This bill is intended to curb state spending and improve government efficiency, as it is estimated to save the State $691 million in total funds when fully implemented. The majority of changes will not take full effect until 2020.

The measure makes several changes to state government programs and processes to contain costs and reduce future spending, including:

Sets Cap on Increase in Government Employee Health Costs

  • Caps the annual premium increase to 3.4% per year for plans under the Public Employees Benefit Board (PEBB) and Oregon Educators Benefit Board (OEBB), well below the national rate of inflation (5.8%).
    Caps Hospital Provider Reimbursement in PEBB

  • Caps reimbursement for inpatient and outpatient hospital services at no more than 200% of Medicare rates for in-network and 185% of Medicare rates for out-of-network hospitals. Reimbursement caps become effective in the 2019 benefit year.
  • This does not apply to A, B, Critical Access, or Sole Community Hospitals with more than a 40% Medicare payer mix in counties with a population of less than 70,000.

Prohibits Double Coverage

  • Eliminates the practice of the state paying twice for employees by:
    • Eliminates opt-out payment(s) made to employees who decline primary coverage through PEBB and OEBB and are subsequently enrolled in a PEBB or OEBB plan under their spouse.
    • Prohibits double coverage, where the state pays two premiums to cover an employee. For example: double coverage occurs when one person is covered as a primary through the state and has subsequent coverage through their spouse.

Holds Health Plans and Providers Accountable

  • Requires annual health plan audits to capture dependency changes, double claim payments, etc.
Increases Efforts to Collect Unpaid Debt
  • Expedites process for assigning unpaid debt to the State to private collection agencies.

Budget Rollup

  • Requires legislative review of agency reclassification of positions, including the compensation differences for each reclassification.
  • Requires DAS to annually report on all positions that have been vacant for six months. Report shall include efforts taken to fill the position and any efforts to use the position for purposes other than those anticipated in the Legislatively Adopted Budget.
  • Requires DAS to report changes to the state employee compensation plan, including step increases, cost of living adjustments, the addition of steps in pay ranges, any other adjustments that have an economic impact on the salary plan, and the total cost of any salary changes for this biennium and the rollup cost for the next biennium
  • Realigns the state cap on government employees to no greater than 1% of the state population.

Review of State Procurement Costs

  • Requires the Legislative Policy and Research Office to conduct a study of state procurement practices to achieve increased cost effectiveness.

State Budget Development

  • Requires the Legislative Fiscal Officer, during the development of the Legislatively Adopted Budget, review and update current service level projections, including position vacancy assumptions, inflation adjustments, and mandated caseload.
  • Requires the Governor to include in his or her recommended budget an amount for deferred maintenance that is equivalent to at least two percent of the replacement value of state owned facilities.

PEBB Webpage for SB 1067

Press Release for SB 1067 from 7/7/2017

PEBB Updates from 8/15/17