For only the second time as governor, I have called legislators to the State Capitol for a special session. These sessions are meant to be narrow in focus and efficient in decision-making. The primary issue this time concerns the health insurance of our teachers and other public-school employees.
Arkansas's Public School Employee Insurance Plan has been headed toward trouble for some time. However, these troubles have nothing to do with the Affordable Care Act. Claims on the plan are high, and only 60 percent of employees participate, creating a smaller pool to fund those claims. By comparison, the State Employee Insurance Plan has a 95 percent participation rate. The school-employee plan has also seen its reserves drained in recent years, making the situation more severe. As a result, teachers and their fellow school employees faced the sticker shock of a 50-percent rate increase for 2014. Legislators began asking for a special session to address this issue. I said I would call one only if they reached consensus on both short-term and long-term solutions for the plan. After weeks of meetings and negotiations, that consensus was reached, and I made the call.
For 2014, legislators will tap future surplus funds to add $43 million to the Public School Employee Plan. This will reduce the rate increase from 50 percent to 10 percent.
For the longer term, other bills will redirect future facilities and professional-development funds to slow additional rate increases. Just as importantly, a committee will study the long-term future of the Public School Employees Plan and make the necessary decisions to keep it sustainable.
The most controversial issue of this special session was once under consideration as part of the insurance solution, but was instead considered separately. In 1996, voters added Amendment 74 to the Arkansas Constitution. The amendment set a statewide Uniform Rate of Tax for property, or URT, to fund maintenance and operation of Arkansas schools. Twenty-five mills of property tax are collected in communities statewide, and then sent to districts by the State to ensure adequate funding for students. Where 25 mills is insufficient, other State funding is provided. In the rare situation when 25 mills provides more revenue than needed for adequate funding, that excess money returns to the State for other educational needs.
Recently, some districts sued to keep that extra revenue for themselves. The current Arkansas Supreme Court went against 15 years of precedent and ruled late last year that because it was unclear that the URT was a State tax, the districts could keep the excess money.
The ruling created a financial advantage now bestowed upon eight Arkansas school districts to the detriment of 230 others. However, the judges also stated in their majority opinion that the General Assembly could add clarity to the URT definition. Nonetheless, the House Education Committee decided to not even discuss the issue, and legislation to restore the equal standing of all school districts stalled.
All school districts are able to hold local elections and approve millage increases above the required 25. When this happens, 100% of that additional property tax money stays local.
School and health-insurance funding are not simple issues. There are no perfect answers here, and there will be much work still ahead as this special session ends. We've just seen again how dysfunctional and unproductive Congress can be in our nation's capital. I'm pleased to say that in Arkansas, with a few exceptions, we continue to show that pragmatic cooperation can win out over political posturing.