Some state Board of Finance members on Tuesday contemplated asking the Legislative Council for more money to put into the health insurance plan for public schools next year beyond the $35 million the council authorized on Friday.
But the board stopped short of giving a recommendation to state lawmakers on changes to make in the insurance plan for 2022. The plan covers more than 100,000 public school employees, retirees and their dependents.
The board reviewed an option under which the premiums would increase by 5% next year and a second option under which premiums would increase by 10%.
The board also reviewed a third option, under which the premiums for current employees would increase by 5%; those for retirees younger than 65 would increase by 10%; and those for retirees 65 and older would increase by 15% next year.
Under each of these three options, the wellness credit for current employees would be reduced from $50 to $25 per month, and a $25-a-month contribution would be created for employees who don't participate in the wellness credit. In addition, current employees would be required to visit their primary care doctors for the wellness credit under all three options.
Coupled with the changes in the wellness credit and the creation of a non-wellness contribution, a fourth option was tossed out by board member and state Auditor Andrea Lea -- increasing the premiums of current employees by 2.5% and those of retirees by 5% next year.
Referring to Lea's proposal, board member Susannah Marshall said, "If we were to model this and accept those, that would leave us with a [projected] deficit of $13.4 million.
"We already have asked for a one-time deficit adjustment of $35 million," Marshall said.
FUNDING IDEAS
The Legislative Council on Friday authorized providing $35 million out of the state's restricted reserve fund in fiscal 2022 for the school health insurance plan, to reduce the plan's projected deficit of $70 million.
Fiscal 2022 starts July 1.
"Let's just go ahead and round up [$13.4 million] and say that's $15 million, so then our ask could be a $15 million adjustment one-time" to eliminate the plan's projected deficit under Lea's proposal, said Marshall, who also is the state bank commissioner.
"We have to promote something that is going to be a better opportunity for a rate plan for 2022 and then we have to go to the plan for years beyond, such as what [board member Keith Konecny of Stuttgart proposed]," she said.
Konecny tossed out the idea of recommending to the Legislative Council that the state provide funding to support a reserve fund of 25% of the plan's total projected cost and maintain the reserve fund at 25% each year.
"Basically, if 100% of the [reserve fund] was covered by the Legislature, that fixes the problem long-term," he said.
Paul Sakhrani of the Milliman actuarial firm said the plan would need $85 million to have a reserve fund of 25% of the plan's total projected costs.
Milliman projected the reserve fund would be at $65 million next year under Lea's proposal.
Before the board adjourned until its meeting next Tuesday, board member Amy Fecher, who also is secretary of the state Department of Transformation and Shared Services, said, "I would encourage the board to think about a motion to get us to a recommendation to the Legislature."
The state Department of Education is providing about $130 million to the plan in 2021, including $20 million in one-time supplemental funds, and is expected to provide about $110 million in 2022, in addition to the $35 million in one-time funding authorized by the Legislative Council on Friday.
School districts provide about $100 million a year to the plan, and the employees and retirees are projected to contribute $137 million to the plan this year.
Sakhrani told the board that the state provides more funding each month for each employee enrolled in the health insurance plan for current and retired state employees than the state and school districts provide each month for each public school employee in the state's health insurance plan for current and retired public school employees.
But the state employees and retirees contribute more each month for each state employee in the state government health insurance plan than public school employees and retirees contribute each month for each employee in the school health insurance plan, he said.
Some of the differences in the cost of the two plans are due to the plans' different benefit provisions.
Most of the public school employees are enrolled in the classic coverage plan of their health insurance plan, he said.
In addition, the plan for state employees covers a higher percentage of retirees compared with the public school employees' plan, he said.
Marshall asked if there was any opportunity for the Education Department to come up with additional one-time funding for the school insurance plan.
Employee Benefits Division Director Jake Bleed said Education Department officials have indicated they don't have the money to do that.
But, he said, "if the board would like us to make a specific request of the Department of Education or to the Legislature, we would be more than happy to do that."
Bleed said he told lawmakers last week that the $35 million for the plan from the restricted fund for next year "will be enough to get us through, but it is by no means a fix and it is by no means an assurance that we won't need additional funding in calendar year 2022."
State Rep. Jim Wooten, R-Beebe, told the finance board that "the school employees have suffered time and time again."
"My suggestion is we would be better off to deal with it on a 2[%] to 3% increase annually," he said. "That beats a 10[%] or 15[%] or 20[%] or 79% increase."
Wooten said, "The time to deal with this issue is now," with the state expecting to have a general revenue surplus of about $1 billion from fiscal 2021.
"While I respect you coming here to say this, I am kind of like, dude, this is going to be on you on Jan. 1, so if you have concrete ideas to share with us after listening to your colleagues, they are going to vote for them," Lea said. "I would love to hear them because this [board's recommendation] becomes futile when it is passed to you, if you guys say we don't like that one."
Wooten responded, "My pledge to you today is I'll do everything I can do to work with the Department of Education, [state Department of Finance and Administration] and the education committee and the total Legislature to see that we deal with the issue."