The Arkansas Educational Association is calling on state officials to use part of the general income surplus to address the state’s lack of funding for the state’s health insurance plan for public school employees.
The association failed to specify on Friday the amount of surplus it wants to take advantage of.
During the first ten months of fiscal year 2021, the state’s overall net income exceeded April 2, 2020, projected at $ 716.8 million, or 15.1%, according to the state finance department earlier this month.
Last year’s forecast had predicted a recession generated by the coronavirus pandemic.
However, Arkansas tax collections during fiscal year 2021 have been bolstered by net revenue increases related to shifting from last year’s income tax deadline of May 15. ‘April to July 15 and federal stimulus payments that have boosted consumer spending.
“Following the announcement of a $ 700 million surplus, we believe some of these funds should be used to prevent teachers and education support professionals from massively raising rates that are likely to force to many to leave the plan, “Tracey-Ann Nelson, the association’s executive director, said in a written statement Friday.
After addressing the current funding deficit, the association “looks forward to working with policy makers to establish a reasonable and sustainable plan, governance, design and funding solutions to ensure an affordable plan with significant benefits,” he said. .
At a special session in 2013, the legislature approved the transfer of $ 43 million in state surpluses to rescue the health insurance program for public school employees.
Gov. Asa Hutchinson said Friday that “I hope to use the state’s general revenue to be part of the solution to meet the needs of our state health insurance plan, but other adjustments need to be made.
“It is important that the legislative review be completed before a final solution is adopted,” the Republican governor said in a written statement.
“The Finance Board should take interim action and then develop a long-term action plan,” he said.
Senate President Pro Tempore Jimmy Hickey of R-Texarkana said Friday that it is premature to decide whether the insurance plan should receive surplus state funds.
“We’re in the midst of trying to figure it out,” he said.
Employees of public schools under the insurance plan will likely have to pay higher premiums and the state may provide more funding next year, Hickey said.
“I understand that these stakeholders want us to deposit the money,” he said, but lawmakers need to balance it with other demands, such as taxpayers who want to pay lower taxes and advocates for the Department of Human Services. State they want more money for services.
A Legislative Council spokesman, Rep. Jeff Wardlaw of R-Hermitage, said “I think there will be some surplus in the front-end” for the insurance plan, but he doesn’t know how much.
Some people have confused the consideration of health insurance benefits with retirement benefits, he said.
“We’re not talking about retirement,” Wardlaw stressed.
The State Finance Board will meet Tuesday morning to continue reviewing the recommendations of the already dissolved public and state schools life and health insurance board for the school’s health insurance plans. public and state employees.
The finance council will make recommendations for change to the Legislative Council.
Act 1004 of 2021, sponsored by Hickey in the Senate and Wardlaw in the House, transferred the governance of the two health insurance plans temporarily from the already dissolved insurance board to the finance board.
Under the proposals of the defunct council for 2022, active school employees would face a 10% increase in bonuses. Retirees under the age of 65 would see a 15% increase, while retirees over the age of 65 would see a 20% increase.
Active state employees would see their premiums increase by 5%, while retirees, regardless of age, would see their premiums increase by 10%. This state would also increase its monthly funding per employee by $ 50 a month.
Both plans would reduce the welfare credit for active employees from $ 50 to $ 25 a month, create a non-welfare contribution of $ 50 a month for active employees, and eliminate the requirement for preventive welfare screening to see doctors in person.
These proposals are expected to reduce the projected public school employee plan deficit from $ 70 million to $ 29.7 million by 2022 and turn the projected state employee plan deficit of $ 33.3 million into a $ 6.2 million surplus, according to state officials. Both plans have dwindling reserve funds.
The Arkansas Educational Association said the health insurance board’s proposals would increase a single employee’s monthly contribution to the classic plan by 45 percent, from $ 71 to $ 103 each month.
A spokeswoman for the state Department of Transformation and Shared Services said a single employee of the classic plan, who receives the welfare credit, would face this increase as proposed by the health insurance board.
The education association said in a statement that “these drastic increases in insurance premiums will erode the progress made in teachers’ remuneration this year and expel educators who are not teachers from the plan.
“This small group will make the plan less financially secure and more expensive to operate, while robbing people of a key advantage that helps ensure a stable workforce,” the group said.
Hickey said it is possible that public school employee premiums will increase more than recommended by the dissolved health insurance board.
But “I don’t think anyone wants to see it,” he said.
During the interview with two consultants from the Legislative Council’s executive subcommittee, some lawmakers raised the possibility of a study on the merger of insurance plans for school and state employees that collectively cover more than 100,000 employees and retirees. The benefits of the two health insurance plans collectively cost $ 662 million in 2020.
The executive subcommittee of the Legislative Council on Wednesday authorized the Office of Legislative Investigations to start contractual negotiations with the Segal company to be the Office’s consultant in the review of insurance plans. This authorization was made after interviewing two consultants: Segal in Atlanta and Cheiron Inc. in North Carolina.
Segal submitted a maximum bid of $ 575,000, while Cheiron submitted a maximum bid of $ 393,750. Cheiron is the former actuary of the State Employee Benefits Division, and his project team included a former deputy director of the division. Senator Missy Irvin of R-Mountain View said Segal would provide a new look at health insurance plans.
The policy-making subcommittee of the legislative council will study the contract negotiated with Segal on Thursday and the plenary council will study the proposal on Friday
The aim would be for the consultant to present a final report to the Legislative Council in October.
Hickey and Wardlaw said the combination of health insurance plans should be studied.
“I was serious when I said all things were on the table,” Hickey said.
Wardlaw said it is also possible that the providers of the two health insurance plans will change.