Retirement & Health Benefit Report for March 1, 2019

Fred Yancey | The Nexus Group
Mar 01, 2019

Time is but the stream
I go a-fishing in. - Henry David Thoreau

The state Legislature is now about 40 percent through this year’s 105-day session and faces its second significant checkpoint on Friday, March 1. That’s the deadline for fiscal committees to send bills on for further action or leave them behind for the year. (Unless, of course, they are deemed necessary to implement the budget (NTIB)).

A little trivia is in order. To date, 2,242 bills have been introduced – 1,206 in the House; 1,036 in the Senate. Of those totals; 307 House bills have made it to Rules; 32 have passed the House; 250 Senate bills have made it to Rules; 66 have passed the Senate.

The following is a brief summary of bills that have moved toward possible floor action. The week has been filled with long agendas as the fiscal committees hear and act on multiple bills and because of the quantity of bills being moved through committees, bill status reports are delayed. Next week’s report will be more complete.

The next cut-off is March 13 where all bills except those determined to be NTIB have to be out of their house of origin.

After this Friday, all action moves to the floors of the respective houses.

Retirement Related Proposals

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. SB 5360 is eligible for Second Reading (floor action). HB 1308 remains in Rules.

SUGGESTED ACTION:

Leadership in both houses need to be contacted and urged to move this bill onto floor calendars for action by the respective bodies.

Substitute Options for Early Retirees

SHB 1139 – 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 was scheduled for Executive Action on February 28th.

HB 1388 allows retirees who retired under alternate early retirement factors enacted in chapter 491, Laws of 2007, to use postretirement 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. It is NTIB.

SB 5801 – Until June 30, 2023, in addition to returning to work as a substitute teacher, a retired teacher who retired under an early retirement option may be employed as an athletic coach, a mentor to teachers, an adviser to students in teacher preparation programs, or a counselor for up to 867 hours per school year without suspension of pension benefits. It is in Rules awaiting further action.

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

HB 2096 – Concerning educational service district health benefits is a bill that asks for a 2-year delay in SEBB implementation for ESD’s. It is scheduled for Executive Session on February 28th. Testimony on the bills was “Pro” by ESD representatives/leadership, and WASA. “Con” was presented by WEA, PSE and the Health Care Authority (HCA).

The HCA pointed out, as an aside, that Friday, March 1st, the HCA will be releasing the new SEBB fixed funding rate. The Governor’s budget assumed funding of SEBB at a base rate of $1,174/FTE. It was suggested that this new rate would be lower. Earlier in Session, in talking with fiscal staff, a $700 million-dollar cost was thought to be more accurate than the much more public $900 million-dollar projection. That ‘new’ figure, however, was based on staff counts, not this new, soon to be released, rate. IMHO, staff is doing its best at lowering the projected cost as much as they can. They have already indicated that staff counts furnished by OSPI may not be accurate.

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

HB 1515 – Concerning the employer-employee relationship. This bill could impact the definition and classification of a contractor versus an employee. It is in Rules awaiting further action.

HB 1813 – Incorporating the costs of employee health benefits into school district contracts for pupil transportation. This bill is in Rules awaiting further action.

HB 2127 – Concerning additional contribution rates for contributions made after the date the service is rendered for individual employers of Washington state retirement systems. This bill is related to the Dolan vs. King County court case. Contract employees (Defense attorneys) working with King County were determined to be employees of the county and not contractors. Therefore, they were qualified and entitled to retirement benefits. King County was ordered to pay a portion of what the Department of Retirement Systems (DRS) calculated they owed for these employees. The balance between what DRS said the system needed to be whole and what the court approved to be socialized with costs borne by increased rates in the PERS plans ($54.4 million dollars to be recouped). This bill would compel the losing party in future cases to pay all costs as determined by DRS with no court decision needed.

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. This bill is in Rules 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.

Caveat: There are a number of other bills that are NTIB but will not see any action, if at all, until the budget(s) are released and ultimately a final one adopted. These will be highlighted occasionally just as a refresher.

Meanwhile, the currents continue to carry everyone along…

Fred Yancey
The Nexus Group




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