Penny Oberlander’s business would become a lot less profitable if a voter initiative is successful in abolishing a state-run workers’ compensation program in November.

"I think that would really make it tougher for us, but it would put other companies out of business," said the vice president of Pro Weld Inc. in White City.

Pro Weld is among an estimated 63 percent of the 2,150 small businesses in Jackson County that rely on the State Accident Insurance Fund to keep their rates low, according to the Southern Oregon Regional Economic Development Inc.

SAIF is under attack from Ballot Measure 38, the Oregon Priorities Act, which would abolish the state-run program during a two-year period. The initiative is being sponsored by Liberty Northwest, its competitor in the workers’ compensation insurance industry.

Oberlander said that if SAIF disappeared, she would be forced to get another workers’ compensation package from a private company, costing her as much as $8,000 extra a year, or almost double her current $9,000 policy that covers 10 employees.

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"For us, that is a big chunk of money," she said.

Oberlander said SAIF offers a superior level of service compared to its competitors, helping businesses prevent workplace accidents.

"They basically help educate me on how to keep our premiums down," she said.

SAIF’s lower workers’ compensation premiums, she said, attract business to Oregon. Getting rid of SAIF, said Oberlander, "is like shooting the state in the foot."

Greg Applen, vice president of Medford Moulding Co., had been a customer of Liberty Northwest for 20 years but switched to SAIF three years ago.

He estimated he only saves a few thousand dollars on his $102,000 policy that covers 82 employees.

But saving money wasn’t the main reason Applen switched.

"The service from Liberty was good, but from SAIF it is outstanding," he said. "They jump on situations immediately."

Applen doesn’t have a problem with recent reports that SAIF has substantial reserves set aside for the future, pointing to potentially higher costs of claims associated with longer lifespans and health benefits.

If passed, Liberty Northwest said Oregonians would realize a profit of $500 million to $850 million, which could be put into a rainy-day fund to help government services such as education.

A committee formed by the Secretary of State’s Office, however, determined it would cost up to $2.2 billion to dissolve SAIF, a figure disputed by supporters of Measure 38.

Brian Boe, spokesperson for Liberty Northwest, said that unless voters approve Measure 38, "the state is headed for a state-run monopoly."

SAIF has just shy of 50 percent of the market in Oregon, compared to 14 percent for Liberty Northwest, said Boe.

Of the companies that are Oregon-based, SAIF has better than 80 percent of the market, he said.

"SAIF has been able to create such an anti-competitive market, that we’re at a crossroads," said Boe.

He disputed claims by local businesses that their rates would go up if SAIF were abolished.

"They’ve been spoon-fed scare tactics from the industry," he said.

But, citing the example of rates from Pro Weld, he said, "There are areas where it is hard to compete with a state- sponsored, tax-exempt group."

Boe said that it isn’t necessarily fair to point to California as the likely outcome of losing SAIF. California relies on private companies and has high workers’ compensation premiums.

"California never found the political will to reform workers’ compensation," he said.

In Oregon, there are laws capping costs, and in Michigan, rates went down after the state ended its state insurance fund, he said.

"They (Michigan legislators) took $291 million and put it in a rainy-day fund," he said. "Instead of cutting services during recent budget problems, the state was able to maintain service levels."

Mary Savage, president of Crater Sand and Gravel Corp. in Central Point, said she has received rebates on her policy from SAIF.

"I’m very concerned that if we privatize, we won’t get the rebates back," she said.

During the last quarter ending in July, the company paid out $19,000 in premiums to SAIF. The rebates are anywhere from $1,500 to $5,000.

She does agree there have been some problems with the administration of SAIF, but not enough to warrant ending the program.

"I hate to see something come in and tip over the apple cart," she said.

Savage said it is ironic that anyone is even considering getting rid of SAIF, when the state has been trying to get new business to move here, particularly businesses from California that have been having their own problems with runaway workers’ compensation costs.

"Overall we have a much better system than they have in California," she said.

Measure 38 at a glance