SB 1497

House Engrossed
  Senate Bill
classical
  learning; tests; examinations
(now: school
  districts; insurance quotes)
State of Arizona
Senate
Fifty-seventh Legislature
Second Regular Session
2026
CHAPTER 231
SENATE BILL 1497
AN
ACT
amending section 15-382, Arizona
Revised Statutes; relating to school insurance.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the
State of Arizona:
Section 1. Section 15-382, Arizona Revised
Statutes, is amended to read:
START_STATUTE15-382. Authorization to self-insure; pooling agreements; joint
agreements; trustees; liability coverage and pool requirements; annual required
coverage information; definition
A. The A school
district governing board may determine that self-insurance is necessary
or desirable in the best interest of the district and may provide for a self-insurance
program or programs for the district, including risk
management consultation. Any risk management consultant or insurance
administrator employed by a school district governing board must be licensed
under title 20, chapter 2, article 3 or 9, and such the license shall be verified by the school district governing
board prior to before employment.
B. The school district governing board may:
1. Enter into intergovernmental agreements or
contracts with pools operated pursuant to section 11-952.01 for
participation in self-insurance programs offered by
public agency pools. In addition to the joint purchasing of
insurance or reinsurance or the pooling of the retention of risks for property,
fidelity and liability losses, these self-insurance programs
may include the joint purchasing of health benefits plan, life or disability
insurance, prepaid legal insurance or the pooling of the retention of their
risks of losses for health, accident, life or disability claims or the
provision of the health and medical services enumerated in section 36-2907.
2. Separately contract with a trustee or board of
trustees that provides a common self-insurance program or self-insurance
programs with pooled funds and risks to more than one district, a
community college district formed pursuant to chapter 12 of this title or an
association of school districts within this state that is funded by member
school districts pursuant to section 15-342, paragraph 8 or a pool
created for and operated solely for charter schools pursuant to section
11-952.01. Beginning January 1, 2010, a trustee, board of trustees or pool that
contracts with a school district governing board or charter school pursuant to
this paragraph shall comply with title 38, chapter 3, article 3.1, title 39,
chapter 1 and section 11-952.01, subsections M and N.
3. Enter into cooperative procurement agreements
with other districts pursuant to rules adopted pursuant to section 15-213
to participate in programs for either self-insurance or the joint
purchase of insurance.
4. Separately establish a self-insurance
program solely for its district.
C. If the school district governing board, either
alone or in combination with another school district or an association of
school districts in this state that is funded by member school districts
pursuant to section 15-342, paragraph 8, establishes a self-insurance
program, the governing board or an association of school districts shall place
all funds into a trust to be used for payment of uninsured losses, claims,
defense costs, costs of training designed to reduce losses and claims, the cost
of related employee benefits including wellness programs, life, disability and
other fully and partially insured group insurance plans, programs that allow
for participation in a cafeteria plan that meets the requirements of the United
States internal revenue code of 1986, costs of administration and other related
expenses. If a member of the governing board or employee of the
school district is acting as a trustee, the trust shall be administered by at
least five joint trustees, of whom no not more
than one may be a member of the governing board and no not more than one may be an employee of the school
district. Funds budgeted for self-insurance programs shall be are subject to district budgetary
requirements, including but not limited to the
requirements that the funds be budgeted within the maintenance and operation
section and the budget limitation on increases as prescribed in section 15-905. The
funds, upon on being placed in the
trust, shall do not lapse at the
close of the fiscal year, except that any cash balance remaining after
termination of the self-insurance program and
settlement of all outstanding claims shall be used for reduction of school
district taxes for the budget year. The trustees of the trust must
be bonded, a stop-loss provision must be incorporated in the trust
agreement, and an annual audit must be performed by a certified public
accountant and a copy of the report kept on file in the district office for a
period of not less than at least five
years.
D. If the self-insurance is for liability
losses, excess liability coverage or reinsurance must be obtained as follows:
1. For a single school district, the coverage may
include an annual aggregate limit of no not
more than three million dollars $3,000,000
and the maximum retention per occurrence shall be one-half of one per cent percent of the district's
maintenance and operation budget.
2. For a pool, the coverage may include an annual
aggregate limit set by the pool and the maximum retention per occurrence shall
not exceed one-half of one per cent percent
of the combined maintenance and operation budgets of the districts in
the pool.
E. If
a school district governing board establishes a self-insurance program
pursuant to this section to purchase disability or health
benefit plans insurance, pool the retention of risks of losses for health or
accident claims or provide health and medical services and the school district employs at
least three hundred employees, the school district governing board shall obtain
quotes for coverage and services from authorized service providers at least
once during every four-year period to determine whether comparable
coverage and services are available at a more favorable price. A
school district governing board may not renew coverage or services from any
person that fails to provide timely, accurate and complete information as
required by subsection F of this section. For
the purposes of this subsection, "authorized service providers" means
any of the following:
1. Two or more service providers that
are available through the pool, trustee or board of trustees that administers
the school district's self-insurance program.
2. Two or more qualified insurers
that provide proposals directly to the school district governing board.
3. An insurance producer who is
licensed pursuant to title 20, chapter 2, article 3 and who obtains proposals
from two or more qualified insurers on behalf of the school district governing
board.
F. At
least sixty days before the end of the current benefit program year, each
trust, insurer, third-party administrator, pharmacy benefit manager or
other person who supports the school district's self-insurance program
shall provide the following information to the school district in an
electronic, machine-readable format:
1. Monthly
enrollment counts by employee-only and dependent tiers for each plan option
offered to the school district for the two calendar years that immediately
precede the current year.
2. Monthly
total claims paid, disaggregated by medical claims and prescription drug
claims, for the two calendar years that immediately precede the current year.
3. A
detailed report on enrollees whose total claims paid exceeds
$50,000 for any of the four calendar years that immediately precede the current
year and enrollees whose total claims paid is projected to exceed
$50,000 in the current year. The report required by this paragraph must include
only de-identified data, comply with the health insurance portability and
accountability act of 1996 (P.L. 104-191; 110 Stat. 1936) and include the
following:
(a) The total claims paid
for each enrollee.
(b) Each enrollee's diagnosis or a description of each enrollee's
medical condition or conditions.
(c) A statement indicating
whether each claim is:
(i) Completed with no
further health care services expected.
(ii) Ongoing with
additional health care services expected or required to address the enrollee's
diagnosis, medical condition or medical conditions.
4. Detailed
prescription drug data for the immediately preceding twelve-month period
for all enrollees, including the following line-level details:
(a) The national drug
code.
(b) The date each
prescription was filled.
(c) The drug name.
(d) The total days' supply
of the drug.
(e) The metric quantity
that is dispensed.
(f) The ingredient cost.
(g) The dispensing fee.
(h) The pharmacy provider
number.
(i) The amount paid by the
school district, if any.
(j) The amount paid by the
enrollee, if any.
(k) The total amount of
rebates received, including rebates by the drug manufacturer and the method of
allocation.
(l) The amount of pharmacy
benefit manager administrative fees paid, if any.
(m) Any other fees charged
to the school district, including per-claim fees, network access fees,
data or clinical program fees, spread-pricing components and all sources
of pharmacy benefit manager compensation charged to the school district.
(n) Whether pricing is set
on a pass-through or spread basis.
5. Complete
documentation for each benefit plan currently available to the school
district's employees, including the following for each plan:
(a) Summary benefits and
coverage.
(b) Full plan documents or
benefit booklets.
(c) Prescription drug
formularies.
(d) Cost-sharing
structures, deductibles and out-of-pocket maximums.
6. A
report of comprehensive eligibility census data for all employees and for all
dependents who participate in the school district's self-insurance
program that is
updated not more than sixty days before the report is submitted. The report
required by this paragraph must include only de-identified data, comply
with the health insurance portability and accountability act of 1996 (P.L. 104-191;
110 Stat. 1936) and include, for each employee and
dependent, all of the
following:
(a) Date of birth.
(b) Gender.
(c) Zip code of residence.
(d) Coverage tier.
(e) Selected plan.
E. G. For
the purposes of this section, "self-insurance program": as used in this section
1. Means programs established
and wholly or partially funded by the school district governing
board. Self-insurance programs shall
2. Does not include a decision
by the governing board not to carry insurance upon on a particular risk or risks. END_STATUTE
APPROVED BY THE GOVERNOR JUNE 22, 2026.
FILED IN THE OFFICE OF THE SECRETARY OF STATE JUNE 22, 2026.