by Karl Voigt
Injured workers: Pennsylvania Republicans want a loan…from you!
On June 29, the Pennsylvania Senate approved a $31.6 billion budget. The legislature is even today, Sunday, meeting to work out the details. Somewhat shortsightedly, they have yet to figure out exactly how to fund their new budget.
One idea tossed out by Republican lawmakers is to take out a loan from the State Workers’ Insurance Fund (SWIF) to help balance the budget. In what they have styled a “temporary loan” from the Fund, they would draw up to $1.5 billion from the insurer’s reserves. There are, however, no specific plans to actually repay the loan.
Some of you may be familiar with SWIF: they are a state run insurance fund that primarily insures employers in Pennsylvania that have a poor safety record or can’t secure policies elsewhere. They do not have the reputation of being the best-run insurer in the Commonwealth.
What the Republicans see is SWIF’s $1.5 billion in assets. These primarily bond funds are to be used by SWIF over the course of time to pay injured workers’ claims. However, the Republicans are seemingly ignoring the fact that SWIF has $1.7 billion in projected liabilities for injured workers’ claims. Meaning that SWIF’s money isn’t enough to pay its future obligations. So, if SWIF loans Pennsylvania its money, where will it get a loan when their money runs out?
Further, while SWIF collected nearly $214 million in premiums in 2015, its operating expenses actually exceeded that amount. Which means SWIF doesn’t operate at a profit; it is actually operating at a deficit.
So essentially, the legislature – operating at a deficit – is contemplating a loan from its own agency that operates at a deficit. Readers are encouraged to contact their local Representatives to let them know their thoughts.