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State bill on municipal risk pools could force short‑notice assessments, towns warned
Summary
A recently introduced state bill (SB 297) would give state overseers new authority over municipal risk pools, including rapid assessments and receivership, a state representative told Brentwood officials — a change towns say could create sudden, unbudgeted costs for local governments and school districts.
Representative Eric (state representative) briefed Brentwood’s Budget Committee on SB 297, a proposal he said was drafted at the Secretary of State’s office and would change how municipal pooled risk-management programs operate.
He told the committee the bill would set liquidity thresholds for risk pools and allow state action — including orders to increase capitalization, assessments of member towns, or placing a pool into receivership — if those thresholds are breached. “One of the things they can do is ask the municipalities, within 30 days, to produce additional resources that are not budgeted for,” Representative Eric said.
The committee heard that the bill grew out of concern after a smaller interlocal pool recently announced it could not cover its obligations. Representative Eric said the bill’s original language included a possible municipal requirement to create a capital reserve equal to 4% of a municipality’s total exposure; that mandate was described as likely to be withdrawn by a committee amendment but to remain an option the bill would enable.
Why it matters: Brentwood and local school districts currently obtain health and liability coverage through risk pools such as HealthTrust and PrimeX. Committee members and the school representative said a requirement to build capital reserves or accept rapid assessments could force towns to find hundreds of thousands of dollars mid‑budget year.
Committee members asked whether HealthTrust — the state’s largest municipal health risk pool and Brentwood’s current provider — was actually insolvent. Representative Eric said HealthTrust’s reserves dipped after a post‑COVID surge in claims but that HealthTrust has said publicly it is recovering. “Both things can be true,” he said: HealthTrust may be rebuilding reserves while still falling short of the secretary of state’s proposed thresholds.
Representative Eric and committee members discussed options: ask the state legislature to amend the bill; encourage the municipal association to oppose the bill in its current form; and have Brentwood staff investigate commercial insurance alternatives in case a municipal pool exits the market. Representative Eric said he would monitor the House Commerce work session and send updates to the committee.
The committee recorded two practical concerns: the bill’s effective date provision would make any changes applicable quickly if enacted (the draft said 60 days after passage), and SB 297’s enforcement language was written to allow retroactive assessments that could reach six figures for small towns depending on the pool’s shortfall.
Ending: Representative Eric said the municipal association and some pool administrators were already discussing the bill with House Commerce. He urged the committee to stay engaged and said he would share committee work‑session materials as they become available.
