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Benefits account for roughly one-quarter of personnel costs; health premium funding and PERSI highlighted
Summary
Budget analysts briefed JFAC on the state's employee benefits package, noting benefits account for about 26.6% of personnel spending; the governor's health-insurance appropriation recommendation is more conservative than actuaries' reserve-draw projections and PERSI employer rates were summarized.
"Benefits generally account for about a quarter of the state's overall personal cost expenditures. In fiscal year 2024, 26.6 percent of personnel cost expenditures were for benefits." (Frances Lippitt, Legislative Services Office)
Legislative Services Office staff explained to JFAC how employee benefits are budgeted and how those costs feed into the state personnel budget. The benefits package discussed includes health and dental insurance, the PERSI retirement plan, Social Security and Medicare, life insurance, and workers' compensation. LSO staff said benefits typically represent about 25% to 27% of total personnel costs and that health insurance is the largest single component.
How benefits are budgeted: health insurance is appropriated as a per-full-time-position (per-FTP) line in the budget, including the premium, a "sweep" for employees who decline coverage, and a reserve to ensure the plan carries a minimum balance (LSO noted a contractual minimum reserve equal to 10% of expected premiums). For FY2026 LSO said a per-FTP figure of $13,960 would meet the 10% reserve target, while the governor's recommended appropriation of about $14,300 per FTP reflects an actuarial level intended to cover plan costs in 90% of scenarios; the difference was roughly $56.6 million in the presentation.
PERSI and variable benefits: the presentation summarized employer contribution rates to PERSI (the states pension plan): 11.96% for general members, 14.65% for public-safety employees and 13.47% for teachers (figures presented as current employer rates). LSO said variable benefits (PERSI plus Social Security/Medicare, life insurance, etc.) are currently budgeted at about 23% of wages.
Process and committee role: Lippitt reminded members that compensation policy and benefit decisions are the subject of the Change in Employee Compensation (CEC) committee, which takes testimony and makes recommendations that JFAC can incorporate when setting appropriation levels. She also noted that some benefits-related payouts (for example, terminal leave payouts) are not budgeted as ongoing appropriations and must be absorbed by an agency's existing budget when they occur.
Ending: The committee received the briefing and had no immediate votes on benefit appropriations; staff said CEC recommendations and agency presentations will provide additional context for JFAC's program-maintenance decisions.
