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A business-like government

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A common rallying cry against government inefficiency and waste is that governments should be run as if they were businesses. Unfortunately, enthusiasm dims considerably when the payroll side of "government as a business" hits home.

Some Utahns were shocked to learn after a recent audit that the head of the Workers Compensation Fund of Utah has been getting regular annual raises of 26 percent and now makes $226,000 a year.Scandalous? Not even close.

Critics fail to note the success of the fund in recent years, due in large part to the recipient of that salary, CEO Lane Summerhays. Workers Compensation is a quasi-governmental agency that operates similar to an insurance company. Ten years ago, it was losing money - $33.5 million in net losses in 1986 alone. The Legislature responded by deciding the fund should operate more as a business. That was a good move. Now the fund has $168.6 million in reserves and has returned $72 million in dividends to policyholders since 1992. In the meantime, rates have come down, as have the number of claims filed each year.

But businesses compete for more than just customers. They compete for talented top executives, as well. That is a side of the equation often overlooked. Even with his large raises, Summerhays still earns $10,000 less than the average CEO of a private Utah insurance company.

The Workers Compensation Fund of Utah is not tax supported. It does, however, provide coverage for workers who don't qualify for private insurance. It also has become a model of an efficiently run quasi-public insurance company.

The rallying cry worked. At least one Utah agency now is operating as a businesses, and doing so effectively. Lawmakers, and the public, shouldn't be tempted to penalize the Workers Compensation Fund for carrying out its mandate.