The state Board of Finance on Wednesday recommended no premium increases next year for current employees and retirees in the state's health insurance plan for public school employees.
The board also recommended cutting the wellness credit for current employees from $50 to $25 a month and creating a $25 monthly contribution for those employees who don't participate in the wellness credit next year. The board also called for requiring 45 employees to visit their primary care doctors for the wellness credit next year.
The health insurance plan covers more than 100,000 public school employees and retirees.
The finance board's recommendations were approved with no audible dissenters and now head to the Legislative Council for its consideration under Act 1004 of 2021.
Act 1004 dissolved the State and Public School Life and Health Insurance Board and temporarily transferred its duties to the Board of Finance.
The Board of Finance's recommendations Wednesday would cut the plan's projected $70.1 million deficit to a projected surplus of $1.9 million next year and increase the plan's projected reserve fund next year from $3.8 million to $75.7 million, according to Milliman, an actuarial firm for the state's Employee Benefits Division.
On June 18, the Legislative Council approved the Board of Finance's request to put $35 million into the public school health insurance plan in fiscal 2022, which started July 1. The money will come from the state's restricted reserve fund.
Also, the state Department of Education had been planning to provide $110 million in state funding to the school health insurance plan for next year, after providing about $130 million this year. But Department of Education Secretary Johnny Key told the board prior to its vote Wednesday that the department will be able to put $20 million more in state funds than originally planned into the insurance plan next year. This year's contribution included $20 million in one-time supplemental funds, according to state officials.
School districts also provide about $100 million a year to the plan, and employees are projected to contribute about $137 million to the health insurance plan this year.
Reducing the wellness credit from $50 to $25 a month for current public school employees is projected to save $11.7 million for the plan next year, and creating the $25-a-month charge for current employees who don't participate in the wellness credit is projected to raise $3.1 million, according to Milliman.
PROTECTING RAISES
Key told the board, "I have some good news for the Board of Finance, at least for a short-term solution.
"As the fiscal year came to a close [on June 30], we looked at the public school fund again to review where we stood in carry forward and, reviewing that status, we determined that we had $20 million that we could make available for the purposes of the public school employees insurance program," he said.
Key said Gov. Asa Hutchinson expressed his desire to protect "as much as we could the integrity of the teacher salary increases" that lawmakers enacted in 2019 and 2021.
"This is something that we feel is in keeping with his desire that the raises not be diminished by added premium costs, so we are happy to offer that $20 million, in addition to the other funds that have been made available, and we would be able to make those available through the fiscal session for calendar year 2022," he said.
Hutchinson, a Republican, is chairman of the state Board of Finance. Department of Transformation and Shared Services Secretary Amy Fecher has been representing the governor on the board on matters pertaining to the health insurance plans for public school employees and state employees.
Afterward, Arkansas Education Association Executive Director Tracey-Ann Nelson said Wednesday, "We are pleased by today's Board of Finance recommendation.
"We appreciate the Governor and legislative leaders working toward a solution of the projected $70 [million] shortfall," she said in a written statement. "Educators stepped up this past school year in a big way."
Last month, Nelson called on state lawmakers to put $70 million of the state's general revenue surplus into the health insurance plan for public school employees so as not to increase the cost in premiums paid by employees and retirees next year.
"We now call on school district leaders to step up and chip in the additional $25 per employee to offset the reduction in the wellness benefit," Nelson said.
Association officials look forward to working with state leaders on a sustainable state health insurance plan for public school employees, she said.
CLASSIC PREMIUMS
The insurance plan for public school employees includes premium, classic and basic plan options. Most of the current employees receive the wellness credit. Under the Board of Finance's projections:
• 12,550 employees in the classic plan who receive the wellness credit would pay $96.02 a month, up from $71.02 a month.
• 2,739 employees in the classic plan without the wellness credit would pay $146.02 a month, up from $121.02 a month.
• 5,642 employees in the classic plan who get the credit and have children would pay $208.42 a month, up from $183.42 a month next year, according to Milliman.
• 1,103 employees in the classic plan without the wellness credit and with children would pay $258.42 a month, up from $233.42.
PREMIUM PLAN
• 10,687 employees in the premium plan who receive the wellness credit would pay $223.45 a month, up from $208.46 a month.
• 2,916 employees in the premium plan without the wellness credit would pay $283.46 a month, up from $258.46 a month.
• 1,869 employees in the premium plan who get the credit and have children would pay $520.54 a month, up from $495.54.
• 453 employees in the premium plan without the wellness credit but with children would pay $570.54 a month, up from $545.54.
Afterward, acting board Chairman Larry Walther, who is secretary of the state Department of Finance and Administration, said the board's recommended changes for the school health insurance plan get them through 2022 and give lawmakers time to work with their consultant, The Segal Group, to "make the decisions with regard to where they want to go in the long term."
"There are some fundamental questions that have to be answered by the Legislature, with [the Employee Benefits Division] and with this board, on where we are going with employee health benefits in the future," he said.
Senate President Pro Tempore Jimmy Hickey, R-Texarkana, said the Board of Finance's recommended changes are a short-term fix. The plans for both school employees and state employees had projected shortages.
"I'm for a long-term fix," he said in an interview. "We are going to have to figure out our long-term plans with our consultant."
A Legislative Council co-chairman, Rep. Jeff Wardlaw, R-Hermitage, said that "I'm OK" with the board's recommendations for changes to the school health insurance plan for next year.
"They put some skin in the game for the employees," he said.
