Joint finance committee approves higher health‑insurance funding; statewide pay plans for state employees remain unresolved

The Joint Finance‑Appropriations Committee on Jan. 31 voted to raise the appropriation for state employee health insurance to $14,130 per eligible full‑time equivalent (FTE) for fiscal year 2026, but the committee failed to adopt any of four competing statewide pay proposals for employee compensation and left that decision for a later date.

The committee’s health‑insurance decision — moved by Senator Chris Woodward, seconded by Representative Tanner — set funding for employer health benefits at $14,130 per eligible FTE and included related variable agency adjustments. Committee staff told members the change results in a combined increase of $48,397,200 across fund types. Mr. Jake Bybee, the committee analyst, described the three dollar options the committee considered and the related reserve projections: "the projections with the amended substitute motion ... the projected reserve balance for fiscal year 2026, the ending balance is $51,600,000 for the governor's recommendation at 14,300, the projected ending reserve balance is at $61,400,000" and the midpoint motion at $14,130 was presented as the compromise option.

Why it matters: the health‑insurance line is the single largest element of the personnel benefit adjustments on the committee’s agenda. Committee members repeatedly cited the size of the plan reserve and actuarial projections when debating whether to buy down premiums or to reflect "the actual cost of insurance," as Senator Ward Engelking put it during discussion.

What the committee did: the roll call returned a majority in both chambers sitting on the joint committee. The chair announced the combined result as "17 ayes, 0 nays, 3 absent and excused," and the motion carried with a due‑pass recommendation.

CEC proposals left unresolved: the committee spent most of the hearing on four competing approaches to Change in Employee Compensation (CEC), ranging from a flat $1.55 per hour across the pay scale to merit‑based increases up to 4 or 5 percent and hybrids that combine the two approaches. Representative Miller introduced a dollar‑floor motion that would allocate the $1.55/hour across state employees and included specified increases for community colleges, public schools and certain pay‑schedule adjustments. Senator Cook offered a substitute focused on merit with up to a 4 percent increase for staff, and Senator Wintrow later presented the governor’s 5 percent merit recommendation.

Multiple votes and procedural rulings: the committee repeatedly voted on and rejected substitute and original motions over the course of the hearing. Representative Furness moved a CEC substitute motion that included a $1.55/hour floor plus a minimum 3 percent for higher wages; that substitute failed in a roll call after members adjusted votes. Senator Cook’s merit‑based motion also failed to secure the House committee majority when called. Later attempts, including the governor’s motion and other substitutes, likewise failed to obtain the separate majorities required under the committee’s joint voting letter. The chair ruled that a majority of each chamber’s committee delegation was required under the adopted voting procedure; members disputed the interpretation during the hearing.

Numbers discussed: committee staff summarized totals for the four CEC options. For example, one dollar‑floor motion was described as totaling $177,429,000 (including $128,354,900 from the general fund), while a variant that included additional merit funding was described in committee discussion as totaling about $180,312,100. Representative Furness’s substitute was presented as totaling $178,040,500 in committee comments; committee staff repeatedly cautioned members that the statewide calculations are complex and that on‑the‑fly edits risk errors.

Claims and context from the hearing: several members questioned actuarial projections and reserve balances. Representative Furness criticized the conservatism of the actuarial vendor, saying their projections have "consistently been, too conservative" and urged a lower funding assumption. Senator Ward Engelking argued that the committee should reflect actual insurance costs rather than using reserves to buy premiums down, saying, "This reflects the actual cost of insurance." Senator Cook and others argued for merit‑based distribution to reward higher performers; opponents warned that purely merit‑based or purely flat raises each have downsides for retention and equity.

Next steps: the committee chair said the CEC proposals are "too complex to calculate on the fly" and announced the committee will return to the items at a future date. Agencies scheduled to appear were excused and will be rescheduled. The hearing adjourned with staff instructed to rework the competing motions for future consideration.

Ending: the committee advanced the health‑insurance funding level to $14,130 for FY2026 but deferred final decisions on employee compensation. Members and staff said they will reconvene with clarified motions and corrected calculations before any CEC plan is recommended to the full legislature.