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updated: 8/25/2013 9:17 AM

Indiana tapped $10 million for damaged homes for bioscience

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Associated Press

INDIANAPOLIS -- A state lawmaker concerned about Indiana's recent move to dip into a fund set aside for repairs to homes damaged by soil shifting above old coal mines wants the state's insurance commissioner to lower the premiums homeowners in the state's coal country pay into that fund.

The $30 billion, two-year budget lawmakers passed in April included a little-noticed provision authorizing the transfer of $10 million from the Indiana Mine Subsidence Insurance Fund to the state's general fund, which is Indiana's main checking account.

The state's management and budget director, Chris Atkins, said that money helped finance the Legislature's $25 million commitment to the Indiana Biosciences Research Institute, a new Indianapolis-based center that's a collaboration between life sciences companies and research universities.

The transfer, on July 1, left $5.1 million in the Mine Subsidence account, which is financed by optional policies homeowners in 26 Indiana coal-mining counties can purchase. Atkins said the fund's new balance is more than enough to meet claims that totaled an average of $743,000 annually since 2009.

He said lawmakers tapped the fund because it had "a very healthy balance" beyond what's needed to pay claims filed by residents whose homes are damaged as soil settles over abandoned underground mines.

"We thought this was a pretty good source of funding for the institute," Atkins said. "We were just trying to take as much pressure as we could off the general fund to free those dollars up for schools and roads and health care."

In announcing the new nonprofit center in May, Gov. Mike Pence predicted it would spur scientific innovation and lure new life sciences jobs, investment and leading scientists to the state.

But former state Rep. Russ Stilwell, a Democrat who until 2010 represented a southwestern Indiana district in the heart of the state's coal country, said the transfer won't sit well with thousands of residents who purchased the special policies.

"They're in essence taking these premiums from homeowners who elect to purchase this insurance and using it for absolutely unintended purposes," he said. "So me and all my neighbors who are purchasing mine subsidence premiums, we're actually paying premiums for the governor, or somebody, to spend it on something else."

The state statute that created the Mine Subsidence fund in 1986 specifies that its balance won't revert to the state's general fund at the end of each fiscal year -- as is the case with some state funds. But Atkins said the budget bill's language supersedes that and authorized a one-time transfer from the fund, which is one of 289 so-called "dedicated funds" Indiana maintains.

State Rep. Ron Bacon, R-Chandler, said the fund-transfer language was added to the budget bill during the closing hours of the General Assembly's session in April.

He said he supported that provision because he was assured there was more than enough money in the fund to cover mine subsidence claims for a least a few years and because roughly $1 million enters the fund each year.

But Bacon, whose district includes heavily mined Warrick, Pike and Spencer counties, said he'll be urging the state's insurance commissioner to lower the state's mine subsidence insurance premiums. He said such a move would make sense given the fund's track record for annual claims and its balance.

"We need to get those down," Bacon said of the premiums. "The state's still taking in more than they're paying out on a regular basis, even with the $5 million cushion."

Indiana Department of Insurance spokesman Dennis Rosebrough said the agency's commissioner, Stephen Robertson, would review any request for a review of the premiums, which haven't changed since 2001 and provide coverage for up to $200,000 per each damaged structure.

But Rosebrough said the agency's staff and Robertson believe the current rates are "adequate" and don't need to come down.

"Given the nature of this fund and the unknowns that we're dealing with with these abandoned mines, we need to be judicious with the funding. We need to make sure there's adequate funding there in the event that there's another subdivision or group of houses impacted so those claims can be paid," he said.

Geologists estimate that the state has about 150 square miles of underground coal mines in the state's coal-producing region, many of them long abandoned after being mined as long ago as the late 1800s, according to the Indiana Department of Natural Resources.

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