Proposal taps schools' funds for insurance

Talk of legislative session widens to include prisons

Legislators are reviewing a proposal that would transfer about $4.6 million from school districts to the health insurance plans that cover 47,000 teachers and other public school employees.

The draft legislation is being circulated as talk of a possible special session of the Legislature heats up.

Gov. Mike Beebe has said he will call a special session if legislators agree on a proposal. Beebe has seen the legislation being circulated by Sen. Jim Hendren, R-Sulphur Springs, and Rep. Harold Copenhaver, D-Jonesboro, spokesman Matt DeCample said.

"There's nothing in the bills that we would object to if the legislative consensus was found," DeCample said.

Beebe also supports allocating money during a special session to open up additional prison space to relieve the backlog of state prisoners in county jails, DeCample said.

The state Department of Correction has space for 330 inmates that is empty because of a lack of staff to operate it, department spokesman Shea Wilson said. Staffing the space for a year would cost about $3.2 million, she said.

DeCample said money could also go toward opening additional beds at the Pulaski County jail, which was closed for a time to most nonviolent offenders for more than a month because of a lack of space.

Sheriff's office Lt. Carl Minden said a 240-bed work center at the jail is empty because of a lack of money to operate it.

DeCample said he didn't want to say where the money for the additional jail and prison space would come from until the proposal had been circulated to all the state's legislators.

"We've been floating that out there to legislators as, 'Here's somewhere we think we can get that money without disrupting any other services," DeCample said.

The legislation affecting the school employee health plans targets money that school districts save in payroll taxes by contributing to their employees' health insurance.

The bill would direct the Department of Finance and Administration's Employee Benefits Division to identify those funds and use them for "premium assistance" for teachers and other school employees.

The legislation would also implement recommendations by a legislative task force aimed at improving the finances of the plans covering teachers and state employees.

Those recommendations include dropping part-time school employees from the plans, excluding from coverage employees' spouses who have access to insurance from their own employers and limiting a legislatively mandated program covering weight-loss surgeries.

Hendren, chairman of the State and Public School Life and Health Insurance Program Legislative Task Force, said a "healthy majority" of the state's 35 senators support the proposals.

Copenhaver, the task force vice chairman, said he was still polling the House's 100 members Wednesday, but added, "Everything's moving forward in a good positive direction."

If enough legislators support the proposals on the health insurance plans, Hendren said he will ask Beebe to call a special session later this month or early next month.

The proposal to shift money from school districts' payroll-tax savings is meant to capture savings that would result from dropping about 4,000 part-time school employees from the plans, he said.

School districts would save about $7 million annually because they would no longer have to contribute toward the cost of the part-time employees' insurance.

The districts are now required to contribute at least $150 per month for each employee enrolled.

Some lawmakers had wanted to require that the $7 million be transferred directly to the insurance plans, but Hendren said he learned that doing so would risk violating requirements for school funding under the Arkansas Constitution.

The legislation would affect only money that the schools save in federal payroll taxes by using the $60 million they receive from the state each year to help pay their employees' insurance premiums.

Sen. David Sanders, R-Little Rock and a member of the task force, said he supports the idea.

"We want to make sure that Arkansas provides a good, solid health benefit for our school employees and part of the way we do that is to make sure the funds that are derived from policy changes are put into the plan," Sanders said.

Representatives of the Arkansas Association of Educational Administrators and Arkansas School Boards Association said they oppose shifting the funds.

"I personally think it's terrible," said Richard Abernathy, director of the administrators association.

"We're diverting money that school districts already have in their budgets that's probably tied up in teachers' salaries or purchasing instructional supplies, and we're diverting it back to EBD and the state for health insurance."

Without being able to offer health insurance to part-time employees, some districts might need to pay them more or offer other benefits, meaning the savings to the schools would be less than $7 million, Abernathy said.

He added that some districts have more part-time employees than others. Those with few part-time employees could end up losing more than they save as a result of the proposals.

School board association officials have similar concerns, said Lucas Harder, the association's assistant director of policy service.

"We think it's a bad policy decision," he said.

Officials with both organizations have also expressed concerns about dropping the part-time employees from coverage.

Proponents of the move say most of the employees would qualify for subsidized coverage that became available Jan. 1 under the federal health care overhaul law.

But Abernathy noted that some legislators want to discontinue funding for the state's expanded Medicaid program, which would take away an option for some part-time employees.

Legislators have said changes are designed to avert a potential 35 percent premium increase in the teachers' plans next year.

Other changes would require the State and Public School Life and Health Insurance Board, which sets the rates for the plans, to include an employee of a rural school district on the board and require employees in certain plans to have health savings accounts.

"In order to allow our teacher and our state employees to have insurance coverage going forward, this is a step we have to take," Copenhaver said.

A Section on 06/19/2014

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