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2011

Other Budget Issues

Last Updated: 5/23/2011
Budget Issue: Request for $748,000 to fund positions to work on implementing federal health insurance reform
Program: Department of Insurance
Finding or Recommendation: We recommend the Legislature reject the May Revision request for $748,000 in special funds to pay for eight currently authorized positions. Our analysis finds that the department has funding for 17 staff that is in excess of the level of resources justified on a workload basis. The department can redirect funds to pay for the eight positions.
Further Detail

Budget Issue

Request for $748,000 in special funds to pay for eight currently authorized positions to work on implementing federal health insurance reform. 

Narrative

Governor’s May Revise Requests $748,000. The Governor’s May Revise proposes expenditures of $748,000 in the Department of Insurance to fund workload associated with implementing federal health insurance reform. According to the department, this funding will support eight currently authorized positions to address increased workload related to health insurance reform.  Funding requested for the positions are in various areas of the department. This request will include funding for activities such as analyzing components of the federal definition of the medical loss ratio, participating in conferences with the National Association of Insurance Commissioners, and consulting with department actuarial staff.

Governor’s January 2011-12 Budget Requested 54 Positions to Address Workload Increases and 17 Positions for Health Insurance Reform. The Governor’s January 2011-12 budget proposed expenditures of $8 million to fund 54 positions. According to the department, these positions were requested to address increased workload and meet statutory mandates. The Governor’s budget also proposed expenditures for 17 positions and $1.9 million to begin implementation of health insurance reform. Some of the funding for these positions would support activities related to reviewing the rates for health insurance premiums and implementation of the health benefits exchange required by federal law.

Legislature Approved Requested Positions in Earlier Budget Actions. The Legislature approved all of the 71 requested positions in budget actions earlier this year. However, it made a modification to the request for the 17 positions to implement health insurance reform and approved these on a limited-term basis.

LAO Analysis. Our analysis of the January budget request found that 17 of the 54 positions requested for increased workload were unjustified on a workload basis and we recommended that the Legislature approve only 37 of the 54 requested positions. Please click here for a link to our analysis and recommendations regarding the Department of Insurance’s request for 54 additional staff. Given that the Legislature recently approved funding for a total of 71 new positions (including funding for the 17 positions we found unjustified), the department could redirect funding from the 17 positions we found unjustified to pay for the eight positions needing funding as proposed in the May Revision.

LAO Recommendation

We recommend the Legislature reject the May Revision request for $748,000 in special funds to pay for eight currently authorized positions. Our analysis finds that the department has funding for 17 staff that is in excess of the level of resources justified on a workload basis. The department can redirect funds to pay for the eight positions.