The 89th General Assembly convened last Thursday, Friday, and early Saturday morning (to fulfill the three-day minimum requirement for a special session), as the 1st Extraordinary Session of 2013. The session was called to address increases in insurance premiums for Arkansas’ public school employees. In this brief post, we will give a quick overview of the insurance premium issue and of the legislature’s response.
First of all, approximately 83,000 people are covered under the state’s public school employee (PSE) health insurance plan, “including 47,000 teachers, cafeteria workers, janitors, and other school employees and their families.” The PSE plan is optional; as such, not all public school employees are enrolled in the state plan. Therefore, much of the funding in the program depends on the enrollment number, number of claims, and the amount of funding contributed by school districts and the state.
Insurance Increases. In August, the State and Public School Life and Health Insurance Board faced a funding gap of close to $50 million and an empty catastrophic claims reserve fund, which had been drained by a larger than expected number of catastrophic claims in 2012. In response, the Board approved premium increases of nearly 50% for most plans and instituted additional fees to help fund the catastrophic claims reserve. Enrollment for the PSE plans with the new rates and conditions was scheduled to begin October 1st, with the new rates going in effect January 1st, 2014. However, in September, Governor Beebe pushed back the enrollment to November 1st, in order to provide time for the state to consider options to potentially prevent the large increases.
The state allocates $50 million a year towards the plans, and school districts are required to contribute at least $131 per employee per month. However, many school districts contribute more than that minimum. In the 2013 regular session, the Legislature increased the required district contribution amount to $150 in 2014 and allocated a one-time $8 million towards the catastrophic claims reserve.
On Wednesday, October 16th, Governor Beebe called the special session to tackle the insurance increases. Legislators met in private to negotiate options for several weeks, as Governor Beebe made clear that he would not call the session until he believed legislators had come to a consensus on a solution, and there would be a majority vote to pass the legislation. While there was debate over how to alleviate the funding gap, in the end, as expected, a bill passed to use surplus funds to bail out the health insurance program.
On Monday, October 21st, Governor Beebe signed into law a bill (Act 5 of the Special Session) that allocates a one-time subsidy of $43 million from state surplus funds. Currently, the state’s surplus holds approximately $164.8 million (by state law, Arkansas is required to have a balanced budget).  Governor Beebe also signed a bill (Act 3 of the Special Session) that creates a 12-member legislative task force (appointed by the House Speaker and Senate President Pro Tempore) to study long-term fixes for teacher insurance and to present recommended changes by June 2014. In the meantime, two bills were passed to shift funds from other educational programs to the insurance plan.
Act 1 of the Special Session shifts funding (about $16.3 million in 2015) from general facilities and supplemental millage funding (which have been phased out) to the insurance plan. Act 2 of the Special Session reduces the requirement of 60 hours of professional development for teachers to 36 hours and shifts funding from professional development to insurance funding (reducing professional development funding from $54 per student to $32.40 per student) in 2014-15.
Furthermore, Act 3 of the Special Session increased the number of members on the State and Public School Life and Health Insurance Board from 12 to 14 voting members.
* * * * *
Due to the bills passed during the Special Session, public school employees will only have to pay a 10 percent increase in premiums rather than a 50 percent increase in the coming year; however, the issue is not solved long-term. In the months to come, we expect to hear from the newly-formed State and Public School Life and Health Insurance Program Legislative Task Force. On Monday, House Speaker Davy Carter (R-Cabot) appointed Rep. George McGill (D-Fort Smith), Rep. Harold Copenhaver (D- Jonesboro), Rep. Bill Gossage (R-Ozark), and Rep. Allen Kerr (R-Little Rock) to the Task Force. Additionally, Rep. James McClean (D-Batesville) and Rep. Tommy Wren (D-Melbourne), the chairmen of the House Education and Insurance Committees, will serve on the Task Force. Senate President Pro Tempore Michael Lamoureux (R-Russellville) has named Sen. Linda Chesterfield (D-Little Rock), Cecile Bledsoe (R-Rogers), David Sanders (R-Little Rock), and Eddie Cheatham (D-Crossett) to serve on the task force. In addition, Sen. Jim Hendren (R-Gravette) was appointed as a designee by the chairmen of the Senate Education and Insurance Committees, Sen. Johnny Key (R-Mountain Home) and Sen. Jason Rapert (R-Conway).
- On the one hand, this may seem like a bad idea, since teacher quality is so critically important to student achievement, and any measures that help improve teacher quality should most certainly be kept in place.
- On the other hand, there is very little hard evidence of the effectiveness of the types of professional development in which many Arkansas districts engage; thus, it may not be so problematic to have dipped into this funding pot for much-needed relief for public school employees from higher health insurance premiums.
This certainly is an important reminder to those of us at the OEP that we had better get to work to try to provide some guidance (based on evidence of effectiveness) on what types of professional development have the best chance for improving student achievement; now that the dollars in this area are more scarce, we’d better be even more careful to spend them efficiently!