California mulls sale of some state fund comp business

SACRAMENTO, Calif.—Gov. Arnold Schwarzenegger proposes selling $1 billion of the State Compensation Insurance Fund's book of business to help California resolve its budget crisis, a spokeswoman for the governor said Wednesday.

The proposal faces a number of hurdles, such as potential opposition from a union representing state employees and debate by state lawmakers, observers said.

Under the proposal, SCIF would remain California's workers compensation insurer of last resort. But the state's director of finance would sell a portion of SCIF's assets to a private insurer with the proceeds going to California's general fund.

According to the latest annual report in 2007, SCIF's total assets were just under $22 billion.