Reforms implemented by Ohio Gov. Bob Taft and lawmakers didn’t go far enough to strengthen the board that oversees Ohio’s troubled state insurance fund for injured workers, an independent consultant studying the fund has concluded.
According to the Associated Press account, the governor should not appoint the five voting members of the Workers’ Compensation Oversight Commission, nor should he appoint the commission chairman, the report by Norwalk, Conn.-based Evaluation Associates said.
Released last week by the state watchdog, the report also says the commission and not the governor should appoint the administrator of the workers’ comp system.
Taft and lawmakers beefed up the board in the wake of last year’s $300 million investment scandal, including the addition of two investment experts.
Thursday’s report did not draw conclusions about the current board makeup and that scandal. Instead, it recommended far more sweeping changes, including the creation of a board that functions like a board of trustees with all decisions and documents made public.
“So long as nearly absolute power is vested with the Governor, the potential for the abuse of this power exists,” the report said.
Lawmakers ordered the report in last year’s budget bill and the analysis was overseen by the State Inspector General.
Additional changes aren’t needed because the bureau is a transformed agency, with a new administrator, a new investment team and new investment procedures, Taft spokesman Mark Rickel said.
“There is already in place a complete, different structure to the bureau,'” Rickel said.
Lawmakers said they would review the report for possible changes but seemed cool to an overhaul based on its recommendations.
“We did what we thought had to be done to tighten things up,” said Senate President Bill Harris, an Ashland Republican. “We’ll look at the recommendations and debate those, but we’re not going to overreact.”
House Speaker Jon Husted said debate over responsibility for a board’s makeup is not new.
“It’s a question of who you think ultimate accountability should lie with,” said Husted, a Dayton-area Republican.
Workers’ comp Administrator William Mabe said the agency has made good progress in changing its fundamental operations, including the way its $15 billion investment fund is handled.
He said changes to the way the agency is governed are up to lawmakers, but cautioned that the organization’s structure was more important than who hires or fires the top administrator.
“It’s not the reporting relationship or who appoints you that’s significant,” Mabe said. “It’s the people on the boards and the seriousness with which they take their responsibility that matters.”
The report said the agency still resembles a private company too closely, giving too much power to staff and not enough to the oversight commission.
It questioned why the commission’s new investment experts are only allowed to vote on investment-related issues.
And it said having the attorney general represent the board created an obvious conflict of interest, since the attorney general also can file civil charges against the workers’ comp bureau.
“It simply stands to reason that an attorney should not be able to bring action against his or her own client,” the report said.
The report also suggested giving the Ohio Retirement Study Council authority to oversee the agency in the same way it oversees the state’s five public pension systems.
The analysis suggested lawmakers may have gone too far in requiring criminal background checks of everyone involved with investing bureau dollars.
Such a requirement is an overreaction to the scandal “and creates some unwieldy requirements that will materially diminish the Bureau’s ability to contract with outside investment management firms,” the report said.
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