Benefits board makes budget cuts

State employees will see the share they pay for benefits increase under budget cuts approved this week by the Public Employee Benefits Program board.

The reductions will reduce the budget for the coming biennium by $27.5 million, according to Executive Director Leslie Johnstone.

But she said that's only half the amount the board must cut from its budget. The other half, she said, will come in changes and reductions to the benefits the health plan provides which is on the board's October agenda.

The board agreed with staff they should not dip into their reserves until they actually get to calculating the rates, and then only if necessary. The recommended reserve for 2010 is $36 million and $40 million for 2011.

The big change approved this week is to reduce the state subsidy share for plan members in the non-base plans only. The base plan subsidy would remain at current percentages for all categories of members.

Johnstone said the high deductible subsidy will not be reduced.

The board also voted to split the Medicare Part D subsidy between the plan and Medicare retirees. For the past few years, Medicare-eligible retirees have been getting the entire Part D subsidy.

Johnston said that change won't cost them very much money since the subsidy isn't nearly as large as everyone thought it was going to be four years ago when it was estimated at more than $78 a month.

This year, she said, the Part D subsidy is just $30.28 a month and the change adopted by the board will reduce what members get by $8.94.

Finally, the board voted to ask the governor and Legislature to eliminate the retiree subsidy for people who retire after June 30 with less than 15 years service. Under current law, the subsidy starts at 25 percent of the premium cost after five years service with the state and increases 7.5 percent for every additional year of service.

"They can still be in the plan, but they'd have to pay full cost," said Johnstone.

She said the change won't affect those already receiving a subsidy.

Johnstone said the Public Employee Benefits Program board will cut another $27.5 million from its budget in October by changing and reducing the benefits offered by the plan.

• Contact reporter Geoff Dornan at or 687-8750.


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