California: State fund board of directors opposes sale of assets to balance budget
In an effort to shore up a more than $24 billion shortfall in the state budget, Gov. Arnold Schwarzenegger suggested that SCIF retain its role as a workers' comp insurer of last resort but that a portion of its assets be sold to a private insurer. Lawmakers, who estimated that the sale could generate as much as $1 billion, passed the budget in late July.
The final state budget outlined numerous conditions that officials must meet in order for sale of the fund's assets to come to fruition. Those conditions include a stipulation that the SCIF's board of directors must come to agreement with lawmakers on the plan. However, the fund's board recently issued a statement saying it was opposed to any proposed legislation regarding the "sale or disposition" of SCIF assets and liabilities for the purpose of balancing the California budget.
Steve Poizner, commissioner for the state Department of Insurance, has also raised concerns about the plan. He told state officials that he feared that the fund might go bankrupt if it loses the ability to write voluntary business in addition to acting as the insurer of last resort. Poizner called for a more thorough study of the plan prior to any sale.
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August 31, 2009
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