Senate hearing on Bill 297 probes solvency, reserve rules for municipal risk pools

Senate Bill 297, sponsored by Sen. Sharon Carson, drew hours of testimony at a joint hearing of the Senate Finance Committee and the Senate Election Law and Municipal Affairs Committee on changes to the state's rules for pooled risk management programs and how shortfalls would be addressed.

Carson opened the hearing by introducing the measure: “For the record, my name is Sharon Carson ... I have for your consideration this afternoon, senate bill 297, which is relative to pool risk management program,” and said the bill was filed at the request of the Secretary of State after regulators identified “financial and operational issues potentially challenging the solvency of some of the risk pools operating in New Hampshire.”

The bill would add statutory minimum and maximum contingency-reserve corridors for pools, formalize an emergency assessment authority that can be used to replenish reserves quickly, clarify several definitions, and require certain disclosures. Supporters said the changes are designed to prevent insolvencies that could ultimately leave public employers and taxpayers on the hook for unpaid claims; opponents said the measures risk shifting liability to municipalities and school districts and impose an impractical short timetable for assessments.

Why this matters: Pooled risk programs are member-owned organizations through which political subdivisions jointly self-insure for health, property, casualty and workers' compensation coverages. Witnesses told the committees that some pools have carried sustained deficits, and that past cases required returning surplus funds to members. Secretary of State David Scanlon read the statutory authority he says gives his office oversight responsibilities under RSA 5-B: “The secretary of state shall have all powers specifically granted or reasonably implied in order to perform the substantive responsibilities imposed by this chapter,” he said, and added that the role “is a role that is given to me by virtue of holding the position of secretary of state. It is a role because of that that I take seriously.”

Actuarial testimony and projected impacts: Hua Li, an actuary working with the Bureau of Securities Regulation, summarized financial reviews of the largest pools and the bill's mechanics. Li testified that several pools have repeatedly charged contributions below actuarial recommendations and that, as a result, at least one large health pool has been losing about “2 and a half million dollars per month” and could be reduced to days of cash on hand without corrective action. He described the bill's two primary tools: (1) emergency assessments to restore a shortfall quickly (the statute text references a short-term trigger equivalent to about 4% of annual payments) and (2) a longer-term corridor that sets minimum and maximum contingency-reserve targets to be measured at specified fiscal checkpoints. Li told the committees that the corridor provision is designed to take effect on a delayed timetable so that contribution impacts would be phased in (his testimony described remediation measured at the end of 2026 with contribution effects appearing in 2028).

Positions from the pools and local governments: Representatives of the state's pooled programs gave varied responses. SchoolCare said it was neutral and believes its finances already conform to the proposed corridor. Primex, the property/casualty pool, said an amended version of the bill addressed its principal concerns and said it was “willing to give amended senate bill 297 a try,” testimony from CEO Ty Gagne said. HealthTrust, the largest public-health pool, opposed the bill in its current form; executive director Scott Duroch testified that Milliman, HealthTrust’s actuary, recommended a contingency reserve between $95 million and $150 million (he said current contributions are about $470,000,000 for FY2024) and warned a 12–16% cap in statute would undercapitalized HealthTrust by “nearly $20,000,000” compared with Milliman's lower bound. New Hampshire Interlocal Trust (NHIT) and several municipal and school leaders urged more deliberation and warned that statutory assessment deadlines and one-time replenishments could be impractical for local budgets.

Process, oversight and regulatory questions: Several witnesses asked for more stakeholder engagement and time to reconcile actuarial assumptions. Insurance Commissioner D.J. Bettencourt told the committees the Insurance Department has a financial-regulation unit and actuarial staff and said the department could take on oversight responsibilities if the Legislature chose to shift regulation: “If you decide to consider whether or not the insurance department is the better place to park this, particular issue … we have that expertise,” he said. Committee members asked the Secretary of State and the Insurance Department to consult further with the attorney general and stakeholders on legal and implementation questions.

Dissent and support: Public-safety unions and firefighters' representatives supported the bill as a means of protecting benefits and preventing insolvencies, while many municipal, county and school officials opposed the bill as drafted, citing the 30-day assessment window and the risk of unbudgeted charges. School and municipal administrators described the practical difficulty of absorbing midyear assessments tied to prior fiscal-year losses.

Next steps: No committee vote was taken at the hearing. Committee members asked the Secretary of State to consult the Attorney General’s Office about whether current corporate structures of some pooled entities shield members from liability, and they asked the Insurance Department to evaluate how statutory or regulatory changes might interact with existing insurance law. Sponsors and stakeholders signaled interest in further amendments and in additional actuarial review before advancing the bill.

Ending note: The hearing drew extensive testimony from state regulators, actuaries, pooled-risk program leaders and municipal officials, highlighting a tension between near-term emergency tools to avert insolvency and longer-term policy choices about how much risk local governments should retain versus how much pools should be permitted to hold in reserve.