The state Board of Finance, now in charge of overseeing state and school employee health insurance plans, decided today to ask the legislature to take $35 million from a reserve fund to cover part of a $70 million deficit forecast in the public school employee health insurance fund.
The state has nearly $1 billion in reserve funds and is accumulating an additional $1 billion surplus this fiscal year, but the current surplus, which isn’t appropriated, can’t be applied to the insurance fund. The Legislative Council, by a three-fifths vote, could spend restricted reserve.
There was much discussion today about how the state got here. One part of it: the average employer contribution to school employee insurance is less than $170 a month while the state provides $450 per month for every budgeted state employee, whether the position is filled or not. Districts may spend more and some do, but many only meet the required minimum.
Auditor Andrea Lea noted that this would be the fifth one-time infusion of money into the fund since 2009. It’s a situation that’s likely to repeat without structural changes.
The Board didn’t make a decision today about either imposing or changing an earlier recommendation by the board that formerly oversaw insurance for significant rate increases for employees. Those increases, including a reduction in a wellness benefit, were projected to cover about $40 million of the expected $70 million deficit. That board was dissolved by the legislature and the Board of Finance put temporarily in charge.
The board also heard further information about how Arkansas provides less support than all but one neighboring state for school employees and Arkansas school employees must pay more for insurance than all but one of the neighboring states.
Some states have teachers and state employees in the same insurance plan.
Board members also said any infusion of money this year, for both the public employee and school employee plans, is not a long-term solution.