The year ended on a high note for David Lang, president of the Professional Fire Fighters Association of New Hampshire, who for years has led a campaign by the statewide union against the Local Government Center, a successor to the New Hampshire Municipal Association.
Through a series of Right To Know requests that twice went to the state Supreme Court, the union for ten years has pressed its case that the LGC insurance pools are being misused at a significant cost to the cities, towns and contributing employees.
Lang is cheering a Dec. 30 ruling by the state Bureau of Securities Regulation, which hired its own actuaries and accountants to determine that the LGC has banked twice the amount of necessary reserve funds.
The bureau is recommending that all of that surplus be returned to the contributing municipalities, with Portsmouth being the largest contributor, paying 1.4 percent of the total pool.
“They can keep reserves,” Bureau staff attorney Earle Wingate III told the Portsmouth Herald on Thursday, “but they’ve got to give back surplus.” Wingate said the LCG should have banked $40.8 million in reserves during 2009, when it actually held $79.5 million. The difference should be paid back to the cities and towns on a proportional basis.
That adds up to a $40 million New Years gift to the municipalities of New Hampshire if the Legislature approves the bureau’s recommendations and the governor signs them into law.
Lang was once on the board of the Local Government Center, and became disenchanted by what he saw from the inside.
The LGC, he says, has been playing a shell game with New Hampshire municipalities since it got into the insurance business in the early 1980s, creating subsidiaries, real estate trusts and other entities as it moves premium surpluses around from its health, property-liability and workers compensation insurance programs.
As we wrote previously, it’s been a great strategy for a small organization that started with a handful of employees as the New Hampshire Municipal Association in the 1940s, and now has 134 workers staffing a $3.4 million new building in Concord, with executives earning six-figure salaries.
Many town managers will defend the LGC, arguing that the insurance premiums they pay the organization are lower than they could get on the open market despite the large surpluses. By pooling resources, they argue, cities and towns get a better deal from the insurance companies.
While that may be the case, the fact remains that the LGC is in a position to provide an even better deal, and the legislature must make sure that it does so. Brookline buys its health insurance through the Local Government Center and has seen costs rise year after year.
Last year, the increase was close to 17 percent over the previous year, Since 2003, health care insurance for Brookline employees purchased through the LGC has risen 66 percent.
The lower reserves will be adequate to fund the insurance programs, but LGC executives may have to cut back on some of the expenses revealed in the securities bureau review.
Those expenditures for 2006 included public money spent on caterers, the Mountain Club at Loon, the 100 Club in Portsmouth, the Holiday Inn on the Bay, comedy clubs and comedians, restaurants, The Galley Hatch Conference Center, the Wayfarer Inn, Gunstock Inn, Gunstock Area, the Woodstock Inn & Resort, the Red Jacket Mountain View Resort, the Washington Street Cafe, the Attitash Grand Summit Hotel, the Hilton Garden Inn and the Mountain Club on Loon, among other expenses. Similar expenditures were found for 2007 and 2008.
Another securities bureau report is expected to be released later this month addressing the firefighter’s charge that the LGC improperly used health insurance premiums to fund a workers’ compensation program, effectively forcing retirees to subsidize a program they’re ineligible to use.
