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Finance Director Urges SEIB to Reject Request of Senators


June 20, 2007

MONTGOMERY, Ala., June 20, 2007 – State Finance Director James Allen Main is urging the State Employees Insurance Board (SEIB) to exercise its option provided in the Alabama Code to not accept Senators into the Local Government Health Insurance Program. In a letter dated today, Main explained the rationale for his request. The following was submitted to William Ashmore, chief executive officer of the State Employees Health Insurance Program, and Joe Dickson, chairman of SEIB.



June 20, 2007

Mr. Joe Dickson, Chairman
State Employees Insurance Board
1021 Riverchase Parkway W.
Birmingham, AL 35244

Mr. William Ashmore, Chief Executive Officer
State Employees Health Insurance Program
500 RSA Tower
201 Monroe Street
Montgomery, AL 36104

Re: Healthcare for Senators under the Local Government Health Insurance Program

Gentlemen:

Senate Resolution 97, passed on the final day of the legislative session is in my opinion deserving of a “veto” by the State Employees Insurance Board (SEIB) for a number of reasons, as set out below. It is, therefore, my recommendation that SEIB exercise its option provided by §36-29-14(b) and not accept the Senators into the Local Government Health Insurance Program (LGHIP). My rationale includes:

1) The attempt to come under the LGHIP is a clear attempt to amend existing law by use of a Senate Resolution. In 1990, by Act 90-649 (§36-29-15), the Legislature gave its members the opportunity to participate in the State Employees Health Insurance Program. Each member is required to pay the full premium for the benefit, as described in §36-29-15(c).

Since 1990, the Legislature as a body has not deemed it necessary to change this approach to legislator healthcare, even though it has amended the government employee health insurance law several times, and in particular the LGHIP statute, to expand the range of groups eligible to participate in these programs.

The Senators’ resolution is clearly an attempt to provide health insurance coverage for its members under a local government employee health insurance program for which they are not logically eligible. If this maneuver is acquiesced to by SEIB, it will be amending Act 90-649 by Senate resolution—an action that is not permissible under the law of this State.

2) This effort by the Senators can only be interpreted to be an effort to have their healthcare insurance paid for by the taxpayers of Alabama. Otherwise, the members could procure coverage under §36-29-15, which also provides a valuable benefit that is not allowed by the LGHIP, the right to continue coverage for 36 months after service in the Legislature has ended.

Payment of a Senator's healthcare insurance by taxpayers will be an increase in the compensation already paid to the Senator for service in the Legislature by approximately $5,000 per year. By law, an increase in the compensation of legislators can only be accomplished by an amendment to the Constitution, as legislative pay is set in §49 of that instrument. Further, such an increase will violate §281 and Amendment 92 of the Constitution, which prohibits increasing the compensation of an elected official during the current term in office.

3) Senators are not eligible for coverage under LGHIP because the Senate is not one of the entities afforded eligibility to participate by Act 90-624, as amended. The closest the Legislature could come to qualifying would be to fall under the class of “agency of the state.” However, in the governmental context, an agency of a state is an administrative agency, created to implement and administer legislation. That is a function of the Executive branch—not the Legislative.

4) The Senate Resolution is an attempt to satisfy the requirements of §36-29-14(a), which requires a qualified entity desiring to participate in the local government program to provide the SEIB with a resolution reciting that the entity wants its employees covered under LGHIP and that it will abide by the rules established by the SEIB “without any liability to the state or the State employees’ health insurance plan.” That requirement cannot be satisfied for two reasons. (1) The Senators’ Resolution is not submitted by an ‘employer,’ and it cannot be satisfied because Senators are not employees of the Senate, but are members of that body, and in fact are ONLY PART-TIME. (2) The requirement that participation of a group be “without liability to the state or the State Employees’ Health Insurance Plan” cannot be satisfied by the Senators. Committing the Senate to pay the premiums for the Senators clearly creates a liability to the state.

5) There is no funding source for payment of the costs of the insurance coverage. Again, the only comprehensible reason for the Senators to select this course for trying to get insurance coverage is to have the costs paid by the taxpayers through the Senate's operating appropriation. While §36-29-14 puts the burden on the employer to remit the costs of the coverage, the Senate's administrators can only pay legal charges for which funds are appropriated. The SEIB must consider if it could be exposed to substantial claims for benefits when there is no money to pay the premiums.

For the foregoing reasons, I urge the SEIB not to accept the application of the Senators.

Very truly yours,

James Allen Main


“This last day, late night resolution by the Senate is an attempt to essentially give free healthcare to members of the Senate,” concluded Main. “It is not fiscally responsible to change the healthcare program for state Senators. Circumventing the legal process without approval of both houses of the Legislature and the Executive branch is an affront to the taxpayers of Alabama.”



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