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State personnel benefits account for roughly a quarter of personnel costs; governor proposes higher per-FTP health appropriation
Summary
LSO analysts told JFAC benefits typically represent about 25% of personnel costs. Health insurance is the largest single component; the governor recommended appropriating $14,300 per full-time position for FY2026 (LSO example used $13,960 as a 10% reserve target), a change the presentation said would cost roughly $56.6 million.
Frances Lippitt, budget and policy analyst with the Legislative Services Office, briefed JFAC on how employee benefits are budgeted and the role of the joint Change in Employee Compensation (CEC) process.
Lippitt said benefits accounted for about a quarter of personnel-cost expenditures statewide; health insurance is the largest line inside benefits and is budgeted via a per-FTP appropriation. Variable benefits (employer retirement, Social Security and Medicare, life insurance, workers' compensation, and an HR-fee allocation) are budgeted as a percentage of salary and currently sum to about 23% of salary for FY2025. She summarized PERSI employer rates the state currently budgets: 11.96% for general members, 14.65% for public-safety employees, and 13.47% for teachers.
On health insurance, Lippitt said the state carries a contractual minimum reserve of 10% of expected premiums. Using that minimum as a target produces a per-FTP appropriation of $13,960 for FY2026 in LSO’s example. The governor’s recommendation, Lippitt said, is $14,300 per FTP — an actuarial-based recommendation intended to cover plan costs in a higher percentile of outcomes — which Lippitt said would increase general-fund costs by about $56.6 million for the year.
She also explained the role of the CEC process: the joint Change in Employee Compensation committee evaluates DHR recommendations and public testimony on total compensation (salary structure, market-based adjustments, merit, and benefits) and then forwards compensation recommendations to JFAC for appropriation decisions.
Why it matters: benefit assumptions and the CEC decisions translate into large, recurring dollars in agency budgets. Members asked clarifying questions about reserve levels and the rationale for the governor’s per-FTP recommendation, and Lippitt explained the governor’s recommendation reflected an actuarial choice aiming to reduce reliance on reserves.
Ending: Lippitt offered to provide additional actuarial detail in follow-up briefings and to assist members as they review compensation and benefits proposals in working-group sessions.
