JFAC stalls on health insurance and employee compensation after contested debate on reserves and merit pay

A series of contested votes on health insurance funding and broader employee compensation left Idaho’s Joint Finance‑Appropriations Committee without a bicameral majority for either option Friday, and committee leaders withdrew competing compensation motions so staff can revise and return with full numbers.

The first contested issue was the health insurance base used to set employer contributions per eligible full‑time position. Division Manager Keith Bybee presented two alternatives: the Change in Employee Compensation (CEC) committee recommendation, which would set the FY2026 health‑insurance base at $13,960 per eligible position (a $960 increase over the current base), and the governor’s recommendation, which would set the base at $14,300 per eligible position (a $1,300 increase). Bybee told the committee the difference affects both the plan reserve and the dollar amount request; the governor’s number would leave an estimated $10 million more cushion in fund reserves compared with the CEC recommendation.

Bybee summarized the actuary’s projection: “The current projections from the Milliman report suggest … with the CEC recommendation … it would pull the reserve balance down to, effectively, the statutory minimum of 10% of the total plan amount. … That’s the projection. And the total cost of the plan in fiscal year 2026 is projected to be $482,000,000.”

Committee members pressed staff on the consequences of falling below the 10% contingency reserve. Laurie Wolf, administrator for the Division of Financial Management, said the 10% contingency is a contractual floor and that “it is actually, a contractual obligation that we stay within that 10% minimum.” Office of Group Insurance administrator Faith Knowlton said a risk charge could be assessed if the state falls below 10%, and that the charge would depend on how far below the floor the reserve falls: “If we fall below the 10% contingency reserve, then a risk charge can be assessed to the state.”

The fiscal impacts in the motions before the committee were specific. The CEC motion (moved by Representative Furness) would have increased costs by $29,996,000 from the General Fund, $7,179,000 from dedicated funds and $3,086,200 from federal funds for a total of $40,261,200. The governor’s proposal (moved earlier by Representative Miller) totaled about $56,315,200 across funds (with roughly $42,076,600 from the General Fund in the motion as stated on the floor).

After debate, the substitute motion to adopt the CEC‑recommended $13,960 base failed on a combined roll call (Senate 6 yes / 4 no; House 3 yes / 7 no — combined 9 yes / 11 no). The later original motion for the $14,300 governor baseline also failed because it did not carry a majority in both chambers (Senate 4 yes / 6 no; House 9 yes / 1 no — combined 13 yes / 7 no). Committee leadership said the committee will revisit the health‑insurance decision at a later meeting.

Lawmakers and staff also debated broader change‑in‑employee‑compensation (CEC) package language. Representative Furness presented the CEC committee’s compensation package — an across‑the‑board $1.55 per hour increase for permanent employees (the motion included specific market and targeted adjustments for Idaho State Police trooper pay, nursing/healthcare workers, and IT/engineering classifications) — and Senator Cook proposed an alternate motion (an increase of $1.55 per hour or 4%, whichever is higher, plus the targeted market adjustments). Both competing compensation motions were vigorously debated but ultimately withdrawn by unanimous consent so staff could reformat numbers and provide updated ballots. Committee leaders said they would bring finalized compensation language back at a subsequent meeting rather than proceed without complete, vetted figures.

Speakers on both sides emphasized different priorities: some lawmakers argued limiting the premium increase preserves the insurance reserve and avoids large future spikes, while others stressed that low‑paid employees need a meaningful raise now and that pay decisions should reflect cost‑of‑living and market competitiveness.

Representative Furness urged restraint on premium funding and noted the sizable reserve, saying, “If you have too much money in the reserve account, the federal government actually comes in and asks you to remit some of that back.” Representative Miller and other supporters of the higher governor baseline emphasized the contractual risks and the value of preserving a cushion against unexpectedly large claims.

Because neither health insurance motion earned the committee’s dual‑house majorities and compensation proposals were withdrawn for rework, staff will return to the committee with revised language and numbers.