During a late night, marathon legislative session, the California Senate passed general government bill AB 12XXX allowing the state to sell a portion of the State Compensation Insurance Fund’s book of business. There was no debate on or objection to the measure, which passed 27-12. As of this morning, the Assembly was still deliberating the Senate version of the bill and had not called for a vote on the measure.

Even if there was no debate on the Senate floor, the issue is being hotly contested within insurance circles and SCIF’s own board of directors. The SCIF board passed a resolution at its last board meeting opposing any sale of SCIF’s assets (see  Fugetaboutit!... ). This vote seems to have done nothing to sway the governor or the Legislature, both of whom left the language exactly as it was when it was first introduced.

“We welcome a debate on the proposal, and we’ll continue to review their arguments,” Mike Naple, spokesman for Governor Schwarzenegger’s office tells Workers’ Comp Executive. “We’ll continue to work with all interested parties,” he said, adding that the governor wants to maintain a secure workers’ compensation system even while selling off parts of SCIF to bring in some needed money.

By passing the measure to sell the SCIF assets, the administration and legislative leaders will be able to book $1 billion in revenue to help close this year's budget hole. No one expects those funds to actually be generated this year, if ever.

When the bill came up for a vote, Sen. Denise Ducheny (D-Coachella) rose on the floor to urge support for the measure.

“The most controversial item in here is the sale of the State Compensation Insurance Fund. We realize that it’s something of great concern, but there is language [in the bill] constraining the sale,” Ducheny said.

She cited the language requiring the board’s concurrence with the Department of Finance and Treasury before selling any assets, the reporting requirements to the Joint Legislative Budget Committee, and a sunset date. She urged members to take the good with the bad because there are provisions in the bill that will allow the state “to realize savings.”

Still, it’s a little difficult to force the cooperation of a board of directors that opposes the selling of any assets, even if they are considered equal partners in the process.

Sen. Dennis Hollingworth (R-Temecula) told Workers’ Comp Executive on the floor that he is well aware of the criticism the SCIF proposal has received.

“The criticism needs to be paid attention to, but we need to realize the maximum value of that asset. I think that asset is necessary to balance the budget,” Hollingsworth said.

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