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Utah Senate advances bill to index Employers Reinsurance Fund, drawing debate over employer costs
Summary
The Utah Senate advanced Senate Bill 13 to index the Employers Reinsurance Fund's $5 million reserve to preserve purchasing power, with sponsors citing a 1989 actuarial recommendation and opponents warning of higher employer premiums; the measure passed in the Senate 25-0 with four absent.
Senators on the floor voted to advance Senate Bill 13, a measure to index the Employers Reinsurance Fund's $5,000,000 cash reserve so the fund retains its purchasing power as the economy and payrolls change. The sponsor, Senator Tempest, told colleagues that the 1989 actuarial study recommended indexing and "this would allow the fund to retain its intended financial position relative to changes in the economy."
Proponents said indexing simply preserves the fund's ability to meet obligations over time as inflation and workforce growth affect costs. Senator McAllister said lawmakers and stakeholders "all seem to agree that $5,000,000 is needed now" and that indexing would maintain the fund's purchasing power rather than let it erode.
Opponents pressed the sponsor and witnesses on whether indexing would raise employer contributions and by how much. Senators noted the bill's short-term effect: the sponsor and staff described a built-in formula that could cause a one-quarter of one percent (0.25%) premium increase in the coming year as the indexing mechanism begins to take effect. Senate discussion included staff estimates that roughly "1% amounted to about a million dollars," so a quarter-percent change would amount to about $250,000 in fund receipts, and a fiscal note example that the state as an employer would pay roughly $10,000 under the immediate change.
Supporters emphasized safeguards. The sponsor and witnesses said the indexing authority would operate within an existing statutory band that allows the percentage charged into the fund to be set between 1% and 8% and that actuarial determinations and a rulemaking process would guide year-to-year changes. They also said legislative oversight remains because rule changes would occur through open processes and an oversight committee.
Senators also raised risks beyond dollar amounts: business representatives feared that a growing fund balance could attract pressure to use the reserve for other purposes; supporters replied the bill does not change the fund's intended purpose and that indexing is an inflation-protection measure recommended by actuaries.
After debate and a brief committee of the whole, the Senate recorded the vote: Senate Bill 13 passed the Senate with 25 ayes, no nays and 4 absent. The bill was placed on the third-reading calendar for final consideration.
