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TO: State Fund Employees
SUBJECT: Departing from Office
Dear Colleagues,
As I leave my role as Board Chair of State Compensation Insurance Fund (State
Fund), I want to thank Governor Schwarzenegger for giving me the opportunity to
lead State Fund through arguably the most difficult time in its history. State
Fund is a different and much stronger organization than it was when I started in
2004, and recent and ongoing changes will ensure that it remains that way.
None of State Fund’s success could have been accomplished without your talent and
dedication. I was blessed to have your support as we made significant and long
lasting reforms to its operations. It is truly a new day with new ways at State
Fund.
Since the Board’s unprecedented action in recent years to set State Fund on a new
course, the organization has made significant strides toward transformative
change and sound corporate governance. The pace and magnitude of this change has
been remarkable and has already resulted in a more open, more accountable and
more collaborative operation.
During my tenure a number of high profile events and significant changes
transpired at State Fund. In 2006 the Board commissioned an internal review of
State Fund’s operations that ultimately set State Fund on a new course.
* We referred the results of that internal investigation in June 2007 to the
California Highway Patrol (CHP), which has jurisdiction over state agencies like
State Fund. CHP formed a task force with the San Francisco District Attorney's
office and California Department of Insurance to further investigate these
findings, which remains ongoing.
* The California Department of Insurance (CDI) conducted operational audits
in 2007 and 2008 that identified 145 findings requiring State Fund’s attention
and remediation. We are proud that CDI’s recently released 2010 Operational
Review confirms State Fund has fully remediated, or has made substantial and
ongoing progress toward remediating, all but one of those findings. Full
remediation of that single remaining item is expected in 2011.
* In 2008 State Fund sponsored two bills that were eventually signed into law
by the Governor. AB 1874 strengthened our corporate governance by expanding the
State Fund Board from five to 11 voting members, enabling the formation of
effective oversight committees, and placing new training and other requirements
on board members. SB 1145 provided State Fund with six exempt management
positions, allowing the organization to recruit top executives to fill key
management positions, and it also made State Fund subject to the Bagley‐Keene and
California Public Records Act.
Given the important role State Fund plays in California’s economy, it was my goal
to ensure the board had the capacity and focus to align the organization’s
operations with the highest standards for business practice and operate with
responsible transparency.
Some of the critical changes to improve governance included:
* Implementation of an auditable whistleblower hotline and education program
for employees to report such concerns.
* A reorganized and strengthened Internal Audit function that now reports to
State Fund’s President and Board of Directors.
* Centralized accounting, finance, financial reporting and internal control
functions placed under the direction of a permanent Chief Financial Officer.
* Improvements to governance documentation to ensure policies, procedures and
lines of authority are clearly delineated.
As Board Chair, I have steadfastly and persistently probed State Fund and its
programs to ensure all facets of the organization could withstand the greatest
scrutiny. I have great confidence that our work these past several years, and
the changes within the organization now underway, have set State Fund on a course
for long‐term stability and continued success.
I am grateful for the opportunity to have served as State Fund Board Chair during
such an important and transformative period in the organization’s history.
Certainly, this has not been an easy road, and future challenges lie ahead as
State Fund realigns its operations geographically to more effectively manage the
cost of workers’ compensation for all Californians. I am confident you will
maintain State Fund’s commitment to keeping California workplaces safe, caring
for workers who are injured on the job, and maintaining an open door for all
businesses.
Sincerely,
Jeanne Cain