LETTERS TO THE EDITOR: BUDGET FIGURES ARE MISLEADING

To the editor:

Your July 17 edition contained a Jack Stapleton article on the state budget that asserted incorrectly Missouri Department of Insurance spending increased 601 percent from fiscal 1988 to 1999. Many others have made the same error because of how state appropriations have changed.

In 1988, more than half of department spending was omitted from the state budget. Insurance companies directly paid our auditors who checked their financial solvency and market practices. While the fiscal 1988 budget showed funding of $1.7 million, actual spending including the auditors was almost $3.5 million.

In the early 1990s, the General Assembly recognized the apparent conflict of interest that occurred when companies paid our examiners directly, and the system was abolished. These auditors now are paid with appropriations like other state employees.

Actual spending from fiscal 1988 to 1999 increased from almost $3.5 million to $12.2 million, or about 250 percent. While that increase appears large, much of the expansion occurred when voters approved elevating the old Division of Insurance to a cabinet-level department in 1991 to improve state regulation of the industry. The General Assembly placed that constitutional amendment on the ballot after a series of insurance scandals rocked the agency in the 1980s.The department spends no general state tax dollars. Virtually all its income comes from statutory fees levied on insurance companies, agents, brokers and other licensed entities and individuals. One small federal grant flows through the department to a not-for-profit service that provides free health insurance counseling for senior Missourians.

RANDY McCONNELL

Public Information Officer

Missouri Department

of Insurance

Jefferson City, Mo.