Retirement & Health Benefit Report for March 15, 2019

Fred Yancey | The Nexus Group
Mar 15, 2019

If it weren’t for the rocks in its bed,
The stream would have no song. - Carl Perkins

The legislative flow has now shifted to upcoming hearings where bills that have passed either house are scheduled for public hearings. The next deadline of note is the planned release on March 20th of the latest revenue forecast and projection. Budgets developed by both houses will follow.

Following is a brief summary of bills that are still alive, putting aside those yet unknown bills that will be or have been determined to be necessary to implement the budget. (NTIB). When two bills on the same topic are still alive, italics are used to indicate the likely vehicle that will advance.

As a reminder, this weekend many legislators have scheduled town halls to hear from their constituents. This is an excellent opportunity to ask questions and air any concerns without having to come to Olympia.

Retirement Related Proposals

SB 5360/ESHB 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 passed the Senate, 39–9 and has been scheduled for a public hearing March 20th. ESHB 1308 passed the House 74–22 and has been referred to the Senate Ways and Means Committee.

Substitute Options for early Retirees

E2SHB 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 passed the House 93/2 and is scheduled for a public hearing on March 18th.

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.

SB 5350 passed the Senate 48–0 and has been scheduled for a public hearing on March 20th before the House Appropriations Committee. HB 1413 passed the House 90/7 and had a public hearing before the Senate Ways and Means Committee on March 9th and is scheduled for Executive Session on March 18th.

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. Although scheduled for Executive Session on February 28th , no action was taken. This bill is entwined with whole SEBB issue. It can be seen as NTIB and could be dealt with once the Legislature decides how to deal with the SEBB issue…the high cost being the most pressing challenge for both budgets to solve.

During the last SEBB meeting, it was mentioned that in order to lower the cost to the General Fund, the state Legislature could do a number of things. The Health Care Authority outlined some of the choices the Legislature could do in order to decrease the state’s obligation.

During the March 7th SEB Board Meeting, it was mentioned that the Legislature could modify assumptions related to the loan repayment and premium stabilization reserve levels. Changes to any of the below items could also impact the funding rate:

  • adjusting the HCA administrative budget,
  • changing enrollment assumptions,
  • restructuring the program and changing eligibility (not likely unless the collective bargaining agreement is rejected and new legislation is adopted),
  • rejecting the CBA and changing assumptions related to employer and employee premium shares,
  • lowering benefit levels while maintaining the 88% AV (such as eliminating acupuncture or chiropractic coverage), and
  • lowering assumed trend (inflation and usage) rates for UMP plans.

Here’s what WEA posted on their website for their message to members about the SEBB.

Other Bills That May Have Fiscal/Hr Impacts For Districts

ESHB 1813 | Incorporating the costs of employee health benefits and pension contributions into school district contracts for pupil transportation. As stated in the bill narrative: “Between the effective date of the bill and December 31, 2019, any pupil transportation services contract must include sufficient funds for the contract employer to provide employees of the contractor with an employer health benefits contribution equal to the allocation rate for school employees, less the retiree remittance, plus an amount equivalent to the total employer normal cost contribution rate to the School Employees’ Retirement System.

Beginning January 1, 2020, any pupil transportation services contract must include sufficient funds for the contract employer to provide employees of the contractor with an employer health benefits contribution equal to the rate established for the School Employees Benefits Board, less the retiree remittance, plus an amount equivalent to the total employer and employee contribution rate to the School Employees’ Retirement System.”

This bill passed the House 56–39 and has been referred to the Senate Education Committee.

SUGGESTED ACTION: This bill will add costs to a district who contracts for transportation services with a private provider. If concerned, one should contact members of the Senate Early Learning and K–12 Education committee and express your concerns. Previous testimony by WASA expressed concerns about the potential increased costs to school districts. Furthermore, if successful, districts who privately contract food services, for example, may well find themselves having to meet the same requirements.

2SSHB 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. 2SSHB 1087 passed the House 63–33 and has been scheduled for a public hearing before the Senate Health and Long-term Care Committee on March 15th.

SHB 1399 makes technical corrections requested by the Employment Security Department in the Family and Medical Leave Act passed last session. This bill passed the House 71–23 and has been scheduled for a public hearing on March 14th before the Senate Committee on Labor and Commerce.

Meanwhile, these rocks create their own song.

Fred Yancey
The Nexus Group




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