News: CJ Exclusives

Oversight Committee Splits Over State Employee Benefits

Panel also discusses monitoring and disposing of surplus state property, changing economic development tiers

Sen. Rick Gunn, R-Alamance, discusses monitoring state property as Sen. Fletcher Hartsell, R-Cabarrus, looks on. (CJ Photo by Barry Smith)
Sen. Rick Gunn, R-Alamance, discusses monitoring state property as Sen. Fletcher Hartsell, R-Cabarrus, looks on. (CJ Photo by Barry Smith)

A legislative oversight committee on Monday delayed recommending changes in supplemental state employee insurance benefits after members could not agree whether to reform the current system or overhaul it.

Rep. Nelson Dollar, R-Wake, who represents a district where a large number of state employees reside, suggested reforming the current system, which allows divisions of state government in different geographic regions flexibility in their supplemental benefit packages.

“There definitely needs to be some tightening in a number of areas,” Dollar said, suggesting that the committee recommend reforming the current system rather than replacing it.

“State employees are very intelligent people,” Dollar said. “We rely on them for a lot of very complex and important things getting done in this state.”

The supplemental insurance benefits include dental, vision, disability, cancer, legal, and pet insurance. Employees pay the premiums for the benefits they choose through payroll deductions.

Last October, the committee heard a report from the General Assembly’s Program Evaluation Division claiming that employee insurance committees are ineffective and had failed to manage the supplemental insurance products properly.

The report, by the division’s Jeff Grimes, showed that some committees weren’t meeting as often as they should and may permit vendors to offer insurance without a contract or a competitive bidding process.

Sen. Ralph Hise, R-Mitchell, wants to overhaul the system into one giving a central state employee committee the authority to decide an array of supplemental insurance benefits that would be available statewide.

“I think we have seen over and over again that even at the state level, at the small committee level and others, there is not sufficient oversight of this process to be granting access to employees’ payroll and to putting the state’s seal of approval on these products by allowing them to be offered when we’re not doing our due diligence and oversight,” Hise said.

“We need to make sure that when we’re allowing these companies that access an employee’s paycheck, that we have made the good faith determination that this is a good buy for the employee, and, most importantly, that it’s in the interest of the state,” Hise added.

The reform bill would continue to allow some variations across the state, but add requirements for competitive bidding and committee oversight.

Sen. Fletcher Hartsell, R-Cabarrus, who co-chairs the committee, said the panel would decide among the options at its March meeting.

Also on Monday, the Program Evaluation Oversight Committee recommended that the General Assembly adopt legislation that would help the state manage its real property more effectively and provide a way of identifying and disposing of surplus property.

The committee also recommended legislation tightening procedures for state agencies that award service contracts. An earlier report determined that state agencies had awarded contracts valued at $511 million though noncompetitive practices. The proposed bill would require the state purchasing officer to approve in writing services with a total cost of up to $5 million. Both the state purchasing officer and the Office of State Budget and Management would have to approve service contracts exceeding $5 million.

The committee also sent to a subcommittee a proposal for the state to scrap its current three-tiered system of awarding economic incentives.