The Truth About the Montana State Fund

Where I take issue with MSF is in their approach to premium costs and lack of benefits for injured workers

By Jim Keane

As most Montanans are aware, the Montana Legislature recently met in a special session to face some fiscal challenges associated with the lack of revenue and paying the firefighting bill. I have had the privilege of serving for almost 18 years and have been through several special sessions. This session, like all others faced many moving pieces to come with solutions that work for Montana. There is one particular issue I would like to bring your attention and offer some perspective that seems to be lacking. This issue is Montana State Fund (MSF) and the decision to authorize a management fee.

MSF is familiar to most businesses as it writes the bulk of the workers compensation insurance in Montana. MSF writes these policies to Main Street Montana businesses and these policies cover workers from all sectors.

Where I take issue with MSF is in their approach to premium costs and lack of benefits for injured workers. MSF has been picking the pockets of business owners by overcharging Montana businesses every year while they build a surplus of capital ($500+ million). Do not be fooled – this is a tax on every small business in Montana who purchases their policy from MSF. MSF will claim that the money is in “reserve” and is “policy holder equity” but in reality it is a tax that is being rat holed to privatize MSF.

The Legislature authorized the Board of Investments (who manages the MSF money) a fee on investments above $1 billion. This fee applies to “equity” or “surplus” and only remains in effect for two years. The bill was written to ensure that dividends remain protected and rates cannot be raised. I have carried numerous bills to educate the business community that they are being overcharged year in and year out by MSF.

Sensing danger to the privatization plan, MSF immediately began to play fast and loose with the true effects of the legislation. MSF messaged that this new fee would somehow increase their already inflated premiums. That is totally false.

The Legislature specifically protected Montana’s small businesses as the following text is taken directly from the bill: “The state fund may not raise rates or reduce dividends to offset real or estimated losses associated with the 3 percent management rate transfer.” As an added layer of protection, MSF’s loss reserve account, the account from which payments to injured workers are made, is specifically excluded from the new fee.

This bill had strong bipartisan support and makes sense to solve Montana’s fiscal issues that we all face, without harming any Montana businesses or Montana workers. I thank my fellow legislators for finally stepping up, taking a hard look at the true numbers, and doing the right thing in passing this bill.

I would also like to thank the new board of directors for stopping a frivolous lawsuit that would have been costly and unnecessary. These costs would have passed on to the businesses of Montana.

As we near Christmas, I’m asking Santa to make sure that Montana employers are now better informed of MSF’s agenda and that the new Board of Directors will start asking the hard questions to protect injured workers and reduce the premiums of Montana businesses.

I would love to wake up on Christmas morning in 2018 and see that Montana has moved from the bottom (46th highest rates in the nation) to the middle of the pack.

Rep. Jim Keane