State panel OKs Employee Benefits Division’s request for $52.7M in federal funds

Panel endorses reimbursement

Jake Bleed, then the Arkansas budget director, answers a question at the state Capitol in Little Rock during a meeting of the Arkansas Legislative Council in this June 19, 2020 file photo. Bleed in 2021 was named director of the Employee Benefits Division of the Arkansas Department of Transformation and Shared Services. (Arkansas Democrat-Gazette/Staton Breidenthal)
Jake Bleed, then the Arkansas budget director, answers a question at the state Capitol in Little Rock during a meeting of the Arkansas Legislative Council in this June 19, 2020 file photo. Bleed in 2021 was named director of the Employee Benefits Division of the Arkansas Department of Transformation and Shared Services. (Arkansas Democrat-Gazette/Staton Breidenthal)

A state panel on Friday endorsed the state's Employee Benefits Division's request for $52.7 million in federal American Rescue Plan funds to reimburse the state's public school and state employees and retirees' health insurance plans for covid-19 related costs.

Arkansas' American Rescue Plan steering committee, appointed by Gov. Asa Hutchinson in May 2021 to recommend the best uses of $1.57 billion in American Rescue Plan State Fiscal Recovery funds, advanced the Employee Benefits Division's request for the federal funds without any audible dissenting votes.

In March 2021, President Joe Biden signed the $1.9 trillion AmericanRescue Plan Act that is designed to help the United States recover from the economic and health effects of the covid-19 pandemic.

Employee Benefits Division Director Jake Bleed told the steering committee that division officials have identified $52.7 million in expenses of the state's health insurance plans for public school and state employees that are directly connected to the covid-19 pandemic itself or to the series of federal funding requirements placed on the plans in response to covid-19 pandemic.

"All of these funds that we would not have spent, but for covid-19," and they meet the criteria of the federal American Rescue funding guidelines, he said.

Obtaining the $52.7 million in the American Rescue Plan funds "would be useful for us to help maintain the longevity of the plan," Bleed said.

He said the division has had some serious funding challenges over the past few years and the Legislature and Hutchinson "have really stepped up in a big way [and] our funding is stable now."

But the cost of providing health insurance to the state's health insurance plans that cover 160,000 public school and state employees and retirees is significant and growing, Bleed said.

"This funding would help us stave off a funding crunch or challenge further into the future," he said. "It will mean that we will be able to operate at far more comfortable margins into as far as calendar year 2026 or so before we begin to need to really start raising rates in response to what we see as a serious challenge."

The $52.7 million in federal American Rescue Plan funds "will put us back to the place where we would have been in the plan if covid-19 had not occurred," Bleed said.

The division is requesting about $31.6 million of these federal funds for the public school employees' health insurance plan and about $21 million in these federal funds for the state employees' health insurance plan, he said.

Steering committee Chairman Larry Walther said the Legislative Council's Performance Evaluation and Expenditure Review Committee on Monday will consider granting spending authority for the Employee Benefits Division's request for $52.7 million in American Rescue Plan funds.

Afterward, Department of Finance and Administration Chief of Staff Alan McVey said the state has about $400 million in unallocated federal American Rescue Plan State Fiscal Recovery funds out of the total allocation of $1.57 billion.