By Donna Howard

District 48 state representative

As my legislative district includes our capital city, I represent a large number of active and retired state employees. On April 30, I wrote to the Legislative Budget Board on behalf of these constituents, as well as state employees across Texas, requesting an emergency appropriation to cover a shortfall in this biennium’s budget for the Texas Group Benefits Program administered by the Employee Retirement System. The Group Benefits Program provides health insurance to over 528,000 state employees, retirees and their dependents

With no additional state assistance appropriated, the ERS Board determined it must ensure the fund’s solvency and voted last month on a plan to shift costs—and the responsibility of funding the shortfall—to state employees. The proposed changes would take effect September 1st, giving the LBB—a joint committee co-chaired by the Lt. Governor and the Speaker of the House—time to meet and remedy this situation.

Since the Legislature meets only every other year, any emergency appropriations during the interim must be approved by the LBB. This board actually meets very rarely. In fact, the last meeting of the LBB was in November 2008. However, I believe that the most responsible action at this point is for the LBB to meet and approve an emergency appropriation to cover the $140.4 million funding shortfall to fulfill our responsibilities as an employer as well as to mitigate the compounding issue of insufficient funding in the next budget cycle, which is projected to reach $880 million.

I am painfully aware of the significant budget deficit that we expect to face when the next legislative session begins in January 2011. It’s important to note, however, that the shortfall during the current biennium is a different issue in that the state failed to appropriate sufficient funding for state employee group health benefits and asked ERS to cover that shortfall with its reserve fund – which is now empty.

This is another one of those “structural deficits” you may have been hearing about, i.e., where the state balances its budget by freezing revenue streams even when costs increase (such as with funding our public schools), replacing one tax with another that brings in fewer dollars (such as replacing some of the property tax with the business franchise tax) or, as in this case, relying on reserve funds rather than appropriations to cover costs. All of these structural deficits continue to compound, creating even greater shortfalls in subsequent years.

There’s no doubt we will be revisiting this issue in January. If the base appropriations bill for 2012-13 does not include an amount sufficient to restore the contingency funds that were used in 2010-11 and provide enough additional funding to cover cost increases for ERS, then legislators will have to seriously consider our state employee health care plan and determine the most equitable and responsible ways to address rising health care costs within our anticipated budget.

But, for now, we must responsibly meet our current obligations as an employer and, therefore, ask the Legislative Budget Board to make the necessary emergency appropriation to cover the approved health care costs for those we have hired to do the state’s business.