Wayne Stenehjem
BISMARCK, N.D. (Legal Newsline) -North Dakota's workers' compensation entity kept its surplus illegally high, state Attorney General Wayne Stenehjem said.
In an opinion released Tuesday, the attorney general sided with state Auditor Bob Peterson, who previously found that Workforce Safety and Insurance ran a surpluses over an allowed limit.
Under a 2005 state law, WSI's surplus has to be at least 120 percent, but not more than 140 percents of its actuarially established discounted reserve.
State officials say the agency's surplus has gone above the 140 percent threshold several times over the past two years.
As of June 30, 2007, the fund's reserves plus surplus balance exceeded the maximum amount allowed by law, officials said.
The fund's surplus should have been between $146.2 million and $292.4 million, but the actual surplus was $466.8 million, resulting in a reserves plus surplus balance equivalent to 163.9 percent of the discounted reserve.
WSI officials contend that when calculating its assets it should not have to count such assets as money set aside for safety grants, a revolving school loan fund, its capital assets and unrealized gains in its investments.
When those and some other assets are removed from the equation, the WSI board says the agency is mostly in compliance with the law.
In his opinion, Stenehjem said WSI cannot pick and choose what assets it counts for the purposes of determining its surplus.
"It is my opinion that WSI must consider all of its assets when calculating the amount of surplus in the fund," Stenehjem said.
He added that the agency must follow the accounting profession's "usual and accepted meaning of 'surplus.'"
From Legal Newsline: Reach reporter Chris Rizo at chrisrizo@legalnewsline.com.