For the past four years, City of Plattsburgh Mayor Donald Kasprzak and the Common Council have made several highly publicized repairs to the city's finances. They have been able to take a fund balance that stood in arrears and restored it to a $4 million sigh of relief.
Unfortunately, councilors were forced recently to take about $1.2 million of that balance and pay off a debt for Workers Compensation claims that accrued from 2002 to 2007.
The debt is the product of the city's decision to enter a self-insured trust fund along with 12 other municipalities. The fund was supposed to allow the city to cover its Workers Compensation debts in a cost-saving, self-insured arrangement.
But the fund was grossly mismanaged, to the point where it went bankrupt. An investigation is being conducted.
As a result, the city, which was the second-largest municipality in the trust behind Kenmore, near Buffalo, was obliged to come up with the nearly $1.2 million to help pay for claims against the trust.
We hope the city has learned a valuable lesson in all of this. In retrospect, the city's previous administration and councils should have been wary of the fact that Plattsburgh was one of only 13 municipalities in the trust.
Anyone who knows anything about insurance knows that the larger the pool, the less exposure and risk for compensation claims. The city is now a member of the New York State Workers Compensation Alliance, which has about 120 members, a much more comfortable pool size.
Another red flag should have been the excessive fees charged for administering the fund — 18.9 percent. Fees should be in the 13-percent range.
One of the three trustees named to oversee the fund was a former city employee, but there is little evidence that the mayor and council were always properly briefed on how the fund was performing. (Nor is there any evidence that they asked.)
As claims were mounting, the trustees and the city should have reviewed all outstanding claims to see if some could be reduced by employees returning to work. If nothing else, it would have provided the city an opportunity to confirm that employees were on Workers' Compensation legitimately. We don't know that any were not legitimate, but for generations rumors to that effect have circulated, and they could have been allayed.
We also wonder if the New York State Workers Compensation Board provided enough insight and oversight to the trust's members.
To the great benefit of city taxpayers, the current mayor and council have done a commendable job of building up the reserve fund to the point where the Workers Comp bill could be paid without having to borrow. Taxpayers often resent taxes that go only toward building cash reserves. In this case, it was critical.
The city's outlook is much brighter now, with the hefty bill paid and a more promising arrangement in place.
Opinion
August 22, 2010
EDITORIAL: City made right decision to pay off Workers Comp debt
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Cheers and Jeers: May 21, 2012
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In My Opinion: Cultural issues need attention
