Retirement & Health Benefit Report for Feb. 22, 2019

Fred Yancey, The Nexus Group
Feb 22, 2019

Roll on, Columbia, roll on, 
Roll on, Columbia, roll on.
~Woody Guthrie

The first cut off is occurring as this is being written and next week will be the last cut-off deadline for all fiscal bills. The legislative field will then be winnowed down, and the focus will shift toward floor action and behind the scenes’ discussions over the budget.

This is a very brief summary of bills that have moved toward possible floor action. Until these next two cut-offs occur, the status of various bills is unknown. And then of course, the dreaded criteria, “Necessary to Implement the Budget (NTIB)” enters the stream. Any bill that has fiscal costs can be deemed NTIB and is therefore alive until Sine Die. In fact, the legislature can bring any bill back to life. So, any certainty derived from this report, or even future ones, is illusory. Some bills may bob to the surface; others may sink.

Retirement Related Proposals

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 had a public hearing before the House Appropriations Committee on February 18th. It is clearly a NTIB bill and will not be dealt with until nearer the end of session as the budget is presented.

SB 5360/HB 1308 Revises 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. Both bills are before the Rules’ Committee in their respective houses.

Substitute Options for early Retirees

SHB 1139 Sections 305–7 states 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 has moved to Appropriations. It is a NTIB bill.

SB 5430/HB 1388 Allows 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:

If this is important to your district, 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 had a public hearing before the Senate Ways and Means Committee on February 20th where testimony indicated that SB 5430 would be a much better solution to the issue of filling needed positions on a temporary basis.

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. Both bills are in their respective Rules’ Committee awaiting action to move to either floor.

School Employee Benefit Board (SEEB) Health Related Proposals

In the words of one legislator, “SEBB and its close to $1 billion-dollar cost is taking up all budget oxygen in the room.” It appears that until legislators decide what or how to deal with SEBB and the cost issue, all other fiscal matters will be put on the wayside. That does not mean however, that districts shouldn’t continue raising questions and concerns.

Caution: It remains 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?

Meanwhile, the HCA has designed an online enrollment system for SEBB that is consistent, easy to use, and supports payroll and benefits staff. The result is SEBB My Account, the exclusive online enrollment system for the SEBB Program. The HCA is aiming for an October launch.

The Health Care Authority (HCA) and SEB Board have released a demonstration video on how enrollment in the new SEBB program will operate.

Other Bills That May Have Fiscal/Hr Impacts For Districts:

(NEW BILL) SSHB 1087 Concerns long-term services and supports. The bills digest reads in part: “Addresses alternative funding for long-term care access. States that the creation of a long-term care insurance benefit of an established dollar amount per day for eligible employees, paid through an employee payroll premium, is in the best interest of the state.” This would create an optional employee paid premium that would help cover long term care coverage for an employee. SSHB 1087 passed the House 63–33 and has been sent to the Senate.

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.

HB 1445 had a public hearing on February 21st and is awaiting further action.

SSB 5449/HB 1399 makes technical corrections requested by the Employment Security Department in the Family and Medical Leave Act passed last session. Both bills are before their respective Rules’ Committees awaiting further action.

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 and are NTIB.

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 (contact info was given above) 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 and are possibly NTIB. 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…

Fred Yancey
The Nexus Group




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