Analysts flag insurance claims and fund reserves in State Treasurer’s FY27 allowance
Loading...
Summary
Department of Legislative Services told the Education Subcommittee that two-thirds of the State Treasurer’s budget is reimbursable funds for the state self-insurance program and recommended further analysis of catastrophic insurance options after balances fell below actuarial targets; the treasurer agreed to follow up on audit questions.
The Department of Legislative Services briefed the Education, Business and Administration Subcommittee on the State Treasurer’s fiscal 2027 allowance, highlighting that roughly two-thirds of the treasurer’s budget is reimbursable funds tied to the state self‑insured insurance program and that insurance premiums are the largest driver of the FY27 increase.
DLS analyst said the treasurer’s budget shows about a $6.5 million projected increase for insurance coverage premiums in FY27 and that FY26 included roughly $7 million in one‑time major IT costs that make the prior year appear elevated. The analyst noted key actuarial signals: some insurance account balances have been below actuarially recommended levels since 2021 and real/property lines in particular showed low or negative balances in recent years.
Why it matters: state agency premiums fund the insurance trust and shortfalls or increased claims shift costs back into the broader state budget. DLS recommended the treasurer analyze whether purchasing private catastrophic insurance or other risk‑transfer tools could reduce fiscal exposure. The analyst also noted the treasurer administers the state’s 529 college savings programs, which are included in the office’s budget and are seeing increased digital outreach.
State Treasurer response: the official representing the Treasurer’s Office told the committee that the office concurs with the recommendation to concur with the governor’s allowance for FY27. He described risk‑management work the office performs — safety inspections, agency support and coordination around weather events — and said parametric insurance and catastrophe bonds are options but carry substantial costs and policy tradeoffs, including potential additions to state debt. "If we were directed to do so, we certainly would," the treasurer said, but added, "at this point in time, we think the cost outweighs the benefits."
Committee follow‑up: Senator Bailey requested a line‑by‑line response about prior audit findings related to workers’ compensation (IWIF) claims and other deficiencies; the treasurer agreed to provide written and verbal responses and to follow up with the senator.
The subcommittee did not take a vote on the treasurer’s allowance at this hearing; the treasurer said staff are available to return for further briefing if the committee requests additional analysis of insurance purchasing options.
