Retirement & Health Benefit Report for March 22, 2019

Fred Yancey | The Nexus Group
Mar 22, 2019

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

This week has been filled with committee hearings on various bills as both houses rush to hear, then vote bills out of committee, in order to beat the next policy and fiscal deadlines.

The state revenue council issued the latest revenue projections and wow, the unanticipated and now new revenue shows an additional $861 million for the 2019–221 budget. Of course, remember at the start of the session, it was reported that the state was looking at over $1 billion-dollar shortfall after case load projections and funding court mandates. The Republican side and the Washington Policy Center argue that there is enough revenue now to fund all that is needed. The Democrats disagree. The focus is now on the House. They have created a package of revenue enhancements to fund all they wish and will release the budget Monday, March 25th with their suggested revenue proposals.

Following is a brief summary of bills that have had some action. A reminder that there are yet unknown bills that will be or 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.

A reminder: Again, this weekend many legislators have scheduled town halls to hear from their constituents. Some town halls were last weekend, but some scheduled them for this upcoming weekend. This remains 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 had a public hearing March 20th. ESHB 1308 passed the House 74/22 and had a public hearing on March 18th and had action taken in Executive Session on March 21st.

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, had a public hearing on March 18th and has yet to be scheduled for executive action. WASA testified in support with the request that the exclusion of administrators be removed.

SB 5400/HB 1390 | Requires beneficiaries who are receiving a monthly benefit from the public employees’ retirement system plan 1 or the teachers’ retirement system plan 1 on July 1, 2018, to receive, effective July 1, 2019, an increase to their monthly benefit of three percent multiplied by the beneficiaries’ monthly benefit, not to exceed sixty-two dollars and fifty cents. HB 1390 had a public hearing in February. Although there has been no further action, this bill is NTIB and is being actively worked by the Washington State School Retirees’ Association. Legislators are being lobbied hard to include a COLA in either budget to reflect the fact that Plan 1 members have not had any substantive cost of living increase since the COLA was removed in 2011. They did receive a one-time 1.5% increase last year but that has been it.

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, had a public hearing before the Senate Ways and Means Committee, was voted out and moved to Rules where it sits until moved to the floor calendar.

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. In talks with various legislators, it seems that they are confronting the state cost of SEBB and will fund it (at what level is yet to be seen). As one leading legislator said, “It’s the right thing to do for individuals and families.”

As an aside, and snarky remark coming, so much of what has been proposed this session in the social service area has been seen as ‘the right thing to do’ pitting groups against each other to compete with limited, if any, funds. Once again, the Legislature will likely end up ‘spreading peanut butter’ among all the competing interests. In short, giving everyone a slimmer slice of dollars, a smaller fish, than what they wanted or needed.

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. More detail was provided in last week’s report.

This bill passed the House 56–39 and has been referred to the Senate Early Learning and K–12 Education Committee. A public hearing is scheduled for March 25th. WASA is opposed to this bill because of the added costs that are likely to fall on districts as vendors pass their costs along to the users.

2SSHB 1087 | Concerns long-term services and supports. 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, (0.058%) 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 was scheduled executive action before the Senate Health and Long-term Care Committee on March 20th, yet, no action was taken.

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. It passed out of the Senate Committee on Labor and Commerce and is in Rules, awaiting a move to the floor calendar.

Fred Yancey
The Nexus Group




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