The Legislature’s options for fixing the state’s financially ailing health insurance plan for public school employees include reallocating state funds to the plan, repealing some tax cuts to provide more funding, and requiring school districts to pay more money in, Gov. Mike Beebe said Wednesday.
He said he’s not ready to advocate for one option over other options because he wants to get feedback from lawmakers.
“I am advocating for a solution,” Beebe said in an interview broadcast on the Talk Business website. “I think we need to help these teachers. I think that the rate increase is awfully high.”
Increases of about 50 percent in premiums are set to take effect next year.
Sen. Jason Rapert, R-Bigelow, said this week that he would push for an infusion of state tax dollars to head off that increase and seek systemic changes in the state insurance plan for teachers to prevent the need for similar rate increases in the future. He said he would support Beebe calling a special session of the Legislature to address the issue.
Beebe said Wednesday that he won’t call a special session unless he reaches agreement with a majority of the 100-member House of Representatives and 35-member Senate on a plan to fix the plan in both the short and long term.
Fixing the problem “could wait until the fiscal session [starting Feb. 10], but, if you wait until the fiscal session, then a lot of these teachers are already going to get hit with some of these catastrophic increases before then,” he said.
The state’s unobligated and unappropriated surplus is about $164.8 million, after the Legislature’s General Improvement Fund obligations are met, according to the state’s budget director, Brandon Sharp.
Beebe said it would cost the state about $58 million to avoid any premium increases in the public school employees health insurance plan, starting Jan. 1, about $44 million to cut the premium increases by 75 percent, and about $29 million to cut the premium increases in half.
“It doesn’t do any good to throw one-time money at an ongoing problem unless you are using the one-time money as a bridge to get to the long term solution, so there has to be some long [term] solutions and all of them involve putting more money into the system - either state tax dollars, redistributing existing dollars, cutting some the tax cuts and redirecting some of that money,” he said. “There are all sorts of options for the Legislature to consider.”
Beebe said raising taxes to aid the health insurance plan “is not my first choice” of options and “before [lawmakers] did, I would rather see them back off some of the tax cuts that they [enacted earlier this year] and apply some of that.”
The state distributes about $200 million a year to school districts targeted toward helping low-income students, he said, and $10 million to $20 million of that money could be reallocated to the health insurance plan.
Another option is requiring school districts to contribute more money to the plan, Beebe said.
Earlier this year, the Legislature increased the required contribution from school districts toward the total monthly cost of an employee’s premium from $131 to $150, starting next year, and allocated $8 million in one-time funding to shore up the plans after they depleted a reserve fund for catastrophic claims.
According to the Employees Benefits Division, about half of the state’s school districts contribute more than the required minimum.
Senate President Pro Tempore Michael Lamoureux, R-Russellville, said in an interview that he would be shocked “if there was the will [in the Legislature] to repeal tax cuts” enacted earlier this year.
“I think there is a consensus something needs to be done” to help the health insurance plan, he said.
But Lamoureux said: “I don’t think there is a consensus on what all that includes at this point.”
House Speaker Davy Carter, R-Cabot, said the lawmakers “have to do something temporarily to alleviate the premium increases for the teachers and then we need to completely overhaul the whole system.”
“I think we have got to give the teachers some idea of what we are going to do and what we are going to do soon,” he said. “I am not interested in leaving them in limbo.”
But Carter said he doesn’t believe the Legislature would be able to completely overhaul the plan in either a special session or the fiscal session starting in February.
Arkansas, Pages 8 on 09/12/2013