The bureau doesn't give rebates when the balance is less than $500 million.
COLUMBUS (AP) -- The state's insurance fund for injured workers will not give a $70 million rebate to Ohio employers on their upcoming premiums because of concerns that a scandal over investment losses has made finances uncertain.
Meanwhile, a three-member investigative team appointed by Gov. Bob Taft said Thursday that the 12-member investment staff at the Bureau of Workers' Compensation is too small and doesn't have the expertise to manage a $14.5 billion portfolio.
Three of the four members of the agency's oversight commission voted Thursday against an 8 percent rebate for premiums due in July, while the fourth representing self-insured employers abstained.
"Frankly, I'm not sure if we know how much money the bureau does have," said William Burga, president of the Ohio AFL-CIO, who represents labor on the commission.
The bureau is projected to end the year with a surplus of $608 million to $653.5 million, depending on how much of a $58 million investment in rare coins must be written off, said Tracy Valentino, chief financial officer. The balance now is $666.5 million, and at least $13 million has been reported missing from the fund once managed by coin dealer and prominent Republican Party donor Tom Noe.
The bureau doesn't give rebates when the balance is less than $500 million. Past balances have approached $3 billion, said commission members, adding they wanted to wait until fall to decide. Employers pay premiums twice yearly.
It was the first time the commission voted against a recommended rebate since the first one was offered from a 1995 surplus, bureau spokesman Jeremy Jackson said.
The rebate would have resulted in a net savings of $9 million for the state's 275,000 employers, because the commission voted last month to raise premiums by an average of 4.4 percent, a total of $61 million.
Interim administrator Tina Kielmeyer said she was confident the bureau's remaining investments are sound and that the overall $15.5 billion insurance fund has enough money to pay all claims, despite ongoing investigations into losses and questions about investment oversight.
The reported losses top $240 million from four funds, including $215 million last year that became public this month. Gov. Bob Taft said he was never informed of the loss.
Former administrator James Conrad resigned amid the scandal. Last week, Kielmeyer put chief investment officer James McLean on paid leave and declared that she must sign off on all investment decisions by staff.
One of the commission members, George Forbes, quit the panel last week because his daughter works for Pittsburgh-based MDL Capital Management Inc., the firm that lost $215 million.
The oversight commission concerned itself with insurance practices and has relied too much on brief written and verbal reports from staff to monitor investments, said William Sopko, the group's chairman.
Sopko acknowledged he knew of the MDL loss in September, although he thought it was about $30 million to $50 million. Sopko said he kept the loss confidential because Conrad and bureau staff assured him the attorney general's office was investigating.
"I had a feeling of confidence that has now been broken," he said.
Sen. Jay Hottinger, a Newark Republican who joined the panel this year as a nonvoting member, said he was "dismayed, disappointed, shocked" when he got his first quarterly report on bureau investments. The brief summary doesn't mention Noe or MDL, he said.
"If this is the type of report that has been issued in quarters past, I don't believe anyone on this board would have been able to determine irregularities or potential losses," Hottinger said.
Two other losses from about four years ago involve fund managers who were convicted on federal fraud charges related to many clients. The bureau lost $3.9 million from one of those two funds, which it kept active after the manager's indictment.
Taft last week appointed three volunteers to review all 156 outside investment managers and recommend policy changes. The bureau has fired 56 managers since 1997, mostly for not meeting investment performance targets.
Ohio Lottery Director Tom Hayes was previously called on by Taft to turn around the troubled Job and Family Services Agency. The others are Laurie Hacking, executive director of the $65 billion Ohio Public Employees Retirement System, and Ohio State University treasurer James Nichols.
Of the bureau's 2,800 employees, 12 handle investments, including just two stock traders.
"It takes a sophisticated investment operation to govern that amount of money in an appropriate way," Nichols said. "Clearly there needs to be additional personnel in that office and there needs to be other skill sets there."