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The Nexus Group: Retirement & Benefits for March 27


Retirement and Health Benefits for March 27

The deadline is fast approaching for bills to be heard and then voted out of committee. They are then passed to their respective Rules Committee for placement on their chamber’s floor calendar for a possible vote. Some bills are being heard and voted out of committees, others are not yet scheduled for a hearing, and others are being held as potential bargaining chips for use near the end of the session (April 26). As the end nears, the question becomes, “What are the critical, ‘must have’ bills that each House insists on having?“

Here’s a recap:

Minimum Wage/Sick/Safe Leave

These next two bills are very dear to the House Democrats yet, opposed by the Senate Republicans. They represent potential bargaining chips as the House and the Senate barter bills in order to reach sine die.

HB 1355 Increasing the minimum hourly wage to twelve dollars over four years passed the House on March 3 (51 to 46 with 1 excused). It has been scheduled for a public hearing before the Senate Commerce and Labor Committee on March 30 at 1:30 PM.

The net effect on school districts is expected to be minimal.

The Senate Republicans do not support this bill, even though many in the business community say that if the Legislature doesn’t pass it to set a state minimum, cities, like Seattle has done, will set their own wages. One wealthy philanthropist has threatened to fund a statewide initiative setting the minimum wage at $15/hour.

HB 1356 Establishing minimum standards for sick and safe leave from employment passed the House on March 3 (51 to 46 with 1 excused). It too has been scheduled for a public hearing before the Senate Commerce and Labor Committee on March 30.

The bill would require employers, which include political subdivisions (school districts) of the state and any municipal corporation or quasi-municipal corporation with more than four full-time FTE’s, to provide paid leave to employees. Paid leave would be permissible for

  1. specified medical reasons relating to the employee’s or a family member’s health;
  2. reasons permitted under existing law requiring unpaid leave for purposes related to domestic violence, sexual assault, and stalking; and
  3. closure of the employee’s place of business or child’s school or place of care due to specified public health emergencies.

The leave is accrued based on the number of hours an employee works, ranging from one hour for every 40 hours worked to one hour for every 30 hours if a Tier 3 employer. Leave would be allowed to be carried over.

The fiscal note reads, “OSPI assumes districts’ leave policies provide a sufficient amount of leave to meet the hourly requirements for Tier 1–3 employers. Tier 1 employers have 5–49 FTE’s, Tier 2 (50–249 FTE’s) and Tier 3 employers have 250 or more FTE’s. Districts may have to modify policies to comply with the eligible uses of leave defined in the bill and if the updated policies result in an expansion of leave eligibility, districts may see an increase in leave usage, which could result in additional costs for substitute teachers.” The bill reads that paid sick and safe leave requirements do not apply to any employees covered by a bona fide collective bargaining agreement to the extent the requirements are expressly waived in clear and unambiguous terms.

This bill has some costs that I believe were unintended, but nevertheless could result from this bill. Universities who use student employees report that this bill would be very costly for them. Furthermore, OSPI did not consider the district cost for part-time employees such as a community coach for a sport who would qualify if he/she works more than 240 hours a year. Contract employees would need an hourly description for their positions. Cities and counties also know it will cost them, but as in the case of many numerous agencies in the fiscal note, the costs are indeterminate.

Substitute Teachers

Districts and most legislators know of the critical need for substitute teachers. There are two bills still ‘alive’ that address this issue.

SHB 1737 Addressing the availability of retired teachers as substitutes passed the House on a 97–1 vote. It was sent to the Senate and is still awaiting a scheduled hearing before the Ways and Means Committee.
The key parts of the bill are:

  1. Districts must document a shortage of certificated substitute teachers;
  2. The number of hours a retired teacher may work without suspension of retirement benefits was increased from 216 hours to 630 hours. (The intent was to basically allow up to a semester of substitute availability, but this would vary depending on the length of an individual school day.); and
  3. The bill will sunset August 1, 2019.

The Senate Ways and Means chair, Senator Andy Hill, will not hold a hearing on this bill unless either or both Senators Bailey and Schoesler ask. At this point, it appears the bill will not advance. Both Senators remain opposed to the bill. Senator Schoesler has said that the Select Committee on Pension Policy could look at this issue again during the interim and make a recommendation to the Legislature for next session.

The reasons they are so opposed to this bill are too numerous to detail. There is a certain amount of illogic in play, resentment over past abuses of the retire-rehire option, and general dislike for WEA. Enough said.

SB 5941 Concerning certification of adjunct faculty as common school substitute teachers.

This bill requires the Professional Educator Standards Board to amend or adopt rules that provide for issuance of the certification necessary to serve as substitute teachers, other than emergency substitute certification, to adjunct faculty currently employed in institutions of higher education who meet certain criteria.

The bill was approved by the Senate on a vote of 48–1. It had a public hearing before the House Education Committee on March 16 and was voted out of committee on the March 26 .

Pensions

These next set of bills could be viewed as examples of what has become the annual ritual of pension bashing by the Senate Republicans. The first two are examples of bills meant to address the high cost of funding pensions. The last two bills are a direct result of a televised ‘exposé’ of Washington’s practice of paying convicted child molesters who were teachers their pensions while they are incarcerated.

An important point is that all of these bills would only relate to persons hired after July 1, 2015.

A public hearing was held March 24 on all four bills. Only one person (representing the Freedom Foundation) testified in favor of any of them. Over 25 people testified in opposition to the bills.

SB 5982 Addressing retirement age provisions for new members of the state retirement systems administered by the Department of Retirement Systems.

Bill Summary: The normal retirement ages for PERS 2 & 3, TRS 2 & 3, SERS 2 & 3, PSERS 2 , LEOFF 2 and WSPRS members are each increased by two years for persons who first become members of the retirement plan on or after July 1, 2015. The reductions for early retirement and disability retirement for persons who first become members on or after July 1, 2015, are calculated based on the difference between the member’s age at retirement or disability and the new plans’ normal retirement ages. The proposed changes the present full retirement age 65 to age 67.

SB 6005 Establishing the state average annual wage as the maximum compensation to be used for calculating state retirement benefits.

Bill Summary: For persons who first become members of PERS 2 & 3, TRS 2 & 3, SERS 2 & 3, and PSERS 2, after December 31, 2015, the average final compensation used to calculate a retirement benefit, and the reported compensation upon which member and employer contribution rates are applied, many not exceed the state average annual wage for the prior calendar year. (The Washington state average annual wage for 2013 was $52,635).

DRS confirmed that, as an example, the maximum retirement benefit someone in SERS, PERS, and TRS with 30 years and at age 65 could receive if he/she retired this year would be 60% of the state average wage of $52,635. ($31,581/year or $2,632/month). Note, that the other retirement system enrollees, law enforcement, judges, firefighters, etc, are not affected by this proposal.

This bill had a public hearing before the Senate Ways and Means Committee on March 24.

The publicly stated intent of both these bills is to save the state money. Due to a reduction in rates, SB 5982 would save $38 million in the upcoming biennium. SB 6005 would save $28.9 million. The philosophically-expressed intent spoken by Senator John Braun, Vice-Chair of Ways & Means, is to have a pension system that operates as a ‘safety net,’ a la Social Security model.

SB 6076: Garnishing public pensions to pay for the costs of incarceration of a public employee convicted of a felony for misconduct associated with such person’s service as a public employee.

Bill Summary: This bill would allow the garnishment up to 50% of the gross monthly benefit for costs of incarceration, probation, parole, or restitution imposed on a member, former member, or retiree as a result of a conviction of or a plea of guilty or nolo contendere to the commission of a felony for misconduct associated with the person’s service as a public employee.

SB 6077 Authorizing the forfeiture of the pension of a public employee convicted of a felony for misconduct associated with such person’s service as a public employee.

Bill Summary: This requires a court, if a member of a state retirement system or plan is convicted of or pleads guilty or nolo contendere to an offense that is a class 1, 2, 3, 4, or 5 felony that was committed in the course of, or was related to, the member’s employment as a public official or public employee, to order that person’s membership terminated and the person shall forfeit all rights and benefits earned under the state retirement system or plan.

Both of these bills grew out of the KING 5 ‘exposé’ of the number of criminals receiving pensions. They have multiple Republicans who signed in as co-sponsors.

Those testifying in opposition made numerous points:

  1. Pensions are ‘private property’ and protected.
  2. The Supreme Court has held that pensions are sacrosanct.
  3. What effect would this loss of income have on the spouse and children?
  4. How do you pay restitution?
  5. Sentencing would change to treating people in terms of source of income instead of their behavior.

Senator Bailey, who was quoted extensively in the television piece, stated that the “public is demanding these changes and is upset over the present practices.” There was no line out the door that substantiated this statement. Instead, one representative from the Freedom Foundation testified in support.

Should any of these bills pass this session, it is unlikely the House will agree.

SB 6076 regarding ‘garnishment’ may be one of the ‘must haves’ for the Senate. (Politicians and new legislation tend to be driven by newspaper headlines.) However these play out, the bills would still remain alive for the ‘short’ session next year.

These bills could also be changed into ‘study’ bills. The Select Committee on Pension Policy, of which Senator Bailey currently chairs, would likely be charged with studying the proposals and making recommendations to the Legislature.

Health Insurance

SSB 5976 Establishing a consolidated purchasing system for public employees.

This bill creates the School Employees’ Benefits Board (SEBB), within the state Health Care Authority (HCA), to design and approve state-wide insurance benefit plans for school employees and to establish eligibility criteria for participation in insurance benefit plans. It would remove health benefits from collective bargaining at a district level and put the responsibility for statewide collective bargaining with the Governor or his designee.

This bill is virtually the same as SB 6442/HB 2724 which was introduced in the 2012 legislative session and received no floor action in the Senate, and no hearings in the House.

The stated intent of the bill to create savings through assumed efficiencies to assure equitable access to health care for all eligible employees and their dependents and to assure assumed cost-effectiveness through pooling, leveraged purchasing, and administrative simplification. One of the chief savings would come from an elimination of the broker and administrative fees currently paid in the private plans in place.

Even though this bill did not make it to the floor for a vote, it is rumored to be one of the potential end of session bargaining chips because many R’s and D’s believe it to be the proper direction to go regarding the provision of health benefits.

Fred Yancey
fyancey@comcast.net
The Nexus Group