By: Mike Salsgiver
Executive Director, AGC Oregon-Columbia Chapter
This article was published by the DJC on April 16 in Buildings Bridges and Roads, and can be viewed here (subscription required).
One of life’s fun games is to criticize government. Having been in and around government for almost 40 years, I’ve even found myself doing that from time to time.
There is one government agency, however, that has turned into an absolutely tremendous success: what is now known as the SAIF Corporation.
Prior to the landmark Mahonia Hall workers’ compensation reforms in 1990, Oregon suffered one of the highest frequencies of workplace claims in the nation. Now, Oregon’s safety-first model is preventing workplace injuries before they happen. In virtually every sector, workplace injuries have remained on a downward trajectory since the reforms took effect. Rates have gone from some of the highest in the nation to among the lowest. SAIF has played a significant role in the ongoing success.
Earlier this month, Gov. Kate Brown released a proposal to rob nearly $500 million from SAIF, Oregon’s nonprofit workers’ compensation carrier, to cover unfunded liabilities in the state’s Public Employees Retirement System (PERS). While her plan has been panned by many, there is great concern that it could emerge as an eleventh hour means of balancing the state budget.
SAIF is actuarially sound, and its current reserves are essential for protecting the safety of workers both inside and outside Oregon’s construction industry. All of SAIF’s income comes from employer premiums and investment income. No state revenue supports SAIF.
Sweeping SAIF’s safety net or otherwise changing its mission would place this positive safety performance trend in jeopardy and negatively impact worker safety and accident prevention. As an insurer that operates in a competitive environment, SAIF would likely either have to increase rates, reduce worker safety programs, or cut in other areas in order to keep rates low. None of these options is acceptable.
Today, SAIF has a team of 70 safety and health experts who work every day with Oregon workers and employers to improve workplace safety and prevent injuries on jobsites across our state. Last year, they provided 6,400 on-site or in-person consultations with Oregon employees and employers.
More than half of all workers in our state are covered by the insurer. Virtually all of these workers are employed by small businesses – 95 percent of the employers have fewer than 10 workers and 75 percent employ fewer than 50. These people and these businesses continue to be the backbone of Oregon’s economy.
On top of that, SAIF also provides phone consultations, online trainings, videos and other important resources that are keeping Oregon workers safe on the job.
The Oregon Legislature has traveled this “raid SAIF” road once before. In the 1980s, faced with budget deficits and a deep recession, legislators raided SAIF’s trust fund. Lawsuits were filed, and years of litigation followed. Ultimately, the courts found the raid of SAIF’s reserve was illegal then, and the Legislature was forced to pay back $225 million to Oregon employers – triple what was taken originally.
Oregon’s primary means of protecting injured workers shouldn’t be used as a piggy bank by politicians trying to cover the unsustainable cost of the state’s government pension system. Make no mistake, PERS is in bad shape. Our school system alone faces a $375 million increase in pension costs over the coming two-year budget cycle. But there is no correlation between that liability and the private money that Oregon employers have paid into SAIF.
The Daily Astorian newspaper said it well last month when it opined that, “Besides hurting Oregon businesses, (raiding SAIF) would be only a short-term solution and would do nothing to put PERS on stable ground.” It simply doesn’t make sense to cannibalize a program that’s working well to address a much deeper structural problem.
As I have said in many columns over the years, the Legislature and the governor need to focus on the root cause of the state’s fiscal crisis. Taking action to put PERS on a sound actuarial footing is going to be politically difficult, but it must be done.
It makes absolutely no sense to take private employers’ money used to support injured workers, raid other public funds, take taxpayers’ kicker funds, and continuously raise taxes to balance the budget but not fix the underlying problem.
The Oregon Business Plan has offered a well-thought out proposal to guide Oregon out of its PERS problem. It would protect current retirees, and place Oregon’s public retirement system on a sound foundation going forward.
For decades, Oregon’s elected officials have shown the ability to come together to address tough problems. If there was ever a time for bipartisanship and leadership, that time is now.
Legislators should say “NO” to raiding SAIF, and they should rededicate themselves to working with the governor to find a real solution, and not take short-term actions that will not solve our fiscal problems.
Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.