Montana’s state-run insurance program for workers injured on the job before July 1990 needs a $14 million infusion or it could run out of money in 10 years, leaving the state responsible for up to twice as much in claims, an insurance expert told the board of the Montana State Fund.
The so-called Old Fund is a pool of money set aside to pay the medical costs and lost wages for Montanans injured on the job before July 1990. The money was raised with a special tax on all businesses and wage earners to help the state workers’ comp program out of a $500 million shortfall.
However, in 2003 the Legislature siphoned the Old Fund’s $22 million in reserves to balance the state budget. At the time, Old Fund managers believed they had enough money to remain solvent, but its investments didn’t earn as much as expected.
“That’s the value of having contingency funds,” said Laurence Hubbard, president of the Montana State Fund. “It’s often decades before our expenses are known.”
If lawmakers fail to set aside $14.2 million, the state treasury will have to pay an estimated $27.4 million between 2015 and 2045 when the Old Fund expires.
The Montana State Fund, a semiprivate state-owned agency created in 1990, manages the Old Fund, but the Legislature is responsible for the account and any shortfalls at the agency will come out of state tax coffers.
Senate Finance Committee Chairman Mike Cooney, D-Helena, said the Legislature needs to address the shortfall–especially because it was the Legislature that spent the Old Fund’s reserves.
“I would suspect we have the obligation to come in and make it right somehow,” Cooney said.
He said it’s possible that a fix could come as early as December, when lawmakers are expected to meet in special session to rework the way Montana pays for public education and put more money in teachers’ and public employees’ retirement accounts.
Gov. Brian Schweitzer would have to expand the scope of the session to include the workers’ comp issue.
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