BILL REQ. #:  S-2871.1 

Read first time 04/14/11.   Referred to Committee on Ways & Means.

     AN ACT Relating to implementation of reforms to school employee benefits purchasing consistent with recommendations of the state auditor's performance review; amending RCW 28A.400.280; creating new sections; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   (1) The state auditor's office completed a performance review of school employee benefits purchasing and found the system is fragmented, with two hundred ninety-five school districts purchasing more than two hundred different medical plans offered through ten different insurance companies and more than one thousand separate benefits-funding bargaining pools. The state and school districts spent one billion two hundred million dollars on benefits in the 2009-10 school year, with over seven hundred eighty million dollars coming from the state, and the balance from school districts and employees. Over one-half of all state school employees are not required to contribute toward the cost of single coverage, while the balance of employees purchasing dependent coverage are burdened with significant out-of-pocket expenses due to the distribution of the funding. The auditor's review recommended policy options to improve benefit delivery and efficiency in the purchasing. Recommendations include streamlining funding of health benefits, restructuring the health benefits system with a uniform statewide approach, transitioning to a standardized benefit package, restructuring local funding pools for stability, and establishing a new governance structure.
     (2) The legislature finds the transition of school employee benefits can provide efficiencies and offer savings to the state, local school districts, and many employees. The transition to a uniform statewide approach is a significant shift and should be done gradually to minimize disruption. It is therefore the intent of the legislature to set in motion the transition and implementation planning for a new K-12 employee benefits administration and governance structure, allowing voluntary participation with incentives to transition into the statewide pool beginning with the September 2012-13 school year.

NEW SECTION.  Sec. 2   (1) The office of the superintendent of public instruction shall establish interagency agreements with the state health care authority, the office of the insurance commissioner, and the office of financial management, to provide a system allowing for voluntary enrollment in a new statewide K-12 employees' health benefits pool, beginning with the 2012-13 school year.
     (2) Beginning July 1, 2011, the office of the superintendent of public instruction, in collaboration with the health care authority, the office of financial management, and the insurance commissioner's office, shall convene a technical working group on K-12 employee benefits, to recommend the details of the implementation of the voluntary statewide pool, create the infrastructure for the new pool, and develop recommendations to the legislature for standardizing benefit packages and purchasing efforts and achieving full implementation of a statewide pool.
     (3) The initial consolidated pool for the 2012-13 school year shall be structured to attract a minimum of five thousand employees but allow no more than sixteen thousand employees to enroll in the first year. All enrollment decisions must be made by school district, by entire bargaining unit, or by entire group of nonrepresented employees. The state health benefit allocations provide an incentive to participate in the new pool and a disincentive for nonparticipants. As the savings from the combination of standardized benefit packages and improved purchasing are realized, the pool must be opened further to allow enrollment to increase, within the budget limitations. The new statewide pool is expected to be separate from the public employees benefits board but staffing and administration for benefits purchasing shall be provided by the health care authority. The new K-12 pool shall operate on a schedule that coordinates with the financing and enrollment schedule used for school districts.
     (4) In addition to any other details the technical working group deems necessary, the technical working group shall make recommendations on the following:
     (a) Approaches for implementing the transition to a statewide pool, including administrative and statutory changes necessary to ensure a successful transition;
     (b) Standardizing the benefit plans in a manner that seeks to maximize funding and equity for all school employees;
     (c) Consolidating the purchasing and budget accountability for school employee benefits to maximize administrative efficiency and leverage existing skills and resources;
     (d) The structure of a permanent governing group to provide ongoing oversight to the consolidated pool, in a manner similar to the public employees benefits board functions for employee health benefits, including statutory duties and authorities of the board; and
     (e) Options for further implementation and expansion of the statewide pool and any statutory changes needed for the full transition, including changes to the public employees benefits risk pools, the movement of school employee retirees into the new K-12 pool or pools, and the potential movement of educational service district employees into the new K-12 pool or pools.
     (5) The technical working group shall include representatives of the office of the superintendent of public instruction, the Washington education association, the Washington association of school administrators, the association of Washington school principals, the Washington state school directors' association, the public school employees of Washington, and other interested stakeholders with appropriate expertise in benefit purchasing and administration. The working group may convene advisory subgroups on specific topics as necessary to assure participation and input from a broad array of diverse stakeholders. Staff support for the working group shall be provided by the office of the superintendent of public instruction, the health care authority, and the office of insurance commissioner, as detailed in the interagency agreements.
     (6) The working group shall make an initial report to the legislature by December 1, 2011, and shall include in its report recommendations for whether additional further work of the group is necessary.

Sec. 3   RCW 28A.400.280 and 1990 1st ex.s. c 11 s 6 are each amended to read as follows:
     (1) Except as provided in subsection (2) of this section, school districts may provide employer fringe benefit contributions after October 1, 1990, only for basic benefits. However, school districts may continue payments under contracts with employees or benefit providers in effect on April 13, 1990, until the contract expires.
     (2) School districts may provide employer contributions after October 1, 1990, for optional benefit plans, in addition to basic benefits, only for employees included in pooling arrangements under this subsection. Beginning with the 2012-13 school year, school districts shall provide a maximum of two employee pooling arrangements for the entire district, ensuring employees have a pool of sufficient size to share employer funding contributions equitably. Optional benefit plans may not include employee beneficiary accounts that can be liquidated by the employee on termination of employment. Optional benefit plans may be offered only if:
     (a) The school district pools benefit allocations among employees using a pooling arrangement that includes at least one employee bargaining unit and/or all nonbargaining group employees;
     (b) Each full-time employee included in the pooling arrangement is offered basic benefits, including coverage for dependents, without a payroll deduction for premium charges;
     (c) Each full-time employee included in the pooling arrangement, regardless of the number of dependents receiving basic coverage, receives the same additional employer contribution for other coverage or optional benefits; and
     (d) For part-time employees included in the pooling arrangement, participation in optional benefit plans shall be governed by the same eligibility criteria and/or proration of employer contributions used for allocations for basic benefits.
     (3) Savings accruing to school districts due to limitations on benefit options under this section shall be pooled and made available by the districts to reduce out-of-pocket premium expenses for employees needing basic coverage for dependents. School districts are not intended to divert state benefit allocations for other purposes.

NEW SECTION.  Sec. 4   This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 2011.

NEW SECTION.  Sec. 5   If specific funding for the purposes of this act, referencing this act by bill or chapter number, is not provided by June 30, 2011, in the omnibus appropriations act, this act is null and void.