AL education budget deal: health insurance premiums to stay down
MONTGOMERY, AL (WSFA) -
Gov. Robert Bentley announced that he has struck a deal with lawmakers on the education budget.
"Our teachers, support personnel and retirees work hard and do a great job to prepare our students for success," the governor said in a statement released on his official website.
The main sticking point of the Education Trust Fund in recent days had been funding for teachers' health insurance, known as PEEHIP, the Public Education Employees Health Insurance Program.
The budget deal brokered by Gov. Bentley's administration and both the House and Senate budget chairmen includes funding for PEEHIP at $780 per member per month.
The previous version of the budget funded member insurance at $753 per member per month which was believed to lead to premium increases.
Lawmakers and the governor have no say over premium hikes. All decisions on health insurance costs including premiums and co-pays are made by the PEEHIP board.
The budget requests that the PEEHIP board dip into the Retiree Healthcare Trust, a fund that's been deposited with surpluses over many years. The budget requires that the board approve a loan of $107 million from the Retiree Healthcare Trust in order to keep the Education Trust Fund balanced.
Rep. Bill Poole, R - Tuscaloosa, who chairs the Ways & Means Education Committee in the House contends that it's not fiscally irresponsible to depend on one time money to ensure that PEEHIP members are made whole.
"Over the course of the years the PEEHIP program has experienced positive surpluses year over year and it's built a reserve and a reserve is what you use during a time when you need to utilize that reserve and we think this is a time" Poole said during a phone interview.
"The vast majority of feedback we received from educators was over funding for PEEHIP," Senate Finance and Taxation Committee Chairman Trip Pittman said in a statement released by Gov. Robert Bentley's office. "I appreciate the leadership of Governor Bentley and Senator Marsh, along with the hard work of Representative Poole, in finding a responsible solution that protects against out-of-pocket increases to our hardworking teachers, administrators and support personnel."
Leura Canary, Chief Legal Counsel for the Retirement Systems of Alabama said there are "planned language changed to prevent increased costs to PEEHIP" as a result of the Affordable Care Act, in order to make sure premiums remain level.
Governor Bentley had called for a 2% raise for teachers in addition to full funding for teachers' health insurance. Lawmakers determined that a 2% raise wasn't sustainable which led the governor and his staff to shift their focus to keeping PEEHIP at least close to fully funded.
In a statement the governor said, ""Their take-home pay should not be reduced by inadequate funding for the health insurance program. I appreciate the House and Senate Leadership, especially Budget Chairmen Bill Poole and Trip Pittman, for working with me to reach a solution that will not require our active and retired education employees to pay more out-of-pocket for their health insurance."
The brokered education spending plan decreases the state's repayment to its Rainy Day Fund, which was used several years ago to balance the Education Trust Fund. State law requires that the entire balance borrowed be paid back by July 2015. The state still owes more than $60 million and the current budget only repays $35 million.
Some of those funds from previous budgets that were set to repay the Rainy Day Fund were redirected to pay for PEEHIP.
"We will repay the Rainy Day Fund by the deadline" Rep. Poole said.
The budget won't be approved for at least a week. Lawmakers return to Montgomery on April 1 after their scheduled Spring Break.