Retirement & Health Benefits for April 19, 2019

Fred Yancey | The Nexus Group
Apr 19, 2019

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“Time is like a river,
made up of the events which happen, and a violent stream;
for as soon as a thing has been seen, it is carried away,
and another comes in its place,
and this will be carried away too,
until at last something hits shore.”
― Marcus Aurelius

After this last deadline, attention now moves to both chamber floors. Action will primarily consist of both chambers debating and voting on bills that have passed either chamber. I’ve earlier explained the concurrence, dispute, and/or conference committee avenues of resolution. Simultaneously, meetings often held in backrooms away from public and member scrutiny, are being held as issues like the budget and revenue enhancements are bargained.

A “**“ before a bill indicates that is it either NTIB (Necessary to Implement the Budget) or as I’ve suggested, NTPB (Necessary to Pass the Budget). Therefore, the issue remains alive as does anything the Legislature wants to revive or introduce.

Retirement/ Pension Related Proposals

SB 5360 changes the present retirement plan default for new hires from Plan 3 to Plan 2, effective July 1, 2020. Since this bill is now identical to the House version, it will be sent to the House for concurrence.

**SB 5999 appropriates $183,749,000 from the Budget Stabilization Account (BSA) to be used to reduce the Teachers’ Retirement System Plan 1 underfunded actuarially accrued liability which is estimated to be $3 billion dollars. Currently, employers are paying an added surcharge on pension contributions to help decrease the unfunded liability. The current plan is to be 100% fully funded by 2026. Keep in mind that is because of a projection that projects premiums and deaths of the older members. It was passed by Executive Session in the Senate Ways and Means Committee and sent to Rules.

Although, sound in principle, caution should be applied. WSSDA testified in support of moving these dollars that currently earn 3% into a fund that earns 7%. “It just makes financial sense.” However, removing these dollars from the BSA also removes dollars that could be used in the future to fund other needs like special education’s unfunded costs? These dollars could be used to avoid cuts that may come should a recession occur. Another bill, SB 6009, passing committee, makes expenditures from the BSA for declared catastrophic events (like fires). How many times can the Legislature go to this well for funds, and not close the door for other uses?

SJR 8211 proposes an amendment to the Constitution concerning revenues from certain premiums, contributions, and other charges imposed on wages. Sponsors: Braun, Keiser, Palumbo, Schoesler, Conway, Van De Wege. This bill was introduced late but has been scheduled for hearing and action before the Senate Ways and Means Committee. It is a ‘simple’ bills that states, “Notwithstanding any other section or article of this Constitution, revenues from premiums, contributions, or other charges imposed on wages for the purpose of creating an actuarially sound system for the provision of future benefits or services only to payers must be deposited into a special fund in the state treasury to be used exclusively for the purposes for which it was imposed.” The bold print was to show the ‘catch’. Clearly this is to ensure that certain funds cannot be ‘raided’ to help balance the budget. The Committee took no action on this bill.

Substitute Options for early Retirees

E2SHB 1139 expands the current and future educator workforce supply. It passed the Senate 26–22 and has been sent back to the House for concurrence with its changes/amendments.

**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. It is contained in ESHB 1109 which is the budget adopted by the Senate.

SB 5350 authorizes an individual at the time of retirement, to purchase an optional actuarially equivalent life annuity benefit. This bill has passed both chambers and is awaiting signatures.

School Employee Benefit Board (SEEB) Health Related Proposals

HB 2096 asks for a 2-year delay in SEBB implementation for ESD’s. This proposal is technically ‘dead’. However, an amendment to the budget was adopted and is part of ESHB 1109 cited above. It is likely to die. (Budget provisos/amendments can fund actions, but it is a stretch for a budget to establish a policy that has not been passed in legislation by the legislature.)

**SB 6011 concerns health care benefits for public school employees. Sponsors: Mullet (D), Braun (R). This bill was introduced late, (April 13), and has not been scheduled for a hearing. It is a direct outgrowth of proposed budget amendments that failed. Both Senators are concerned with the high cost of SEBB. This bill would help to correct that and according to staff save an estimated $150 million dollars. Among other provisions it would raise the qualifying bar to 1,040 hours and allow for the prorating of benefits.

The issue of SEBB and funding may well be an ‘endgame’ budget player. Stay tuned.

Other Bills That May Have Fiscal/Hr Impacts For Districts

ESHB 1813 did not make it out of Senate Rules. This bill provides that school districts could only enter into pupil transportation service contracts with nongovernmental entities that provide health and retirement benefit contributions to their employees that are equivalent to those received by school employees. It appears to be ‘dead’, however, with the strong labor focus of this session, this may be one to come back.

2SHB 1087 concerns long-term services and supports passed the House 63–33 and passed the Senate 26–22. Because of adopted amendments, it has been sent back to the House for further action.

Beginning January 1, 2022, employers will collect from employees in Washington who are working an assessed premium of 0.58 percent of their wages for deposit into a state dedicated fund. Once qualified due to work history, an individual could claim up to $36,500 in lifetime benefits toward meeting the costs of aging and ailing.

SHB 1399 makes technical corrections requested by the Employment Security Department in the Family and Medical Leave Act passed last session. Signed by the Governor, this becomes in effect on 7/28/19.

Fred Yancey
The Nexus Group




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