Legislature(2023 - 2024)BELTZ 105 (TSBldg)
04/03/2023 03:30 PM Senate EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| SB113 | |
| Confirmation Hearing(s) | |
| SB97 | |
| SB110 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 113 | TELECONFERENCED | |
| += | SB 97 | TELECONFERENCED | |
| *+ | SB 110 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 110-SCHOOL/UNIVERSITY EMPLOYEE HEALTH INSUR
4:39:28 PM
CHAIR TOBIN announced the consideration of SENATE BILL NO. 110
"An Act relating to group insurance coverage and self-insurance
coverage for school district employees, employees of the
University of Alaska, and employees of other governmental units
in the state; and providing for an effective date."
4:39:34 PM
SENATOR SHELLEY HUGHES, District M, Alaska State Legislature,
Juneau, Alaska, said a crucial, often overlooked method exists
to bolster classroom funding without requiring additional
financial allocation. The potential impact could significantly
enhance resources for student instruction. The essence of SB 110
lies in granting school districts the choice to participate in
AlaskaCare, the state's employee health care plan. The rationale
behind this choice is rooted in the substantial savings it could
offer to districts compared to their existing health plans. She
stated the Mat-Su borough roughly estimated that it could save
$7 million by opting for AlaskaCare. They are grappling with
annual premium increases of roughly $3.3 million. To put this
into perspective, $3.3 million equates to the funding required
for 33 teaching positions. Therefore, with the potential for $7
million in savings, there is the potential to preserve 65
teaching positions. These savings could be instrumental in
freeing up funds for classroom instruction, which aligns with
the shared goal of enhancing student education.
SB 110 aims to create a statutory framework that would give
schools and local governments the option to participate in the
health care pooling system. By entering the pool, districts
might benefit from economies of scale and improved healthcare
cost negotiations, a critical necessity given Alaska's status as
the state with the highest insurance premiums in the nation.
Furthermore, Alaska faces increasing healthcare spending and
bears the highest out-of-pocket costs for healthcare among its
residents.
SENATOR HUGHES requested SB 110 proceed so school districts are
empowered to decide whether participating in the pool aligns
with their interests. She opined that SB 110 could lead to
substantial cost savings, which districts could then invest in
students' educational experiences.
4:44:03 PM
GABY GONZALEZ, Staff, Senator Shelley Hughes, Alaska State
Legislature, Juneau, Alaska, provided a presentation titled "SB
110 State Health Insurance Pooling Option." She turned to slide
2:
[Original punctuation provided.]
ISER Research Summary No. 2019-4
• "Alaska has the highest per capita healthcare costs
in the US (Passini, Frazier, & Guettabi, 2018), which
negatively affects private and public sectors of our
economy. Healthcare costs are a part of teacher
compensation. Alaska unadjusted per-pupil spending on
teacher salaries is 14th in the nation - but after
adjusted to US cost-of-living, the amount is 23
percent below the national average. Similarly,
Alaska's unadjusted per-pupil spending on educator's
employee benefits is 64 percent above the US average -
but after adjusted is only 9 percent above the US
average.
• While the challenge of high healthcare costs is not
unique to education, in a fixed budget scenario these
costs put downward pressure on wages, making it more
difficult for Alaska districts to offer teachers a
nationally competitive salary.
4:44:54 PM
MS. GONZALEZ turned to slide 3 and said the graph is from ISER
2018. ISER collected the data from the Centers for Medicare and
Medicaid Services (CMS), between 1991 - 2014. CMS published data
on personal health care spending for the US and individual
states. The graph shows that costs began to skyrocket in the
early 2000s. Health insurance pooling provides the following
benefits:
[Original punctuation provided.]
Save Money
• Eases the downward pressure on districts and local
government budgets.
More Healthcare Options
• Expands healthcare options.
Reduced Staff Burden
• Schools can focus on providing a quality education.
• Local governments can focus on public services.
4:46:00 PM
MS. GONZALEZ turned to slide 4 and said the graphs show more of
the data collection that ISER assembled. It shows Alaska's
healthcare spending amounts. In 1991, spending was $1.5 billion.
In 2014, the amount increased to $8.2 billion.
MS. GONZALEZ turned to slide 5 and said the Department of
Administration provided the following information:
[Original punctuation provided.]
The AlaskaCare employee plan's current average per-
employee-per-month claims and administrative cost is
$1734 ($20,808 per year).
• The current per-employee-per-month employer
contribution is $1,685. It will increase to $1,793 in
FY24.
• The monthly employee contribution ("employee
premium") varies as follows:
2023 ACTIVE EMPLOYEE PREMIUMS
For AVTECTA - AK Vocational Teachers (TA), APEA -
Confidential (KK), APEA - Supervisory (SS), ACOA -
Correctional Officers (GC), TEAME - Mt. Edgecumbe
Teachers (TM), MEBA - Marine Engineers (BB) Employees
not covered by collective bargaining (Exempt)
Plan Employee Only Employee
& Family
Standard Medical Plan $125 $303
Economy Medical Plan $63 $167
Consumer Choice Medical Plan $25 $71
Standard Dental Plan $37 $102
Economy Dental Plan $0 $0
Managed Vision $15 $40
4:46:43 PM
SENATOR HUGHES said the amount districts currently spend is
unknown. However, based on Mat-Su, even at $1,793, it would be a
savings. She opined that Mat-Su's healthcare spending is
approximately $41 million annually. She said any reduction would
benefit classrooms.
SENATOR HUGHES stated she was unaware there would be invited
testimony and listed the names of individuals she asked to
testify publicly.
4:48:10 PM
MS. GONZALEZ read the following sectional analysis for SB 110:
[Original punctuation provided.]
SB 110 Sectional Analysis
Section 1 AS 14.08.101 Page 1, Line 5 through Page
2, Line 29
Adds to powers of regional school boards the power to
establish and maintain school district participation
in a policy of group insurance, selected by the State
of Alaska, that provides medical insurance.
Section 2 AS 14.14.090 Page 2, Line 30 through
Page 4, Line 13
Adds to the duties of a regional school board the
duty, when the board's school district participates in
a policy of group insurance elected by the State of
Alaska that provides medical insurance, to determine
and disperse to district employees and administrative
officers the amounts necessary to cover the district's
portion of the cost of that participation.
Section 3 AS 14.17.300 Page 4, Line 14 through
Line 27
Allows the Commissioner of Administration to expend
from the public education fund (AS 14.17.300) to the
group health and life benefits fund (AS 39.30.095) a
total of $100,000,000 or less as needed to pay claims
submitted by school district employees who are covered
by a policy of self-insurance provided by the state;
and, requires the Commissioner of Administration to
repay the public education fund, over a period of 10
years, the full amount of the commissioner's
expenditures from the public education fund.
Section 4 AS 14 Page 4, Line 28 through Page 5,
Line 31
4. (a) Allows school districts to participate in a
policy of insurance that provides medical insurance
coverage to state employees and to school district
employees. (b) Requires participating school districts
to contribute to the group health and life benefits
fund (AS 39.30.095) based on rates set by the
commissioner of administration. (c) Requires
participating school districts to reimburse the state
for procuring excess loss insurance if the state
provides insurance benefits to school district
employees under a policy of self-insurance. (d)
Requires participating school districts to reimburse,
over a period not to exceed 10 years, the department
of administration's cost of paying insurance claims by
school district employees for the first four months
school district employees are covered by a policy of
self-insurance provided by the state of Alaska. (e)
Allows a participating school district to require its
employees to pay some or all of the money that this
bill section would require the school district to pay
to the state. (f) Defines "school employee" and
"school employer" for purposes of the bill section.
Section 5 AS 14.40.170(b) Page 6, Line 1 through
Line 15
Allows the Board of Regents of the University of
Alaska to establish and maintain university
participation in a policy of group insurance, selected
by the State of Alaska, that provides medical
insurance for university employees.
Section 6 AS 39.30.090(a) Page 6, Line 16 through
Page 8, Line 30
Clarifies that when an employee of a participating
governmental unit is covered by a group insurance
policy obtained by the Department of Administration
the employee spouse and dependent children are also
covered.
Section 7 AS 39.30.090(b)(2) Page 8, Line 31
through Page 9, Line 3
Adds to the University of Alaska to the definition of
governmental unit applicable to section 6 of the bill.
Section 8 AS 39.30.090(b) Page 9, Line 4 through
Line 6
Add the definition of school district to AS 39.30.090,
which is amended by section 6 and 7 of the bill.
Section 9 AS 39.30.091 Page 9, Line 7 through Line
15
Authorizes the Department of Administration to provide
group medical care insurance coverage to school
district employees and employees of other governmental
unit by means of self-insurance.
Section 10 AS 39.30.091 Page 9, Line 16 through
Line 20
Requires the Department of Administration to procure
excess loss insurance in connection with providing
group medical insurance coverage to employees of
governmental units other than the state, and allows
the department to allocate the cost with the excess
loss insurance across all of those governmental units.
Section 11 The Uncodified law of the State of Alaska
Page 9, Line 21 through Line 25 Make sections 1- 8
and section 10 of the bill applicable to collective
bargaining agreements and other contracts that become
legally binding on or after the effective date of
those bill sections.
Section 12 The Uncodified law of the State of Alaska
Page 9, Line 26 through Page 10, Line 4
Require certain self-insured school districts to
transfer the closing balance of their self-funded
insurance reserve account soon after they enroll in a
health care plan administered by the state, and
requires that when transferred by a school district
these amounts will be applied to offset reimbursements
owed by that school district under AS 14.20.127(d), a
provision proposed in section 4 the bill.
Section 13 The Uncodified law of the State of Alaska
Page 10, Line 5 through Line 9
Authorizes the commissioner of administration to adopt
regulations necessary to implement the changes made by
the bill, to take effect on or after the effective
date of the changes made by the bill.
Section 14 The Uncodified law of the State of Alaska
Page 10, Line 10
Make sections 12 and 13 of the bill effective
immediately, subject to the restrictions set forth in
those bill sections.
Section 15 Page 10, Line 11
Makes the bill's provisions effective date July 1,
2024, except as provided in bill section 14.
4:53:17 PM
CHAIR TOBIN opened invited testimony on SB 110.
4:53:30 PM
SENATOR HUGHES asked to make a quick comment and said the
University of Alaska is not interested in participating. The
Department of Administration proposes needing three positions,
an investment of $300,000. However, if all the schools were to
join the pool, the savings could unofficially be $200 million.
She stated her belief that not all the districts are interested,
but the savings would be sizable and pay for the new positions.
4:54:21 PM
CHAIR TOBIN asked if the pool was open to other governmental
units, such as municipalities.
SENATOR HUGHES replied yes.
4:54:36 PM
LISA PARADY, Executive Director, Alaska Council of School
Administrators, Juneau, Alaska, said she regularly meets with
superintendents to discuss legislative matters and recently
sought their input on SB 110. She said there was substantial
interest in the proposed option.
Ms. Parady emphasized the Alaska Council of School
Administrators' position on the importance of providing health
insurance to employees for staff retention and recruitment. They
also encouraged solutions to address the state's long-term,
rising healthcare and health insurance costs, which SB 110 aims
to explore. The association supports various mechanisms to
decrease healthcare expenses, particularly for essential
workers, as controlling these costs would benefit the
recruitment and retention of effective educators and school
staff.
MS. PARADY provided context saying there was a survey conducted
in April of the previous year where 38 school districts
responded. Of these, 36 reported increases in healthcare costs
from FY 17 to FY 22 with many projecting further increases in FY
23. She cited examples of two rural districts. One experienced a
jump of 64.7 percent, while the other jumped 78.42 percent. She
also verified increases in places like Petersburg (15 percent
increase) and Haines (22 percent increase), demonstrating that
these cost challenges were not limited to remote districts.
4:58:29 PM
MS. PARDY highlighted that healthcare cost concerns were not
restricted to rural areas, pointing out a 10.8 percent increase
in Anchorage. She stressed the importance of addressing this
issue as it significantly impacts public education budgets and
diverts funds from classrooms to cover healthcare expenses. She
urged the committee to provide school districts with options to
address these rising costs so districts can direct needed
resources to classrooms.
4:59:58 PM
SENATOR KIEHL asked whether any Alaska school district maintains
a self-insurance pool.
5:00:46 PM
MS. PARDY replied some districts maintain pools and she would
provide the names of the districts to the committee.
5:00:56 PM
RANDY TRANI, Superintendent, Mat-Su Borough School District,
Palmer, Alaska, said there is a significant opportunity to
provide districts with an option or a chance to participate in a
healthcare mechanism that could result in substantial cost
savings. He pointed out that the Mat-Su Borough School
District's healthcare expenditure amounted to approximately $41
million, the largest expense after salaries. He further stated
that if the four unions hypothetically negotiate and take
advantage of the AlaskaCare option, there could be a potential
savings of about $5 million for the district and $2 million for
the employees, totaling approximately $7 million in savings. The
district's savings alone could potentially increase the base
student allocation (BSA) by $135 to $140. He stated that pooling
has been a priority for the board for the past three years and
has consistently been presented to the legislature. He
emphasized that the Mat-Su Borough School District strongly
supports this opportunity and would encourage other districts to
explore it as a viable possibility.
5:02:59 PM
SENATOR BJORKMAN asked how many lives are covered by the Mat-Su
Borough School District's plan.
MR. TRANI replied that there are approximately 2,400 employees
within all four unions. The lives covered would be more than
three times that amount.
SENATOR BJORKMAN inquired about the total cost of the plan per
employee.
MR. TRANI replied there are many bargaining units. The district
pays approximately $ 2,000 monthly for the largest bargaining
group, equating to $24,000 annually. The amount that employees
pay varies depending on which plan employees opt for. It ranges
from $ 4,000 to $ 6,000 per year for the district's largest
bargaining unit.
SENATOR BJORKMAN stated that there are often initiation costs
when a smaller pool of employees joins a larger pool. The
initiation costs cover risk reduction, stock loss, and
insurance. He asked whether the district anticipated an
initiation fee for joining AlaskaCare or whether the state would
absorb the cost.
MR. TRANI said he did not know the answer. The Mat-Su School
District supports SB 110 because it offers an option that has
not been available. Since the district does not have the option,
it has not spent resources examining the details of the option.
He stated there could be an initiation fee but he does not know
if SB 110 addresses it.
SENATOR BJORKMAN asked about the current total cost of the plan
per employee for AlaskaCare.
MR. TRANI offered his understanding that the cost for the state
is a little over $1,700 per month per employee. Employees may
add options. He added that he has heard that employee costs may
increase to $1,790 per month per employee.
5:05:35 PM
CHAIR TOBIN held SB 110 in committee.