Retirement & Health Benefit Report for Feb. 8, 2019

Fred Yancey & Mike Moran
Feb 08, 2019

We have an unknown distance yet to run, an unknown river to explore.
What falls there are, we know not; what rocks beset the channel,
we know not; what walls ride over the river, we know not.
Ah, well! we may conjecture many things." - John Wesley Powell

The session is still flowing toward cut off dates, when an observer can then more closely focus on what would appear to be potential ‘rocks’. Also, energies can be directed more specifically to advance critical bills that have survived the first cut. As a reminder, the cut off dates are: February 22 for policy bills and March 1 for fiscal bills.

So many of these issues concern money. They will not really come into a sense of finality until nearer the end of session. SEBB is an example, where the only option for significant change in the model would be if the Legislature rejected the collective bargaining agreement, which they may, and the key word is ‘may’ do after seeing the upcoming revenue forecasts. This is why we are just going with the flow and watching for obstacles. This is a brief summary of only those bills that had some movement status.

Retirement Related Proposals

SB 5400/HB 1390 would provide a 3% cost of living adjustment (COLA) to TRS1 and PERS1 members. These bills are Select Committee for Pension Policy (SCPP) agency request legislation. Both bills are still awaiting scheduling before their respective fiscal committees.

SB 5360/HB 1308 Revise provisions in the public employees’ retirement system, the teachers’ retirement system, and the school employees’ retirement system with regard to plan membership default. It would change the present retirement plan default for new hires from Plan 3 to Plan 2.

SB 5360 was voted out of the Senate Ways and Means Committee and has been moved to Rules committee awaiting action.

HB 1308 was scheduled and expected to be voted out of the House Appropriations Committee on February 7th meeting, but the hearing ran late, and Executive Session was postponed. This will be rescheduled.

Substitute Options for early Retirees

HB 1139 is a large bill relating to expanding the current and future educator workforce supply. A previous version of the bill passed the House last session but got no action in the Senate. This bill, by Representative Santos, is basically a re-introduction of the previous bill. Sections 304/305 state that educators that are members of Teachers’ Retirement System (TRS) Plans 2 or 3 that retired under the 2008 Early Retirement Factors are permitted to return to work before age 65 in any non-administrative position, not just in substitute teaching and instructional positions, and work for up to 867 hours per year without suspension of pension benefits. The ending date on the current provisions of August 1, 2020, as well as the separate section expiring the section of law, are removed, making the section effective indefinitely. A provision similar to the TRS provision is created for School Employees’ Retirement System, which is for classified school employees. It also removes the August 1, 2020 sunset date and the directive regarding substitute pay. It passed out of committee on an 18/1 vote and has moved to Rules.

SB 5350/HB 1413 Authorizes the following, at the time of retirement, to purchase an optional actuarially equivalent life annuity benefit from:

  1. The public employees’ retirement system plan 1 fund;
  2. The public employees’ retirement system combined plan 2 and plan 3 fund;
  3. The public safety employees’ retirement system plan 2 fund; or
  4. The school employees’ retirement system combined plan 2 and 3 fund, as appropriate. This bill was agency request legislation from the SCPP. SB 5350 was voted out of committee and sent to Senate Rules for further action. HB 1413 is scheduled for executive action on February 11.

School Employee Benefit Board (SEEB)Health Related Proposals

School districts need to continue contacting their legislators to educate them and express any concerns over the impending costs of SEBB. It has become clear that legislators are expressing discomfort, (some might say ‘shock’) with the $900+million-dollar cost of implementing the program and collective bargaining agreement. But they are not yet talking about the unfunded costs expected to be borne by districts.

HB 1955 was just introduced by Rep. Stokesbary. (Ranking Minority Leader on Appropriations). This bill appears to reduce district costs from 85% to 80%, which seems in my humble opinion ho-hum and misses the bigger picture.

Health Care

SB 5469/HB 1085 Concerns reducing the insurance premium for Medicare-eligible retiree participants in the public employees’ benefits board program. It requires the amount of a premium reduction for Medicare eligible retiree participants to be no less than fifty percent of the premium cost.

HB 1085 held a public hearing 1/28 at 3:30 before the House Appropriations Committee and is awaiting further action by the committee.

HB 1813 incorporates the costs of employee health benefits into school district contracts for pupil transportation. A portion of the bill reads : “Beginning January 1, 2020, any pupil transportation services contract must include:(i) Sufficient funds specifically for the contracting employer to provide the employees of the contractor with an employer health benefits contribution equal to the rate for the school employees’ benefits board program, less the retiree remittance for the public employees’ benefits board; and (ii) An amount equivalent to the total employer and employee contribution rate to the school employees’ retirement system, multiplied by the estimated salaries of the employees of the contractor. This bill has a public hearing before the House Appropriations Committee on February 14th.

Other Bills That May Have Fiscal/Hr Impacts For Districts

SB 5473/HB 1445 makes unemployment benefits accessible to persons with family responsibilities and other availability issues and making clarifying changes. Among other things, it revises the employment security act to: (1) Provide unemployment benefits (UI) to people with family responsibilities and other availability issues. Districts will have new claimants for UI which a district could not contest.

SB 5743 is scheduled for a public hearing on February 14th before the Senate Labor and Commerce Committee.

HB 1445 was voted out of committee and sent to Appropriations.

SSB 5449/HB 1399 makes technical corrections requested by the Employment Security Department in the Family and Medical Leave Act passed last session.

SSB 5449 (a substitute bill) has been voted out of committee and sent to Rules.

SHB 1399 (Substitute bill) A public hearing before the House Appropriations Committee is scheduled for Feb. 14th.

The legislative river continues to flow…

Fred Yancey/Mike Moran
The Nexus Group

  • benefits
  • Health Benefits
  • Retirement
  • Advocacy & Legislation

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