Attorney General Wayne Stenehjem agrees that Workforce Safety and Insurance cannot cherry-pick which funds to include when calculating its surplus, according to an opinion issued Tuesday.

A 2007 financial audit of WSI found that its surplus was nearly 164 percent of the agency's reserves, or about $467 million. It cannot go above 140 percent by state law.

WSI contended that it could exclude some grants and other funds from its surplus to bring it below the 140 percent limit, but Stenehjem's opinion aligns with State Auditor Bob Peterson's argument that the agency must include all its funds in its calculation.

But since September, that surplus has dropped below that 140 percent limit, even with all of WSI's assets added to its surplus, because of the slumping economy, said Bruce Furness, interim WSI director.

Stenehjem said he will take no immediate action in light of his opinion, adding lawmakers will be better equipped to clarify WSI's surplus law instead of forcing the agency to sell off its assets in light of the sputtering economy.

The Industry, Business and Labor interim committee has recommended a bill that would extend the maximum surplus for WSI from 140 percent to 150 percent of its reserves.

Furness called Stenehjem's opinion a "reasonable solution to the problem," and said he expects the Legislature to find a solution to the surplus law next year.

"I think it will be resolved, I don't know exactly how," he said.

As for the dispute over whether certain funds be counted in the agency's surplus, Furness said WSI will follow the law and comply with Stenehjem's opinion.

"We felt we were doing what was originally intended," Furness said of the state law. "Obviously the auditor didn't and the attorney general agreed with him."

(Reach reporter Brian Duggan at 223-8482 or brian.duggan@;bismarcktribune.com.)