By MATT GOURAS/Associated Press Writer
HELENA - The Montana State Fund, which last week said state agencies would see average workers' compensation rate increases of 34 percent beginning next month, confirmed Monday it will seek pay raises for some of its employees.
Laurence Hubbard, State Fund president and chief executive officer, said the average 3.25 percent pay increase, which will be pitched to the State Fund's board of directors Friday, is less than last year and is needed to
retain and recruit employees in the insurance industry.
But Chuck Swysgood, Gov. Judy Martz's budget director, said he thinks the State Fund, which provides insurance against on-the-job accidents, should reconsider the proposal, especially since a tight state budget forced lawmakers to freeze pay increases for state employees until 2005.
''In these times of financial constraints, they need to take a look at all of it, the whole picture,'' Swysgood said.
In addition to the 34 percent increase in rates for state agencies, the State Fund decided last month it needed to increase rates for its private employer customers by 12 percent.
Hubbard said under the pay raise request, not all employees would get a 3.25 percent pay raise. Some might get no raise, while others could get a much larger raise based on job performance
Officials said, since the State Fund was ordered in the 1990s to act more like a private insurance company, it has
authority to set pay levels for its employees.
Hubbard said only 0.2 percent of the rate increases charged to customers would go toward its proposed pay increase.
''The bottom line is, we need to operate a financially sound business, and it is our recommendation to our board that to do so we need a budget that includes a merit adjustment based on performance,'' Hubbard said.
He said the pay of employees at the State Fund, which doesn't receive tax money, can't be compared to that of state workers.
''We're an enterprise government entity,'' he said. ''It's different.''
State Fund spokesman Matthew Cohn said officials are concerned about how the plan will go over at a time when state workers are being left without a pay increase.
''There's obviously sensitivity and concern,'' he said. ''But the situation is different. We're a different duck than other state entities.''
Earlier this year, the Legislature decided to give state workers a 25-cent an hour pay raise, but delay it until 2005, after lawmakers were unable to find money for a more substantial increase. The State Fund employees will not be receiving any of that increase, Cohn said.
''We're on a totally different pay plan,'' he said.
Still, Swysgood said, the State Fund should consider the state's overall fiscal situation before approving such a comparatively large pay increase for its own employees.
''Well, I would certainly like them to consider all of the things that have happened to state employees,'' he said.