State weighing fate of workers fund

If you haven't heard of the Workers Compensation Fund of Utah, you likely will over the next several months as Gov. Mike Leavitt and the Legislature decide whether to sell the quasi-public, tax-exempt fund with some $350 million in assets.

On Thursday, the governor told the annual seminar of the Utah Taxpayers Association that what to do with the WCF "is one of most important decisions" to be made by state leaders this year.

Leavitt wouldn't say whether he favors the sale, or if so, for how much. But in his 45-minute discussion it was clear Leavitt sees real value in "selling" the fund to policyholders — the state being the largest — and "releasing the value" now held up in the fund's $220 million reserves.

For a brief time during the 2003 Legislature, Leavitt and legislators considered selling the state's "founding interest" in the fund for $50 million.

In the end, Leavitt asked lawmakers in the 2003 general session not to act on the proposal. Now a consultant has been hired, and by May 31 a report on what do to with the fund will be given lawmakers, the governor said.

Leavitt promises to call a special session this summer on the matter. But the complex issues that Leavitt explained to the tax watchdog group need public airing, he said.

There are a few alternatives: "Sell" the fund, perhaps giving policyholders tradeable stock in the fund; let the fund merge with other public or private insurance funds; drain the huge reserves of the fund that are not needed to make the fund sound, perhaps through reduced premiums; or, do nothing.

Doing nothing doesn't appear likely. The WCF, which writes 80 percent of its premiums in Utah, wants to expand the 20 percent of its out-of-state business. And because the fund is tax exempt, there is political pressure in other states not to allow an insurance fund with such a competitive edge to take the workers compensation business.

Workers compensation funds throughout the nation are the "market of last resort," providing affordable insurance, most often required by law, to employers to help compensate employees who are hurt on the job. Utah's fund was set up in 1917, made partly private in 1988, and today is a "magnificent asset, well-managed," said Leavitt, a former executive for his family's insurance company.