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State employee and public‑school health plans project multi‑million deficits, officials tell committee
Summary
EBD officials told the Senate committee that the state employee and public school health plans face projected deficits in 2021 and 2022, prompting use of prior surpluses and reserves and the need for legislative consideration of longer‑term funding options.
State officials and actuaries briefed the Insurance & Commerce committee on the financial condition of Arkansas’ two large public plans — the State Employee Account (ASC) and the Public School Employee Account (PSC).
Amy Fettcher, secretary of transformation and shared services, and Courtney White of Milliman described five budget levers available to manage plan costs: state and school district funding, employee and retiree contributions, plan design, EBD initiatives and reserves. White said the board applied prior surpluses to help 2020 results and provided the committee with projections that use the most recent 12 months of pharmacy data and pre‑pandemic medical claims to estimate 2021 and 2022 experience.
Courtney White reported the board applied about $25.1 million in prior surpluses for 2020; after adjustments ASC’s net position was roughly break‑even (about $500,000). Unallocated assets were listed at about $8.9 million. Without prior funding, the 2020 outturn would have shown a larger deficit. For 2021 the ASC was projected to face a multi‑million shortfall even after board actions; the presentation showed a remaining projected loss of about $5 million after applying an additional $14 million in funding from reserves and adjustments.
For the PSC the briefing noted more acute pressure: unallocated assets were quoted at $2.1 million and a 2021 projected deficit of roughly $27.2 million. White said the PSC’s medical trend was higher than ASC’s and required deeper attention.
Officials emphasized assumptions underlying projections — membership and trend rates (the presentation used about a 5% medical trend and 8% pharmacy trend) — and cautioned that COVID‑era claims patterns complicate forecasting. They told the committee they will continue to evaluate plan levers and that legislative cooperation may be needed to resolve structural funding gaps.
The committee thanked officials and indicated further review in session; auditors and committee staff will be expected to provide more detailed breakdowns upon request.
