Retirement & Health Benefit Report for Feb. 15, 2019

Fred Yancey & Mike Moran
Feb 15, 2019

retirement-health_072315


A frozen river is not a dry one, it’s just a still river on the surface but is still moving. ~Willie Nelson

 

Snowmageddon descended on Olympia, and things came to a halt, but now that the worst (we can hope) is over, the process is moving again. Agendas have been lengthened. As cut off dates approach the list of bills for executive action by individual committees grows long.

This is a brief summary of bills that are either moving or should be pushed to move. The last section of this report has some suggested actions on bills that need support and advocacy in order to advance before cutoffs.

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. HB 1390 has been scheduled for a public hearing before the House Appropriations Committee on February 18th at 3:30 PM.

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 voted out of committee and sent to Houses Rules awaiting action.

Substitute Options for Early Retirees

SHB 1139 | Sections 305–7 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 Appropriations.

SB 5430/HB 1388 Allow retirees who retired under alternate early retirement factors enacted in chapter 491, Laws of 2007, to use post-retirement options prior to reaching age sixty-five. This is SCPP agency request legislation. It is similar to the above referenced bill but broader in that administrators are not excluded, bus drivers, para-pros, OT’s etc. are included. It also includes PERS retirees who have retired from positions with cities and counties for example. Smaller cities/counties need the expertise of their retirees for short durations. They testified in support of this change. Both bills are still awaiting hearings before their respective fiscal committees.

SUGGESTED ACTION:

Please contact Senator Rolfes, chair of the Senate Ways and Means Committee, to request a hearing on SB 5430. Office: 360–786–7644

Please contact Timm Ormsby, chair of the House Appropriations Committee, to request a hearing on HB 1388. Office: 360–786–7946

Certainly, contact your own legislators as well and urge movement on these bills.

These proposals are much broader than either of the other proposals. (SB 5801 below; SHB 1139 above) and would allow districts the greatest flexibility over time with no need to add other exceptions as they arise.

SB 5801 | This bill is a modified/slimmer version of SB 5430/HB 1388 mentioned above. It reads: “ (a) The retired teacher reenters employment more than one calendar month after his or her accrual date and after June 9, 2016; (2) The retired teacher is employed exclusively as either (i) A substitute teacher as defined in RCW 41.32.010(48)(a) in an instructional capacity, as opposed to other capacities identified in RCW 41.32.010(49); (ii) An athletic coach,(iii) A mentor to teachers or an adviser to students in teacher1 preparation programs; or (iv) A counselor; and(c) The employing school district compensates the district’s substitute teachers at a rate that is at least eighty-five percent of the full daily amount allocated by the state to the district for substitute teacher compensation. (2) For the purposes of this section, “mentor” means an educator who has achieved appropriate training in assisting, coaching, and advising beginning teachers or student teaching residents as defined by the office of the superintendent of public instruction, such as national board certification or other specialized training.(3) This section expires July 1, 2023 It has been scheduled for a public hearing before the Senate Ways and Means Committee on February 20th at 3:30.

SUGGESTED ACTION:

Senator Wellman, chair of the Senate Education Committee needs to be encouraged to focus on SB 5430 as it is broader and offers more flexibility to districts particularly in allowing use of classified retirees. The SCPP reviewed and approved this proposal. Office: 360–786–7641

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 was voted out of committee and sent to Rules.

School Employee Benefit Board (SEEB) Health Related Proposals

SUGGESTED ACTION:

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. T.J. Kelly from OSPI released estimates that the local levy burden to districts for SEBB assuming the legislature accepts the collective bargaining agreement (CBA) would be $258 million per school year. If the benefit multipliers agreed to in the CBA were disallowed, the cost to districts would be $742 million/year.

Caution: It is important to underscore that districts are not against the principle of providing affordable health insurance. It’s the right thing to do.The unions have done a very effective campaign, resonant with many legislators, about the need to provide affordable health insurance. Complaining about SEBB runs the risk of seeming cold-hearted and callous to the issue. But the message is simple:It’s a question of cost; How much? Who pays? How does a district pay?

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. WASA testified as “Other”. It expressed sympathy for the need but concerns over who pays and how to pay for it. This would be another unfunded mandate added to the upcoming fiscal burden of SEBB.

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 had a public hearing on February 14th and is awaiting further action by the Senate Labor and Commerce Committee.

HB 1445 was voted out of committee and sent to Appropriations for a public hearing on February 21st at 3:30 PM.

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 Executive Session action has been scheduled for February 18th before the House Appropriations Committee.

SB 5513/HB 1515 Concerns the employer-employee relationship by clarifying the difference between an independent contractor and an employee. WASBO has been asked to review this proposal for any unintended impacts to districts.

HB 1515 has been scheduled for Executive Sessions for February 21st.

SUGGESTED ACTIONS ON SELECTED BILLS:

SB 5178/HB 1132 Concerns early retirement options for members of the teachers’ retirement system and school employees’ retirement system plans 2 and 3. It proposes changing the current option for early retirement at 62 years of age with no penalty to 60 years of age. Both bills are still awaiting public hearings before their fiscal committees. If this is important to advance as a tool to help districts retain employees and even allow some of those more expensive ones an option to retire earlier, then contact Chairs Senator Rolfes and Ormsby whose contact info was given above. (See SB 5430) and request a hearing.

SB 5414/HB 1409 Prohibits a contract year for employee benefits from exceeding two hundred sixty days, for K–12 employees. Currently, upon retirement, an individual can cash in his/her accumulated sick leave at a 1:4 ratio using a maximum of 180 days. This change would increase the maximum to 260 days reflecting the longer contract years many school employees, especially administrators work.

Both bills are awaiting scheduling for a public hearing in Appropriations (House) or Ways and Means (Senate) committees.

This could be important if a person would like to cash in more than the current 180-day maximum leave accrual to place into a health VEBA account. Many school personnel work more than a 180-day contact and this proposal would set the cap at the contracted day amount rather than the current 180-day limit. Contact Chairs Rolfes and Ormsby and request a hearing.

The legislative river continues to flow…In fact, I can hear water running outside my office…

Fred Yancey/ Mike Moran
The Nexus Group




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