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Staff reviews state employee benefits: health insurance appropriation, PERSI employer rates and budget impact
Summary
An LSO analyst summarized how benefits are budgeted — health insurance appropriations per full‑time position, the PERSI employer contribution rates, and how benefits compose roughly a quarter of personnel costs — noting the governor’s recommended health‑insurance appropriation per FTP and the fiscal effect.
Frances Lippitt, budget and policy analyst with the Legislative Services Office, briefed the committee on how employee benefits are budgeted and how they affect agency personnel costs.
Lippitt said benefits — which include health and dental insurance, PERSI retirement contributions, Social Security and Medicare, life insurance, and workers’ compensation — account for roughly one quarter of state personnel expenditures. Health insurance is budgeted per full‑time position (FTP). The LSO staff recommended an appropriation assumption for FY2026 of $13,960 per FTP based on a 10% minimum reserve target, while the governor’s recommendation used a more conservative actuarial assumption of $14,300 per FTP to cover plan costs at a 90% confidence level; Lippitt said that governor‑recommended change would cost about $56.6 million statewide.
On retirement costs, Lippitt summarized employer contribution rates used for budgeting: 11.96% for general PERSI members, 14.65% for public‑safety employees and 13.47% for teachers, noting PERSI employer contributions represented a significant variable benefit cost in the statewide budget.
Lippitt also explained how variable benefits are calculated as percentages of salaries and that lower‑paid employees have a higher benefits‑to‑salary ratio; she provided examples showing the different effective benefit load percentages at different hourly wage levels.
Why it matters: changes in health‑insurance assumptions or PERSI rates directly affect the program‑maintenance cost base and the general‑fund obligation for FY2026.
Next steps: the committee will consider compensation and benefits recommendations through the Change in Employee Compensation process and the CEC committee’s recommendations, and staff said the LSO will provide detailed fund‑level cost pages when agencies testify.
