PEPB plan changes approved by Nevada Senate committee

Despite the fact the employee benefits board changed the governor’s recommended budget without permission, the Senate Finance Committee voted Monday to accept those changes.

But even as a majority of the committee approved the changes that will cost the state several million dollars, they voted to include language in the budget to prevent it from happening again.

They did so over the objections of Sen. Ben Kieckhefer, R-Reno, who, along with Sen. James Settelmeyer, R-Gardnerville, voted no.

“We’re rewarding bad behavior by the board that didn’t come back to the Legislature to approve it,” Kieckhefer said. “We’re deviating from historical rate setting and I’ll be voting no.”

“I don’t disagree with you,” said Finance Chairman Joyce Woodhouse, D-Henderson. “Unfortunately, we are where we are.”

The Public Employees Benefits Program board voted March 28 to change elements of the plan that provides health benefits to state workers by increasing the state’s percentage of total premiums by 2 percent. That enabled them to keep the monthly premium an active state worker pays at roughly $31. It was set at $42 a month by lawmakers two years ago but lowered by the PEBP board to $31 using excess reserves. That change cost $12.4 million but legislative fiscal analyst Alex Haartz told the committee the problem is reserves are “one time funds” that shouldn’t be used for ongoing costs.

Sen. Chris Brooks, D-Las Vegas, also objected to the process.

“They used reserves for a one time buy down,” he said. “How does the board allocate money outside of the budget?”

Haartz said the money was projected reserves, not budgeted reserves but added that could be cured by including “back language” in the Authorizations Act requiring Interim Finance permission to spend excess reserves.

The vote was 6-2 to accept the PEBP board decision to increase the state percentage of total premium from 93 to 95 percent in both years of the biennium. That will cost a total of $6.6 million in fiscal year 2020 and $6.9 million in FY2021. But since the governor had them at 95 percent in the second year, the second year’s costs will be revenue neutral.

The “back language,” however, will require prior approval by IFC before any allocation of excess reserves, projected or budgeted, regardless of the purpose.

Haartz told the committee that will give lawmakers the opportunity to review and consider changes in health plan design both in session and during the interim.