Retirement & Health Benefits for April 5, 2019

Fred Yancey | The Nexus Group
Apr 05, 2019


Denial ain’t just a river in Egypt. – Mark Twain

“No! No! No!” was the constant refrain heard as the committees and floor debated numerous amendments to the budget proposals. Requests for spending totaled more than the amount either house was willing to spend or to make a priority.

Concurrently, policy committees continued to hear and then move bills. All of which have been reported previously in greater detail.

Retirement Related Proposals

SB 5360/ESHB 1308 changes the present retirement plan default for new hires from Plan 3 to Plan 2. SB 5360 passed the Senate, 39–9. ESHB 1308 passed the House 74–22. Both are in their respective Rules’ Committees awaiting further action. The only difference between the two bills is the date applicable to new employees. ESHB 1308 applies to any one hired after 7/1/2019; SB 5360 after 7/1/2020.

Substitute Options for early Retirees

E2SHB 1139 expands the current and future educator workforce supply has now been scheduled for a public hearing before the Senate Ways and Means Committee on April 5th. This large bill has a section that would allow early certified and classified retirees to return to work for a limited time. WASA testified and asked that the exclusion of administrative positions be removed.

SB 5400/ HB 1390 requires beneficiaries who are receiving a monthly benefit from the PERS or TRS plans 1 to receive a one-time 3% cost of living adjustment. HB 1390 had a public hearing in February and was unanimously voted out of the House Appropriations’ Committee and sent to Rules. This bill is considered a ‘trailer bill’. If the money is appropriated in the budget, this bill would then need to be passed. Hopefully, it will be moved to the floor calendar.

Note: The original House budget did not include a COLA. However, through extensive lobbying, a floor amendment sponsored by Rep. Drew MacEwen (R) was adopted on a 94–0 vote. Representatives Leavitt and Kloba were the advocates and leaders within the Democratic caucus.

The Senate budget did not include a COLA, nor the increase in Medicare health insurance benefit. The House proposed an increase from $168 to $183. An amendment to grant a COLA sponsored by Sen. Holy was defeated in the Senate. Senator Steve Conway, chair of the Select Committee on Pension Policy, spoke in opposition even though the SCPP recommended this COLA.

SB 5350/HB 1413 authorize an individual at the time of retirement, to purchase an optional actuarially equivalent life annuity benefit. SB 5350 passed the Senate 48–0. HB 1413 passed the House 90–7. Both are in their respective Rules’ Committees awaiting movement to the floor calendar.

School Employee Benefit Board (SEEB)Health Related Proposals

HB 2096 asks for a 2-year delay in SEBB implementation for ESD’s. This proposal never moved out of committee. However, an amendment to the budget was adopted by the Senate Ways and Means Committee. This change now has to be approved in the House budget.

Regarding SEBB: As stated last week, this whole SEBB cost projection and process is all built on assumptions. There are few, if any, facts available. Until the plan is up and running on January 1, 2020, the real effects and costs will not be known. So, to repeat what a cynic might say, “It appears that one set of figures is as good as any other”. That is certainly the case here.

The Health Care Authority (HCA) projected SEBB costs at $750 million; the House Budgeted (ESHB 1109) $650.7 million. HCA projected a funding rate of $1,114 for FY 20 and $1,127 for FY 21. The House projected $1,079 in FY 2020 and $1,106 for FY 21. The House also proposed a reduced rate for July 1-December 31, 2019 of $971. Along comes the Senate (SB 5153). The Senate proposed a rate of $994 for 2020 and $1,056 for 2021. Excluding the addition of budgeted maintenance level dollars, the House budgets $443 million; the Senate $319 million. So, the figures are all over the place.

At this point, it just becomes like the theater of the absurd. All these figures are just thrown about as though they have some solid factual base behind them when point of fact, there is no real base. The only known is that districts will be on the fiscal hook for covering all the costs of offering this benefit. As was stated earlier, the state can use the supplemental budget process during the next shorter session to correct any errors made in the legislature’s assumptions. These are appropriation/dollar errors made by the state, but districts still have to pay whatever costs emerge.

Thursday, April 4th, the Senate debated the budget. Two amendments proposed rejecting the SEBB collective bargaining agreement and directing the dollars elsewhere. Both failed, but if you are interested:

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

ESHB 1813 incorporates the costs of employee health benefits into school district contracts for pupil transportation.

This bill passed the House 56–39. An amended version was moved out of Senate Early Learning and K–12 Education Committee. It will have a public hearing before the Senate Ways and Means Committee on April 5th. WASA is opposed to this bill for the additional unfunded costs that will fall on districts.

2SSHB 1087 concerns long-term services and supports. It is scheduled for a public hearing before the Senate Ways and Means Committee, April 5th. This bill is a major AARP want.

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 the Senate 40–06 and has been sent to the Governor for action.

Caveats: At this point in the process, previous bills thought ‘dead’ may bob to the surface regardless of where they were earlier in the session. The discussion of revenue and any resulting actions has just begun. Both proposed budgets include varying amounts of assumed revenues from changes in the present systems. Clearly, some revenue bills need to be passed. No easy feat. And if they are not passed, then both budgets need to make further cuts in their proposals. Even while holding the majority, it is clear that the Democratic caucus is split. One example is HB 2158, which would change some B & O taxes and impose taxes on some services among other things. Needless to say, there was a great deal of testimony opposed and in favor of making these changes. The net effect? The Senate Finance Committee, even with a Democrat majority, has scheduled executive action on this bill twice and postponed action. The third try will on the 5th.

Keeping to the river metaphor, each proposal to raise dollars dams the river and slows the flow. Breaching these dams will not be easy.

Fred Yancey
The Nexus Group

P.S. Purely as an aside, two Republican budget amendments out of the 40+ were proposed that give a glimpse of how game playing occurs among these legislative adults. The Republican goal here was to either embarrass the Democrats or at least have them awkwardly defend something.

One amendment transferred $1.7 million dollars budgeted to the Department of Corrections to provide hot breakfasts for inmates. The R’s proposed transferring those dollars to the Meals on Wheels Program instead pitting seniors in need against convicts. “DOC couldn’t find existing money to provide hot breakfasts? Even hot oatmeal?” Statements like “That sure must be expensive oatmeal.” and “Our seniors could benefit from this expansion.” were heard. This was debated and then defeated on party lines.

The other amendment took $3.5 million dollars from the Governor’s biennial budget for security costs related to his executive protection unit and transferred those dollars to increase breast, cervical and colon cancer screening. The R’s wanted the Governor’s Presidential Campaign Committee to reimburse the state for any campaign related travel and resulting security coverage pitting a run for President against increasing cancer screens. (Senator Ericksen cattily pointed out that Inslee’s campaign may not even have enough money to reimburse the state.) After an awkward debate, this was also was defeated with a party line vote.

Such is Olympia.

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