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State bill on municipal risk pools alarms Brentwood budget committee; Rep. Eric Tura briefs members
Summary
State bill SB 297 would impose capitalization tests and assessment powers on municipal risk pools; Representative Eric Tura told BrentwoodBudget Committee members the measure is in flux and could require towns to provide unexpected cash assessments or create capital reserves.
Representative Eric Tura, a state representative who attended the Brentwood Budget Committee meeting, briefed members on SB 297 and its potential effects on municipal health and liability risk pools.
Tura said the bill, introduced at the request of the Secretary of Stateand approved unanimously in the Senate, would set warning and actionable liquidity thresholds for risk pools and give the state office new powers to require increased capitalization or place a pool into receivership. He said initial draft language would have allowed "assessments" on member towns within 30 days and would have required towns to establish a capital reserve equal to about 4 percent of a pools liabilities; an amendment circulated by the Secretary of States office reportedly removes the mandate to create a reserve but permits creating one.
Tura and others at the House Commerce hearing said the measure grew out of concern after an interlocal pool declared it could not cover claims and planned to close. He said the states proposed standards treat the pools more like insurers, requiring tests of liquidity and new capitalization rules, and that the change could produce sudden, unbudgeted assessments for member municipalities.
Committee members said Brentwood participates in HealthTrust and other pooled arrangements and asked how quickly a change could affect town budgets. Tura said the current bill sets a 60-day effective period after passage and that an assessment regime or an insurer withdrawing from the state market could create gaps for the town and the school district, which uses a July-to-July plan.
Tura described differences of view among risk pools: larger pools such as HealthTrust warned they might leave the New Hampshire market if the bill passed as originally drafted; other pools said they supported the change. He also quoted municipal experience that private-market coverage often costs more than pooled solutions for many towns, though he warned that existing pools have not been subject to insurance-style capital and reinsurance requirements.
Committee members and attendees asked whether Brentwood or the SAU should start soliciting commercial insurance quotes. Tura said obtaining broker quotes is feasible at any time but cautioned that private coverage often costs more and that the larger co-ops covering schools can complicate buying arrangements. He committed to watch the House Commerce work session and to send status updates to the committee.
The meeting included questions about clarity of statements from the Secretary of State and HealthTrust; Tura said both could be true at once: HealthTrust may be rebuilding capital after a COVID-related claim surge, yet still fall short of the Secretary of States proposed thresholds.
No formal recommendation or vote was taken by the Budget Committee on SB 297 during the meeting. Tura told the committee he had heard the Municipal Association was likely to oppose the bill in its current form.
Ending: Committee members said they appreciated the briefing and asked to be notified of developments so they could factor any new obligations into the town and school budget processes.
