Otter, JFAC clash over governor’s proposed delay in re-bidding state employee insurance contract

Members of the Idaho Legislature’s joint budget committee are steamed at Gov. Butch Otter for deciding the state should wait a year to re-bid its state employee health insurance contract, when they passed a budget bill this year that specifically says it’ll happen by July 1, 2019 — not July 1, 2020, as Otter now wants.

“This is troubling to me, and I think troubling to all of us, that that was not clear,” said Rep. Maxine Bell, R-Jerome, co-chair of the Joint Finance-Appropriations Committee, which held an interim meeting in Pocatello on Monday.

Part of the governor’s concern is letting the new governor who takes office later this year have a role.

Bob Geddes, director of the state Department of Administration, told lawmakers, “The governor has expressed concern that maybe, perhaps, we’re moving a little quickly on this issue. He believes that time is critical, and he wishes to comply with the intent language that was presented, but this year has some unique characteristics. We’ll have a new governor by November, or at least a governor-elect, and he believes that that governor-elect should be somewhat involved or at least cognizant of the changes that could perhaps be there to impact not only the current employees, but the ability to hire employees in the future.”

Annual studies of Idaho’s state employee compensation have long recognized that state workers’ health benefits are above average, but their pay lags well below average for both public and private employers in the region.

A legislative interim committee that has been meeting for two years studied the issue and recommended the re-bid, along with a series of other recommendations including exploring whether to move to a self-funded, rather than fully insured, health plan for state employees, with the aim of saving millions in taxpayer funds. The interim committee hired a contractor and spent $120,000 in the process of developing the recommendations.

Yet, JFAC was told Monday that the state Department of Administration has made no progress on a request for proposals for the re-bid since an earlier draft that it shared in March.

Rep. Fred Wood, R-Burley, who co-chairs the interim committee, said, “I’m a little bit concerned about the delay. … What I don’t want to have happen is that through time, the recommendations brought by the interim committee are forgotten about. … We did a lot of work. We developed a good program, good recommendations, and I don’t want to see those efforts go by the wayside.”

Wood said interim committee members, who met last week and were equally concerned about the governor’s proposed yearlong delay, have no objection to the governor’s proposal to do an informal request for information to vendors first, and believe that would be a good step to help refine the final RFP. “Nobody was against that step,” he said. “It did cause concern because of the possibility of taking an additional year.”

JFAC uses wording it identifies as “intent language” in budget bills to tie strings to the appropriations it makes of state funds. That differs from non-binding statements of legislative intent that sometimes are written into non-budget bills in the Legislature. Intent language in budget bills has the full force of state law, but only lasts for the fiscal year the budget is in effect.

Wood said he believes JFAC should examine its rules and make it 100 percent clear that intent language added to appropriation bills has the force of law and isn’t just a suggestion — perhaps coming up with a new name for it. “What we ought to do is slam the door and then weld it shut and pour a bunch of concrete around it,” he said.

In a June 20 letter to lawmakers, David Hensley, Otter’s chief of staff, called for the year delay, saying it would allow time for an informal RFI process before moving to a full, formal request for proposals from prospective insurers.

“Governor Otter believes this approach achieves the spirit of the intent language, which is to provide employees the best health care at the most competitive prices,” Hensley wrote.

Sen. Shawn Keough, R-Sandpoint, the Senate co-chair of JFAC, said, “I’m just confused how the language in the bill that says ‘to administer an array of employee health care benefits plans that begin on July 1, 2019’ can be interpreted any other way.”

Bell noted that the bill passed the 105-member Legislature and was signed into law by the governor without objections. “So there’s 106 of us that it’s clear to, apparently. Maybe the writer of the letter is outstanding in his field.”

Rep. Neil Anderson, R-Blackfoot, said, “I haven’t seen letters like this ever before in my 10 years in the Legislature. If this is a letter from the governor, why didn’t the governor sign it?”

Rep. Wendy Horman, R-Idaho Falls, said she worried that a precedent could be set of ignoring language in budget bills that’s supposed to have the force of law.

Bell asked Geddes to move expeditiously on the RFI process, and send monthly progress reports to JFAC; the joint budget committee will take up the issue again at its October meeting.