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Committee adopts LFC recommendation for Public School Insurance Authority as risk fund faces projected deficit
Summary
The committee adopted the LFC recommendation for the Public School Insurance Authority after the agency reported a projected negative risk fund balance (~$26.3M) and outlined plan-design and premium changes including reference-based pricing estimated to save about $16 million.
The Public School Insurance Authority (NPSIA) told HAFC subcommittee D that it projects a negative ending fund balance of about $26.3 million for FY26 and is pursuing premium and plan-design changes to stabilize the fund.
Simon Miller (DFA analyst) and Director Patrick Sandoval outlined differences between the executive and LFC budget recommendations and said both recommendations fully fund the authority’s request for health benefit spending with small differences in transfers to program support. Miller noted the executive included a $30 million one-time infusion into the authority’s risk fund; the LFC recommendation treats the infusion differently in its presentation.
Sandoval described the authority’s recent plan-design and premium moves: NPSIA passed a 16% premium increase in FY26 and projects a similar increase for FY27; the authority also implemented changes to deductibles and plan options designed to encourage in-network care and estimated plan-design savings of about $6 million for FY26 and $12.8 million for the same period in internal estimates.
The authority has begun piloting a risk premium credit program tied to compliance with House Bill 128 (school personnel background training), and is implementing reference-based pricing in counties with populations over 125,000 (four counties) to limit hospital reimbursement and reduce claims costs. Sandoval said reference-based pricing was estimated to generate approximately $16 million in savings and includes a no-balance-billing provision to protect members.
Vice Chair Silva moved to adopt the LFC recommendation for NPSIA; Representative Herrera seconded. The committee recorded no opposition and the motion passed.
