Lawmakers debate employee health insurance increase and reserve levels; neither proposal wins required cross‑chamber majority

The Joint Finance‑Appropriations Committee spent significant time on statewide personnel benefit costs, particularly the base appropriation for employee health insurance for eligible full‑time positions in FY2026.

Analysts explained two competing recommendations: the Economic Outlook/CEC committee recommended setting the baseline at $13,960 per eligible FTE (a $960 increase over the current base), producing an estimated general‑fund impact included in the committee packet; the governor’s recommendation raised the baseline to $14,300 per eligible FTE (a $1,300 increase). Committee staff said the CEC number would reduce the fund balance to the statutory 10% contingency threshold while the governor’s recommendation would leave an approximately $10 million cushion above that minimum according to Milliman projections.

Representative Miller moved to adopt the governor’s $14,300 recommendation; Representative Furness offered a substitute motion to adopt the CEC recommendation of $13,960. Committee discussion focused heavily on reserve levels, actuarial risk and contract terms: Division of Financial Management Administrator Laurie Wolf and Faith Knowlton, administrator for the Office of Group Insurance, explained that falling below the 10% contingency reserve could expose the state to risk charges under contract and that Milliman projections show a roughly 50% chance of reaching or falling below the 10% threshold depending on the funding choice.

Representative Furness and other members argued the CEC recommendation targeted excess reserves and would limit the amount of cash accumulated beyond likely needs; other members argued that the governor’s recommendation provided necessary cushion for unanticipated large claims and avoided the risk of violating contractual contingency requirements.

The substitute motion to adopt the CEC recommendation received 9 ayes and 11 nays overall and failed to meet the dual‑chamber majority requirement. The original motion for the governor’s $14,300 recommendation failed to garner the necessary majority in the Senate (the combined grand total reported 13 ayes, 7 nays), so it also failed under the committee’s requirement that a measure have majorities in both the House and Senate to move forward. Committee members and staff said the issue would be revisited later; no change to the employee health insurance baseline was adopted at the session.

Key factual points in the discussion included: the Milliman actuarial report projections presented to the committee; the current reserve balance figures cited in committee debate (a committee member referenced an $80,491,337 reserve balance); and testimony from the Division of Financial Management and Office of Group Insurance about the contractual minimums and the possibility of a risk charge if the contingency reserve were insufficient.