The Department of Enterprise Services (DES) is requesting $1.274 billion in 2027–29 and $939.5 million in 2029–31 in new spending from the self-insurance liability account (SILA).

The SILA is used to “pay legal liabilities and defense costs of the state resulting from tortious conduct.” Agencies pay premiums to the account based on an actuarial study of the agency’s projected liabilities. These premiums are paid by various accounts, but much of it comes from the general fund–state (GFS). Consequently, although the DES request only shows up in the agency requests documentation as coming from the SILA, it would actually increase appropriations from the GFS and other accounts.

The increasingly high cost of indemnity payments and the associated cash deficits in SILA have been known for years.

• The 2022 supplemental budget provided $217 million from the GFS to backfill SILA.
• The funding request from DES for the 2025–27 biennial budget asked for $159.3 million to backfill SILA again. Over the course of the 2025 legislative session, the SILA deficit increased. During the session, on April 15, the Office of Financial Management (OFM) authorized SILA to be in a temporary cash deficiency of $580 million at the end of FY 2025. Nevertheless, the Legislature chose not to provide any backfill. (The 2025–27 budget bill was passed April 27.) We identified this choice as a factor making the 2025–27 budget unsustainable.
• In July 2025, OFM authorized SILA to be in a cash deficit of up to $1.01 billion in 2025–27.
• In a 2026 supplemental budget request, DES said there is a “permanent cash deficiency in the account.”
• In the enacted 2026 supplemental, the Legislature included $1.074 billion (including $956.1 million from the NGFO) to backfill SILA.
• SILA has ended each fiscal year since 2018 in deficit. At the end of FY 2026, the shortfall was $963.9 million.

According to the 2027–29 budget request from DES, SILA is expected to have a cash deficit of about $345 million at the end of 2025–27—even after incorporating the $1.074 billion backfill. Consequently, DES requests $335.0 million to backfill the account. (This is categorized by DES as a maintenance level change, but it would actually be a policy level decision for the Legislature.)

Additionally, DES notes that the base funding for SILA in 2027–29 (the amount included in the carry-forward level) is $360.2 million. However, the actuary estimates that premiums will need to total $1.3 billion for the biennium. Thus, premiums will need to increase by $939.5 million in 2027–29 and by $939.5 million in 2029–31. (It’s not clear how much of that would come from the GFS.)

(Previous posts on the 2027–29 budget requests are available here.)