Legislature(2023 - 2024)BELTZ 105 (TSBldg)
04/12/2023 03:30 PM Senate EDUCATION
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| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing(s) | |
| SB110 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 110 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 110-SCHOOL/UNIVERSITY EMPLOYEE HEALTH INSUR
3:57:34 PM
CHAIR TOBIN reconvened the meeting and 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."
3:57:57 PM
SENATOR HUGHES, District M, Alaska State Legislature, Juneau,
Alaska, introduced Ms. Gonzalez as an intern working in her
office. She noted that Juneau School District Superintendent Ms.
Weiss, Association of Alaska School Boards Executive Director
Mr. Garrison, and Ketchikan Gateway Borough Mayor Mr. Dial were
unavailable to testify in person and submitted written testimony
in support of SB 110. She said there is a broad spectrum of
support across the state for SB 110.
SENATOR HUGHES explained that if SB 110 were to pass, it would
offer school districts the opportunity to consider joining the
state employee health insurance pool. In addition to being a
quality plan, it has the potential for significant cost savings.
As discussed in a previous hearing, the estimated cost for both
the employer and employee state health insurance plan is
approximately $20,000 per year. For Mat-Su, the combined cost
for employers and employees is $28,000 - $30,000 per year. This
is a cost differential of $8,000 - $10,000 per year.
Superintendents have expressed interest in the cost-saving
option that SB 110 could provide.
4:00:56 PM
ELWIN BLACKWELL, School Finance Manager, School Finance and
Facilities, Department of Education and Early Development
(DEED), Juneau, Alaska, provided an overview of the fiscal note
OMB 2804 for SB 110. He stated that the fiscal note for the
Department of Education indicated an indeterminate fiscal
impact. The fiscal note stated that there was uncertainty
regarding the number of districts that would choose to
participate in the program and the timeframe for their
participation. This uncertainty was because SB 110 made
participation contingent on ratification by the unions
representing teachers and other district members, and the timing
of such ratification was unknown.
4:02:06 PM
SARA PERMAN, State Government Relations Manager, University of
Alaska, Fairbanks, Alaska, provided an overview of SB 110 fiscal
note OMB 730. She said the university presented a zero fiscal
note because SB 110 made the proposed plan an option for the
university. She said the university had internally decided not
to take advantage of this option. She informed the committee
that in 2020, the university did a study in collaboration with
the Department of Retirement and Benefits and a consultant. The
study revealed that switching from the University of Alaska (UA)
Choice health plan to the AlaskaCare plan would cost the
university $9 - $16 million to implement. While it might lower
health insurance premiums, it would also eliminate the $600
wellness rebate provided to employees annually, as well as other
retirement benefits included in their current package.
4:03:43 PM
BETSY WOOD, Chief Health Administrator, Division of Retirement &
Benefits, Department of Administration, Juneau, Alaska, provided
the following overview of SB 110 fiscal note OMB 2152:
[Original punctuation provided.]
The Division also anticipates a fiscal impact to claim
and program costs for the AlaskaCare employee plan,
however that impact requires an actuarial analysis and
will be discussed in a separate fiscal note.
This bill would enable governmental units (school
districts, municipalities, the University of Alaska,
other political subdivisions, and the North Pacific
Fishery Management Council) to join in self-insured
group health insurance plans administered by the
Department of Administration for State employees. This
type of health coverage is currently provided to State
employees through the AlaskaCare health plans.
The Division will require three permanent employees,
two Retirement and Benefits Technician 2 positions and
one Retirement and Benefits Specialist 2
(personalservices) plus computer, phone, cubicle,
supplies (commodities) to provide billing and
accounts-receivable supportservices to manage
enrollment, eligibility, and employee premium and
employer contribution payments from participating
governmental units. These positions should begin in
mid FY2024.
The Division will incur costs related to required
system coding changes (both internal Division systems
and third-party contracted partners), contracted
actuarial consultants, and support from the Department
of Law for legal and regulatory review (services).
These costs are anticipated to largely accrue during
the first two fiscal years, however some consulting
services will be ongoing.
The Department would need to promulgate regulations as
a result of the passage of this bill. These
regulations should be in place by the effective date
of the bill (July 1, 2024), as they will articulate
the process and protocol for governmental units
seeking to join the AlaskaCare employee health plan.
4:05:44 PM
SENATOR KIEHL asked Ms. Wood to clarify the assumptions the
department used to formulate the fiscal note. Specifically, he
inquired about the department's estimates regarding the number
of additional covered lives that might result from the proposed
changes. He provided an example, suggesting that if every school
district and municipality were to participate, it would likely
be unmanageable with only three people. He sought information on
the working assumptions used in the fiscal note's estimation.
4:06:17 PM
MS. WOOD replied that it was unlikely that three people could
handle the workload if every eligible group joined. However,
since SB 110 made participation voluntary, the department
assumed that not every group would choose to join. She mentioned
that several groups expressed disinterest. Therefore, the
department anticipated a slower uptake, which it believed could
be managed with three staff members. She said the department was
looking at groups joining that consist of approximately 3,000 to
4,000 additional covered lives. This approach aimed to establish
systems with a single new employer or group rather than with
each individual new enrollee.
4:07:14 PM
SENATOR KIEHL stated that her response provided an order of
magnitude.
4:07:21 PM
CHAIR TOBIN announced invited testimony on SB 110.
4:07:36 PM
KATHY LEARY, City Administrator, Gustavus, Alaska, expressed
support for SB 110 because it would provide smaller
municipalities with more options for healthcare benefits. She
explained that currently, the city could only afford to offer
health insurance for employees. She mentioned the desire to
attract and retain employees by expanding healthcare to
employees families, as some opt out due to more affordable
insurance options elsewhere. She cited an example of losing a
city clerk to an organization with better benefits.
Ms. Leary also mentioned concerns about potential regulations
that might exclude small cities like hers from participation,
specifically addressing minimum threshold requirements. She
believed that being part of a larger pool would result in cost
savings for both the school district and the city. Additionally,
she advocated for the state to invest in a few positions to
manage enrollment.
4:11:17 PM
SENATOR KIEHL asked how much Gustavus pays for city employee
insurance.
4:11:38 PM
MS. LEARY mentioned that the city paid approximately $800 per
month for insurance. She acknowledged that the state plan had
similar costs, but Gustavus employees were responsible for 20
percent of the benefit's cost. She expressed hope that with a
larger pool, this expense might become more feasible, and there
could be potential cost reductions. Ms. Leary stated her belief
that the city might be able to cover both employees and their
families if costs were less than the current option of $28,000
per year.
4:12:18 PM
SENATOR KIEHL asked whether the insurance policy met health care
law standards or if it was a catastrophic plan.
MS. LEARY replied that she thinks the policy meets health care
law, however the city has so few employees that it is exempt
from compliance. Gustavus purchased the plan it could afford
through Alaska Public Entity Insurance (APEI). Some employees
have expressed a preference for a stipend. The employees are
part-time, and their earnings are low enough that they would
qualify for better insurance through the Affordable Care Act
(ACA). However, they cannot purchase through ACA when they have
a plan through the city.
4:13:43 PM
CLAYTON HOLLAND, Superintendent, Kenai Peninsula Borough School
District, Soldotna, Alaska, stated that healthcare costs in
Alaska are the highest in the nation, reaching about five times
the national average. Alaskans spend the most per resident, have
the highest insurance premiums, and have seen overall spending
grow much faster than the rest of the US. Alaskan's have spent
more out-of-pocket dollars on healthcare costs than any other
state. Escalating healthcare costs affect the paychecks of
employees and strain the district's overall budget. It hinders
the recruitment of new staff and the retention of existing
school personnel in Kenai and across Alaska. For Fiscal Year
2024, the Kenai Peninsula rural school district allocated $22
million for healthcare, which constituted approximately 16
percent of its total general fund budget.
MR. HOLLAND emphasized the importance of the opportunity to join
a healthcare plan with a large pool of employees, not only for
the Kenai Peninsula Borough School District but also for other
school districts in Alaska.
4:15:41 PM
DAN POLTA, Superintendent, Denali School District, Healy,
Alaska, expressed his support and urged the legislature to pass
SB 110. He highlighted that the cost of providing adequate
healthcare coverage for teachers and support staff was a
significant financial burden for school districts. Specifically,
the Denali school district allocated approximately 12 percent of
its annual budget to cover health insurance expenses. He
emphasized the importance of taking measures to reduce these
costs to allow school districts to allocate more funding towards
the essential task of educating children.
MR. POLTA emphasized the importance of robust health insurance
in retaining and attracting high-quality educators for Alaska's
students. He also stressed the benefits of limiting healthcare
insurance costs for employees. In Denali and other districts,
teachers pay a percentage share of their health care premiums.
Lower premiums would mean that more of a teacher's salary
remained with them and their families. He advocated for the
passage of SB 110, as it would offer districts more choices for
employee coverage, enabling the Denali Borough School District
to make efficient and effective decisions regarding healthcare
coverage.
4:17:28 PM
CHAIR TOBIN opened public testimony on SB 110; finding none, she
closed public testimony.
4:18:08 PM
CHAIR TOBIN held SB 110 in committee.