully repelled the attempt. Now New York Governor Andrew Cuomo is making the same move on the New York State Insurance Fund.

The budget Cuomo submitted on January 22nd proposes to take between $1.75 and $2 billion dollars of the NYSIF surplus and shift them to the states general funds. Almost laughably, he is claiming at the same time that this budget closes a $1.3 Billion deficit “without raising taxes”. I suppose raiding someone else’s piggy bank makes that a lot easier to achieve. 

Politicians never cease to amaze me in the brashness of their actions and brazenness of their statements. The fiscal irresponsibility demonstrated with these actions are not always related to workers’ comp state fund reserves. Here in Florida, Governor Charlie Crist hailed the 2009 Obama stimulus plan as a tremendous benefit, as it allowed the state to close a $3 Billion deficit that year. Never mind we were just trading a state deficit for a federal one. Charlie and the boys were saved the tough decisions required of actual leadership, and allowed to pass on those same problems to a future date (and another Governor).

This raid on state fund reserves is no different. Rather than actually lead on the issue and make hard choices, it is far easier to grab someone else’s available cash and use it as a short term band aid solution. That money was not raised through taxation; instead it was provided by employers of the state through premiums and investments, and is there to ensure that injured workers benefits can continue to flow – as much as “flowing” is possible in New York, a state with some of the highest costs and lowest returns in the nation. In fact, state law mandates NYSIF to maintain “a solvent fund … of reasonable reserves and surplus”. To take that cash simply because it is there is irresponsible, and puts injured workers and the fund that insures them at risk. 

Instead, if the surplus at NYSIF is indeed more than it projects its needs will require, that money should be returned to its insureds in the form of lower rates. The state funds are, in most states, designed to be autonomous and to run independently of state budgets and government. That is what makes this type of irresponsible action even harder to accept.

State Budget Director Robert Megna refers to this plan as a “reform” that will “reduce the size of the State Insurance Fund”. I suppose that is one way to do it. It is clear that New York’s politicians, like so many others, fundamentally do not understand the concept of solvency. Or responsibility. 

It is a short sighted, boneheaded move that employers and their workers should pay attention to. The can will have been kicked down the down the road with confiscated cash. Someday leaders in that state may be actually forced to lead.

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