The Local Government Center and State Law

The legislative committee charged with reviewing the hearing officers final ruling and making recommendations to changes or amendments to RSA 5-B met on Wednesday. As you may recall the Local Government Center (LGC) has - in part -  been required to return surplus to their members, reorganize their Trusts and they are no longer allowed to require Trust members to join the New Hampshire Municipal Association (NHMA). In all  there are 20 issues the hearing officer, Donald Mitchell addressed. 

Wednesday’s hearing was an opportunity for the Bureau of Security Regulations (BSR) to address the committee. They are the organization that brought the compalint against the LGC. The BSR was there primarily to review the final order and answer questions.

So here’s what I took from the proceedings. There seemed to be two lines of thought as to what, if anything should be done to clarify or amend RSA 5-B, the state statute that governs managed risk pool programs like the LGC’s. 

I would say at least 3 of the 5 members of the committee were leaning towards adding to or amending RSA 5-B. While Earl Wingate from the BSR felt that the law as written was sufficient with the caveat that the Supreme Court upholds the hearing officers final order.

I have felt that RSA 5-B could use some more muscle, but after listening to Wingate, I would be inclined to be more cautious about moving forward with amendments to RSA 5-B. Wingate related a conversation he had years ago with a fellow from Maine. The essence of what was said to him was that if you have good people working for an organization you don’t need too many rules. But if those folks aren’t so good, you can’t have enough rules.

Wingate felt that many of the  committee’s concerns were already addressed in RSA 5-B. He went on to say that if the final order was upheld that would set precedent and further define RSA 5-B.

The committee on the other hand is composed of legislators and they are charged with legislating. The committee also had a number of good points. Much of the discussion focused on what was an appropriate level of reserve and if that was clearly defined in RSA 5-B.

Representative Chris Muns the committee chair, brought up an interesting point. He asked if there should be a distinction in setting reserves for a non profit versus a commercial entity. He went on to ask if RSA 5-B was up to the task of setting reserves for managed risk pools. Is there a proper number or percentage for setting reserves? Earl Wingate, from the BSR responded this is precisely what the hearing officers final order does. It sets a precedent for establishing an appropriate level of reserves.

Obviously there was much more to this two hour hearing. But what I took away was that the committee was concerned if RSA 5-B could prevent another rogue organization from following in the LGC’s footsteps, while Wingate representing the BSR had a less is more approach. He was cautious that changes and amendments to RSA 5-B could have unintended consequences. 

Both parties impressed me with their concerns for continued litigation and the return of surplus within the time frame determined in the final order. They made clear that any litigation or delay of the return of surplus effects tax payers in the communities who are members of the LGC’s Trusts and not the LGC.

In fact that was the reason Wingate cited for the hearing officer not imposing fines. It wouldn't be the LGC that would be paying the fines it woud be coming from the taxes of municipalities who are members of the LGC and their Trusts.

The committee will hear from the State’s managed risk pools at their next meeting. It will be interesting on a number of counts. Will the State’s other risk pools side with the LGC or will they be supportive of the BSR’s actions and the results of the final order? What if any amendments and changes to RSA 5-B will be proposed and by whom? 

At the end of the hearing the committee asked for some additional information from the BSR.

They would like to know the extent of the communications between the BSR’s counsel and the LGC’s counsel on an issue that could have resulted in a compromise for how surplus was distributed. The BSR has stated that the LGC never responded to their communications on this issue.

A summary of the tax status of all the State’s managed risk pools and their trusts.

The submission of a timeline

And finally what if any recommendations the BSR would make to the committee regarding changes and amendments to RSA 5-B.

The committee’s next meeting is:

August 28 (8:30 - 10:30am) - Representatives from the State’s managed risk pools will be testifying.

All meetings are open to the public and at their September 4 & 18 meetings they will be taking comments from the public.

Here’s a link with committee information and a listing of the dates and times of the committee’s upcoming hearings:

http://www.gencourt.state.nh.us/statstudcomm/details.aspx?id=2121&rbl=1&txtbillnumber=hb283