The Local Government Center, which operates an insurance pool for cities and towns to achieve favorable health insurance rates, should return the millions dollars of surplus funds which are in excess of what it needs to pay out claims. It should do so willingly and promptly.
Unfortunately, that is not the signal which the organization, to which most of the state's municipalities belong, is sending.
Last week the state Bureau of Securities Regulation released a report that the LGC has banked twice the amount of necessary reserve funds. The report found the LGC held $79.5 million in reserves, but an insurance expert hired by the Securities Bureau concluded an appropriate amount to keep in reserve would have been $40.8 million.
Under law, all surplus funds in the insurance pool must be returned to the contributing municipalities.
Following the release of the Securities Bureau's report the LGC issued a less-than-forthcoming statement.
"We look forward to discussing the applicability of the Stochastic Method in determining a target level of net assets," LGC Executive Director Maura Carroll said in a written statement.
Sadly, this terse statement is in keeping with the LGC's hauteur. It has not taken kindly to criticism that it has been holding excessive reserves while spending $3.6 million to build and expand the organization's Concord office and $10 million to fund a workers' compensation pool. It has regularly sought to block requests to open its records to scrutiny. The records used in the Securities Bureau's review were provided only through a series of Right To Know requests that twice went to the state Supreme Court.
To its credit, the LGC-managed insurance programs have been a benefit to the cities and towns — and hence the taxpayers — by making it possible to buy insurance at less cost than would otherwise be possible. But that benefit is no justification for holding millions above what it needs to settle claims. This practice of holding so much in reserve lends credence to the LGC's critics who argue the organization has, in effect, been overcharging municipalities for insurance coverage.
With the cities and towns everywhere facing budgetary squeezes, and with a new Legislature about to get down to business, the LGC should send a signal that it is committed to returning any surplus funds to the municipalities.