AFL-CIO wants SAIF to revert back to state agency

The Oregon AFL-CIO — with backing from Labor Commissioner Dan Gardner — will support an initiative petition to convert SAIF Corporation back into a bona fide state agency.

SAIF, Oregon’s largest seller of workers’ compensation insurance, is a self-supporting, not-for-profit, publicly-owned insurance company that is not supported by tax dollars. But it also operates outside the normal rules and regulations governing other state agencies — such as legislative oversight.

SAIF insures approximately 530,000 employees and last year reported revenues of $432 million. With a multi-billion-dollar reserve, it has drawn fire from lawmakers and critics for its spending habits — particularly when it comes to lobbyists, consultants and advertising.

Two incidents that surfaced over the past month included a no-bid lobbying contract (with former Governor Neil Goldschmidt) that cost more than $1 million, and a severance package that resulted in about a quarter-million-dollars payout to a former SAIF official. This scrutiny was the impetus for Governor Ted Kulongoski to order a review of the corporation by its governing board. [Ken Allen, executive director of Oregon Council 75 of the American Federation of State, County and Municipal Employees, is a governor-appointed member of the SAIF board.]

Speaking Dec. 12 in Portland at the quarterly meeting of the Oregon AFL-CIO Executive Board and General Board, Kulongoski vowed to take a hard look at how the agency operates. But he also praised SAIF, saying it has been instrumental in creating one of the most cost-effective systems in the country for compensating injured workers.

He also said Oregon’s low “pure premium” workers’ compensation insurance rate is a plus for the state when it comes to attracting new businesses.

Kulongoski’s Website says Oregon’s pure premium insurance rate has declined 12 consecutive years and that the 57.4 percent reduction has saved employers $8.8 billion since 1990.

“SAIF has been effective in making this happen. They’ve done what we wanted them to do,” Kulongoski told the AFL-CIO Executive Board.

“It’s not the structure of the public corporation that is bad,” he said, explaining that critics tend to focus on the corporate half of a public corporation while ignoring the public half.

“People are constantly saying they want government to operate more like a business,” he continued. “See what happens when it does? People don’t like it.”

Still, many union members question how insurance rates can continually decrease, while at the same time, medical and other insurance costs have been skyrocketing.

Labor Commissioner Gardner is one of those critics.

Speaking at the AFL-CIO Executive Board meeting after Kulongoski left, Gardner, a former state representative and member of Electrical Workers Local 48, said that SAIF “has done a tremendous job keeping rates down, but they’ve done it on the backs of workers. There’s no other way.”

“They are the greediest of greedy insurance companies that I’ve ever seen.”

Gardner is chief petitioner on two initiatives filed with the secretary of state (actually, a half-dozen similar initiatives have been filed) that seek to abolish SAIF Corp. and sell its assets. However, since filing those initiatives earlier this year Gardner has had a change of heart. He told the AFL-CIO Executive Board on Dec. 12 that he was dropping them both and will support an initiative to convert SAIF back to a public agency.

“The time is right to turn SAIF back to a benevolent state agency whose sole purpose is to take care of injured workers, Gardner said.

The Oregon AFL-CIO’s Committee on Political Education agreed, voting to support an initiative that would convert SAIF back to public agency status — under the authority of the Department of Consumer and Business Services and subject to the legislative appropriations process.

An initiative stating such was filed earlier this year, but was rejected by the attorney general. Oregon AFL-CIO President Tim Nesbitt said a similar initiative will be refiled soon and that the state labor federation will support it.

Organized labor was a key player in the creation of SAIF in 1913. Then known as the State Accident Insurance Fund, it was the sole provider of workers’ comp insurance in Oregon. In 1965 the Legislature opened the door for private insurers to compete with the state fund and in 1979 the Legislature turned SAIF into a public corporation.

Kulongoski said at the heart of the issue is the private insurance company (and SAIF’s largest competitor) Liberty Northwest Insurance Corp., a subsidiary of Liberty Mutual of Boston. The governor said Liberty wants to drive SAIF away so that it can be the largest comp insurer in the state.

“I’m not going to let them be the only dog in this hunt,” he said.

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