Gillespie Asks $5.4 Million to Implement Prop. 103

State Insurance Commissioner Roxani Gillespie has asked for authorization to spend $5.4 million more than budgeted for her department in the fiscal year ending June 30 to immediately hire 200 more employees to implement Proposition 103, it was disclosed Monday.

The state Department of Finance forwarded the request to legislative leaders with a notice that a review of it was not yet completed. But legislative sources said Gillespie would not likely have made the request without knowing that it would be approved.

‘Deficiency Request’

Under established procedures for such so-called “deficiency requests,” once approval comes from the Finance Department, Gillespie could begin spending the money unless the Legislature objects within 30 days.

Gillespie said she needs the funds to begin establishing a plan by which the Insurance Department will approve and monitor rates charged by insurance companies beginning next Nov. 8, according to provisions of Proposition 103.

Both industry and consumer groups have been suggesting in recent weeks that procedures must be established and personnel hired well in advance of November if the rate regulation system is to avoid becoming bogged down as soon as it goes into effect.

Planned $18-Million Increase

Gillespie said in an interview last Nov. 21 that she planned to eventually add 300 employees to her 515-member staff and increase the annual budget of $33 million by $18 million.

But when Gov. George Deukmejian forwarded his budget request for the next fiscal year to the Legislature, none of these additions were in it, and Gillespie explained she was waiting until later to see what would be necessary.

The request revealed Monday means she wants to embark on a major part of the staff increases and new spending now. According to terms of Proposition 103, the insurance industry itself will pay for the increased Insurance Department budget.