DENVER — A divided Senate approved a 2009-10 state budget on Monday that preserves funding for higher education by appropriating $300 million from the surplus of a state workers’ compensation insurance fund.By a 22-12 vote, the Senate sent the budget bill to the House, rejecting Republicans’ arguments that the insurance fund’s manager, Pinnacol Assurance, was off-limits as a private company. The Senate also dismissed a warning from Attorney General John Suthers, a Republican, who released a memo on Friday asserting that the Pinnacol transfer was unconstitutional and could not be defended by his office in the event of a lawsuit.But the key votes weren’t on the budget itself but on the Pinnacol raid, without which the budget would have been in deficit, violating the state constitution.Senators debated whether Pinnacol is fundamentally a private company or a public entity.Sen. Morgan Carroll, D-Aurora, recited all the ways Pinnacol stands apart from private companies – the fact that it was created by statute; that its board is appointed by the governor and confirmed by the Senate; that it is exempt from state taxes; that it enjoys immunities from prosecution accorded to government agencies; that it can’t be sold except by the Legislature.”Does that look like any private company you’ve ever seen before?” she asked.”Their surplus revenue is state revenue,” said Sen. Brandon Shaffer, D-Longmont, the Senate majority leader and sponsor of the Pinnacol bill.To the argument that Pinnacol could be raided because it’s part of state government, Sen. Shawn Mitchell, R-Broomfield, had this response: “Every town in Colorado is a political subdivision of the state, yet we don’t have constitutional authority to raid the bank account of every town or city or county in Colorado.”Sen. Mark Scheffel, R-Parker, said his constituents in Douglas and Teller counties are asking him, “When are you people going to stop looking for money where you shouldn’t be looking for it and get down to the reality of reducing the size of government?” Republicans have proposed to balance the budget by furloughing state workers and imposing a 2.9 percent across-the-board cut in state spending. Sen. Dave Schultheis, R-Colorado Springs, called on senators, or the legislative Joint Budget Committee, to find “the courage to reduce the government’s programs.””This budget doesn’t save higher ed,” said Sen. Bill Cadman, R-Colorado Springs. “It saves our JBC members from going back to the chalkboard to generate cuts.”Sen. Moe Keller, chairwoman of the JBC, defended the cuts it had already made to reduce a $700 million recession-induced budget deficit to the $300 million that would be cured by the Pinnacol patch.Even if the House approves the bill and Gov. Bill Ritter signs it, the threat of a lawsuit by Pinnacol, possibly tying up the $300 million for months or years, hangs over the state’s public colleges and universities. Without that money, state funding for higher education would be cut by roughly half.Ritter’s office said Monday that he was engaged in “ongoing discussions with Pinnacol Assurance and exploring other ways to close the remaining $300 million budget gap.”Contact the writer: 476-1654

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