LGC Reorganization Faces Questions

The Local Government Center hopes a new corporate reorganization can help resolve its years-long fight with state regulators. But the change, which had been scheduled to take effect July 1, has been delayed to allow additional talks with the Bureau of Securities Regulation, which has doubts about the proposal.

The Concord-headquartered LGC, which operates public risk pools providing health and property insurance to local governments and school districts in New Hampshire, has been in hot water with the bureau, which is part of Secretary of State Bill Gardner’s office, since 2009.

After an investigation, the bureau accused the LGC of, among other things, retaining too much surplus money instead of refunding it to members and undertaking an illegal corporate reorganization in 2003. An administrative-hearing officer ruled against the LGC last August, ordering it to repay millions to its members and reorganize.

The group then appealed the case to the state Supreme Court, and that case is still pending before the high court.

But early this year, the LGC’s board ousted Executive Director Maura Carroll and brought in George Bald, a longtime public official and two-time state commissioner of resources and economic development, as interim executive director.

Bald told the Monitor in February that “mistakes were made” and the LGC had “gotten off track” in recent years. The group reorganized its corporate boards last fall, but Bald has now proposed a broader reorganization that would eliminate the web of limited liability companies created by the LGC in 2003.

Instead, there would be three nonprofit corporations: one for the health insurance pool, one for the property-liability pool and one for the New Hampshire Municipal Association, which provides lobbying, training and other services to local governments.

“This action and reorganization will provide greater transparency, clearer accountability and will make for more focused operations – with an emphasis on continued, top-notch customer service,” Bald told members in a May 3 letter.

But Bald told LGC members in a later message, dated June 7, that the reorganization has been delayed from its target date of July 1 “to ensure that we allow additional time for our regulator, the Bureau of Securities Regulation, to reflect and comment on our course of action.”

Andru Volinsky, special counsel for the bureau, said regulators are concerned that the reorganization would still leave a single executive director in place for all three organizations, and likely other shared staff as well.

“It’s not the bureau’s place to bless this proposal, because you have form and then you have substance,” Volinsky said Friday. “They’re making changes in form – changes that they probably should have made last October instead of the reorganization they did at that time – but they propose to keep operations still under the control of one person. . . . It’s yet to be seen whether they’ll achieve the appropriate end goal here, which is to have autonomous pools run by autonomous boards.”

Volinsky said the bureau has asked the LGC for more information and is waiting on its reply.

Three public hearings are planned this week on the planned reorganization. They’ll be held tomorrow and Thursday at 9 a.m. and Friday at 1 p.m., all at the LGC’s headquarters, 25 Triangle Park Drive in Concord.