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The Nexus Group: Retirement & Benefits for March 20


Retirement and Health Benefits: March 20

The two main issues of importance this week are the continuing need by districts to increase the pool of substitutes available and the re-emergence of two fairly draconian pension reform bills.

SHB 1737 Addressing the availability of retired teachers as substitutes.

To review, this bill passed the House on a 97–1 vote. It has been 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 challenge remains to get a hearing and then a vote before the Committee over the objections of Senators Bailey and Schoesler. What’s important to bring to their attention is that this bill is not a carte blanche opening of the door for retire-rehire abuses. Districts must document a need, the individual is limited in the total hours possible to work, and the bill will sunset. These changes from the original proposal should continue to be pointed out to these two senators and other members of the Committee. The need to increase the number of substitutes available is critical and will only grow more so.

The deadline for bills to have cleared the Senate Ways and Means Committee is April 7.

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. It is scheduled for Executive Session and a presumed vote out of the Committee on March 26.

SSB 5976 Establishing a consolidating purchasing system for public school 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.

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.

This bill did not make it to the floor for a vote so is ‘dead’ for now. However, since there is talk among legislators about looking at K–12 collective bargaining at a state level, the issue of health benefits will certainly be raised during that discussion should it occur.

Two pension-related bills that were introduced earlier in February are now scheduled to be heard by the Senate Ways and Means Committee. Both bills were introduced by Senator Braun as the sole sponsor. Senator Braun is the Vice Chair and right-hand person to chair of the Committee, Senator Andy Hill.

Both bills, if approved, would represent harsh and dramatic changes in the present pension system. WASA and AWSP are discussing how best to deal with these bills.

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

Summary of Bill: 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.

This bill is scheduled for a public hearing on Tuesday, March 24, before the Senate Ways and Means Committee at 3:30 PM.

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

Summary of Bill: 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). For persons first employed after December 31, 2015, the annual contributions to higher education defined benefit plans by the state universities, the regional universities, The Evergreen State College, the State Board for Community and Technical Colleges and the Student Achievement Council may not exceed 10 percent of the state average annual wage for the prior calendar year. The Department of Retirement Systems must inform members and employers of the annual changes to the state average wage limit.

So, if I read this correctly, the maximum retirement benefit someone in SERS, PERS, and TRS with 30 years and at age 65 could receive would be 60% of the state average wage of $52,635. ($31,581/year or $2,632/month).

This bill is scheduled for a public hearing before the Senate Ways and Means Committee on Tuesday, March 24, at 3:30 PM.

Fred Yancey
fyancey@comcast.net
The Nexus Group