The Arkansas Legislative Council on Friday signed off on Gov. Sarah Huckabee Sanders' requests for $11 million in one-time state funds to help school districts pay for rising property insurance premiums.
In a related action, the council authorized the Bureau of Legislative Research to issue a request for proposals for a consultant to help lawmakers develop plans aimed at stemming increasing property insurance costs for the public schools and the state's colleges and universities.
"Higher ed has been screaming pretty loud for the last week and a half" about rising property insurance rates, Rep. Jeff Wardlaw, R-Hermitage, who is a Legislative Council co-chairman, said earlier this week.
The bureau's draft request for proposals envisions the consultant working with the council's Executive Subcommittee to develop a final report, including proposed legislation, to provide to the council by March 15 prior to the 2024 fiscal session, which begins in April.
Sanders announced last week the state would cover 30% of the cost of the increased premiums for the public schools' property insurance and laid the blame on insurance companies for the large increase in premiums, saying the companies are trying to take advantage of already financially strapped public schools.
State Insurance Commissioner Alan McClain said recently the rising school property insurance premiums are due to "a convergence of factors -- poor claims experience, difficult conditions in the insurance marketplace and a negative outlook from weather models."
The state Department of Insurance requested a transfer of $6.3 million from the state's restricted reserve fund to partially offset the increased property insurance premiums for 170 school districts participating in the insurance program managed by the Arkansas School Boards Association. The program faces increased fiscal year 2024 insurance premiums of about $21 million, or 114%, McClain said. Fiscal year 2024 started July 1.
The Department of Insurance also asked for a transfer of $4.4 million from the state's restricted reserve fund to partially offset the increased property insurance premiums for the 68 school districts participating in the Arkansas Public School Insurance Trust managed by the Department of Insurance. McClain said the property insurance premiums billed to these school districts will increase by about $15 million, or 154%, in fiscal year 2024.
The Department of Insurance also requested a transfer of $117,928.08 from the state's restricted reserve fund to partially offset the increased property insurance premiums for the Bentonville School District that procures insurance directly through the open market. The school district has increased insurance premiums of about $393,000, or 50%, in fiscal year 2024, McClain said.
In addition, the Department of Insurance asked for a transfer of $190,471.93 from the state's restricted reserve fund to help eight charter schools that procure insurance directly from the insurance market similar to Bentonville School District, McClain said in a letter dated Wednesday to Bureau of Legislative Research Director Marty Garrity. The council voted Friday to add this request to the council's agenda.
These eight charter schools have experienced the same insurance difficulties as Bentonville and other school districts, resulting in increased fiscal year 2024 premiums of about $635,000, or 56%, McClain wrote in his letter. The transfer from the restricted reserve fund will be used to partially offset the increase in premiums with the charter schools covering 70% of the increase and the state the other 30%, he said.
The Bureau of Legislative Research's draft request for proposals for a consultant to assist the Legislative Council's Executive Subcommittee in developing plans to stem the rising property insurance costs envisions releasing the request for proposals on Monday, receiving proposals from consultants until Aug. 21 at 4 p.m, and the Legislative Council ultimately approving a final contract with a consultant Sept. 15.
"It is the objective of the Subcommittee, by entering into a Contract for consulting services, to provide to the members of the Arkansas Legislative Council detailed and accurate information concerning a multi-year strategic path forward for provision of property insurance to K-12 districts in a manner that will provide for reasonable and predictable premium rates," according to the bureau's draft request for proposals for a consultant.
The subcommittee also aims to provide council members with plans for consistent governance of the plans, including legislative oversight, funding mechanisms and options for revisions to the current plans, according to the draft request for proposals.
The revisions to the current plans could include combining the two existing plans and implementing a self-insured structure or using reinsurance or some combination of self-insurance with reinsurance above recommended specific aggregate limits, according to the bureau's draft request for proposals for a consultant.
In other action, the Legislative Council on Friday approved other requests for restricted reserve funds, including:
The University of Arkansas for Medical Sciences' request for $100 million to assist the school in its campaign to obtain a National Cancer Institute designation.
Asked when UAMS will apply for that designation, UAMS spokesperson Leslie Taylor said Thursday in a written statement that "We are making great progress.
"We are working closely with an external advisory board representing NCI-designated cancer centers across the U.S. to ensure we meet all the requirements to apply. We expect to submit our application within two years."
The state Department of Education's request for $15 million for the Arkansas Children's Educational Freedom Account Program, or school voucher program.
The state Department of Finance and Administration's request for $12 million for law enforcement stipend grants to state agencies and colleges and universities based on guidance approved by the Arkansas Legislative Council.
The state Department of Finance and Administration's request for $2.5 million for drug task forces.
The University of Arkansas at Pine Bluff's request for $2 million in state funds to match federal land grant funds.
The state Department of Parks, Heritage and Tourism's request for $1 million in state funds to be used as matching funds for a grant through the U.S. Economic Development Administration.
The state funds will be used as matching funds for a federal grant that the University of Arkansas Greenhouse Outdoor Recreation Program plans to seek, according to state and UA officials.
Sarah Goforth, executive director of the UA Office of Entrepreneurship and Innovation, which the Greenhouse Outdoor Recreation Program is under, said the UA Office of Entrepreneurship and Innovation is in the final stages of proposal development.
"OEI is applying for the EDA's Build to Scale program in the "Venture-Scale" category, which is intended to expand existing business incubators and accelerators," Goforth said in a written statement. "We hope this expansion would also support new businesses being formed around the Opportunity Zones that have been created near some of our Arkansas State Parks through the efforts of the Natural State Initiative."
The state Department of Finance and Administration's request for $1 million for grants to provide to pregnancy-help organizations.
The state Department of Finance and Administration's request for $120,000, divided equally by the state's eight economic development districts.
Afterward, finance department spokesperson Scott Hardin said the state's overall restricted reserve fund balance now totals $1.48 million.