Colorado’s long‑running bid to let Pinnacol Assurance break away from state control is suddenly in jeopardy, as a newly revised bill — stripped of the payouts and structural changes once central to the deal — has triggered fresh tensions among lawmakers, unions and the insurer itself.

A draft obtained by Colorado Politics shows a very different legislation from earlier versions and proposals on how the state would make that deal work.

The difference starts with sponsorship.

House Speaker Julie McCluskie, D-Dillon, had been on previous drafts, but the latest, dated May 6, listed Senate Majority Leader Robert Rodriguez, D-Denver, as the prime sponsor.

Initially, Gov. Jared Polis had hoped the state could gain about $400 million, money Pinnacol would pay the state to separate.

That would have helped cover the senior and disabled veterans’ homestead exemption, about $200 million, and the rest into the general fund reserve.

Instead, the exemption is being covered by general fund dollars in the 2026-27 budget that Polis signed Friday.

Pinnacol would also have to pay the Public Employees’ Retirement Association for its share of the state pension plan that covers Pinnacol employees. That’s at least $300 million.

But the latest draft shows the state would get nothing, and Pinnacol’s employees would remain in PERA.

In addition, Pinnacol would remain as the state’s insurer of last resort, one of the sticking points for allowing Pinnacol to privatize.

The draft legislation says that Pinnacol would become a special-purpose authority and be treated as a mutual insurance company, allowing it to sell its insurance products in other states. That ability to expand beyond Colorado is the main reason Pinnacol wants to separate from the state.

Under current law in Colorado and other states, a political subdivision of the state, such as Pinnacol, cannot sell insurance elsewhere.

Pinnacol officials say these restrictions hurt the company’s financial performance. They note that Colorado businesses with employees in other states can’t purchase workers’ compensation coverage from Pinnacol, which means the company loses potential customers. Even so, Pinnacol remains the state’s largest workers’ compensation insurer, holding about half of the market.

Under the current bill, Pinnacol’s board would change from nine to 11 members and, for the first time, would add a union representative from a statewide organization representing building and construction trade workers.

The governor would appoint six members; Pinnacol would appoint five.

Unions have been among the biggest opponents of any Pinnacol deal, citing worries that Pinnacol would no longer be the insurer of last resort. That means Pinnacol must provide workers’ compensation insurance to any employer regardless of risk.

AFL-CIO representatives did not respond to a request for comment.

Frustration with the union’s refusal to negotiate is putting the legislation at risk, according to some.

Pinnacol’s vice president for public affairs, Wes Parham, said in a statement to Colorado Politics that the company has “bent over backward to meet every public demand of AFL-CIO.” He said that, at the request of legislative leaders, Pinnacol offered a compromise that keeps the company affiliated with the state, keeps employees in PERA, and reinforces its role as the permanent provider of last resort.

Parham argued that legislative delays are pushing more Colorado workers away from Pinnacol — which he described as the state’s top‑rated carrier among workers — toward national, private‑equity‑backed insurers. He called the union’s refusal to act “bewildering and indefensible” and said workers deserve better.

Those who support a ballot measure that would give Pinnacol its freedom with no strings attached aren’t waiting for the legislature to act anymore, either.

On Friday, Colorado Succeeds, the main backer of initiative No. 317, deposited $217,500 into the Better Jobs, Better Skills issue committee, which will seek petition signatures in the coming months for the November ballot.

That’s on top of $33,000 the group has already contributed to the committee.

The initiative’s petition format was approved on May 6, and signatures are due Aug. 3.

The measure is statutory, meaning it will require 50% plus one vote from voters.

Under Initiative No. 317, Pinnacol would become an independent mutual insurance company on July 1, 2027, while continuing to serve as the insurer of last resort until Jan. 1, 2029.

The measure would require Pinnacol to contribute $150 million to a skilled‑workers and trades fund that supports job training for firefighters, construction workers, welders, plumbers, electricians, teachers, early‑childhood educators, nurses, emerging‑technology roles, and other trades.

Premium taxes paid by Pinnacol would also be directed into this fund.

In addition, Pinnacol would be responsible for buying out the employee portion of its workers’ PERA pension obligations, a cost estimated at more than $300 million.