Retirement & Health Benefits for March 6, 2020

Sometimes there is no solution.
Sometimes there’s simply an end.
As the clock continues to run…
~ Sara Ella

The session is moving toward Sine Die and there’s a great deal of unknowns still to come. It’s the part of the session where bills need to be voted out of their opposite house. Some bills will make it; others will die as the clock runs down.

Each chamber has lengthy lists of other bills eligible for debate and votes. Many won’t make it. There are at least four main areas yet to be dealt with, any of which will take a great deal of floor time as bills addressing these are debated. These are bills that seek to establish a low carbon fuel standard, a clean air rule, guidelines protecting data privacy and those that deal with the repeal of the Boeing tax break. Additionally, time can be consumed by virtue of debating proposed amendments attached to these or any remaining bills.

Here is a summary of bills that are still ‘alive’ to date, subject to change. Remember that no bill is really ‘dead’ until Sine Die. Bills with fiscal impacts can be deemed ‘necessary to implement the budget’ (NTIB) or just plain deemed necessary by a majority of a legislative body.

Retirement Related Proposals

Proposed bills dealing with providing a benefit increase to those members in TRS1 and PERS 1 plans can easily be seen as NTIB (Necessary to Implement the Budget) so will remain alive until Session ends.

SSB 5400 at the request of the Select Committee on Pension Policy grants TRS/PERS Plans 1 beneficiaries an increase to their monthly benefit of three percent multiplied by the beneficiaries’ monthly benefit, not to exceed sixty-two dollars and fifty cents on the first $25,000 of benefit. Its companion bill is EHB 1390.

Both bills unanimously passed their respective houses. Both budgets also funded this cost of living adjustment. The challenge is that one of the bills has to pass out of the opposite house.

EHB 1390 has been moved to the Senate calendar where it awaits action to bring it to debate and a vote. SHB 5400 remains in House Rules.

SB 6383 | Concerning the retirement strategy funds in the plan 3 and the deferred compensation programs. Basically, retirement strategy funds offered by the State Investment Board in the Plans 3 and DCP (Deferred Compensation Program), if the bill is passed, may include investment in the State’s Commingled Trust Fund.

This bill passed the Senate 47–0 and is now on the House calendar for debate and vote.

HB 2956 was introduced late. It proposes to take the extra dollars the state will receive once it repeals the Boeing tax preferences the Legislature had granted them in the past to provide funding for the unfunded liabilities in the teachers’ retirement system and the public employees’ retirement system Plans 1. (Boeing has asked for this repeal to avoid receiving substantial fines from the European Union.)

It is NTIB so will be one of many suggested uses of these ‘extra’ Boeing dollars. The Legislature is divided on how to handle Boeing’s request for this action. Some want it to return only with performance guarantees (read ‘jobs’); others want no strings attached.

HB 2945 before House Rules is the bill repealing and then reinstating this tax preference. SB 6690, its companion is in Senate Rules.

School Employee Benefit Board (SEEB) and Other Health Related Proposals

ESSB 6189 | Directs the Joint Legislative Audit and Review Committee to study the number and types of part-time employees that are eligible for School Employees’ Benefits Board coverage. Directs the Health Care Authority to analyze changes to the requirement that employers pay premiums when employees waive coverage. Reports are due Sept. 1, 2021. Prohibits dual enrollment in School Employees’ Benefits Board and Public Employees’ Benefits Board plans. Previous TRIO’s have noted concerns with the bill as written.

This bill is in House Rules awaiting movement to the floor calendar.

HB 2458 | Concerning optional benefits offered by school districts.

Specifies that school district optional benefits may not compete with any basic or optional benefits offered through the School Employees’ Benefits Board. Grants school districts express authority to offer employee-paid, voluntary benefits to school employees that are paid by employees through a payroll deduction that may fall under the SEB Board’s authority, but that are not being provided by the SEB Board. This can include personal lines homeowner’s insurance, private passenger automobile insurance, and accident only, specified disease, and other fixed payment benefit insurance. Includes a legislative finding that supplemental fixed payment insurance plans offer financial protection and do not conflict or compete with basic medical or disability plans.

This bill has been placed on the Senate floor calendar and is awaiting debate and a vote.

SHB 2325 the 2019–21 proposed Supplemental Budget, adopted an amendment that directs the Office of Superintendent of Public Instruction, in consultation with the healthcare authority, to study and report on school districts’ utilization of substitute teachers and the impact of the School Employees’ Benefits Board program on substitute teacher staffing. By December 1, 2020, and in compliance with RCW 43.01.036, the Office of Superintendent of Public Instruction must submit the report to the appropriate fiscal and policy committees of the Legislature. The report must include the following:

1. The number of individual and full-time equivalent substitute teachers employed in the 2018–19 and 2019–20 school years by district.
2. Substitute teachers as a percentage of classroom teachers for the 2018–19 and 2019–20 school years by district.
3. The number of substitute teachers eligible for the school employees’ benefits board program by district.
4. Impacts, both positive and negative, of the school employees’ benefits board program on substitute teacher staffing.
5. Options for substitute teacher eligibility under the school employees’ benefits board program, including possible exceptions for substitute teachers.
6. Recommendations for preserving an adequate pool of substitute teachers while consistently classifying substitute teachers for health benefits eligibility.

The bill passed the Appropriations’ Committee and has been sent to House Rules for further action.

Other Bills

ESHB 1813 mandates that the costs of contracted employee health and retirement benefits must be built into school district contracts for pupil transportation.

The bill was amended by the Senate Ways and Means Committee. Sen. Braun proposed and Chair Rolfes agreed to adopt a ‘null and void clause’ making this bill null and void if specific funding for the provisions of the bill is not provided in the omnibus appropriations act. Three plus scenarios could play out:

1. The bill never comes up for debate/vote as the clock runs out,
2. The bill passes and is then sent back to the House for concurrence, or
3. The bill passes, and the Governor vetoes the ‘null and void’ section placing the cost solely onto districts.

This bill has been moved to the Senate floor calendar for debate and a vote.

Other Bills That May Have Fiscal/HR Impacts for Districts

SHB 2614 | Concerning paid family and medical leave.

Makes numerous revisions to the Paid Family and Medical Leave program to provide clarity and improve the program’s administration, including waiting periods, conditional waivers, and supplementation of benefits. Exempts casual labor from the types of covered employment. Grants the Employment Security Department (ESD) statutory authority to administer oaths, take depositions, issue subpoenas, or compel a witness’ attendance in an administrative proceeding. Allows ESD to apply for and obtain a superior court order authorizing a subpoena in advance of its issuance. Authorizes employees to bring a private right of action to recover damages for an employer’s unlawful acts, under specified conditions. This bill is agency request legislation. Read the bill report.

It has passed the Senate (38–10–1) and sent back to the House for concurrence.

HB 2739 | Modifies definitions for purposes of the shared leave program. Allows an employee to maintain up to 40 hours of the applicable leave in reserve and still be eligible for shared leave. Allows intermittent and nonconsecutive use of shared leave. Removes the requirement that an employee pursue and be found ineligible for industrial insurance wage benefits for shared leave eligibility. Limits the amount of shared leave that an employee may receive when also receiving industrial insurance wage replacement benefits to 25 percent of base salary.

This bill has moved to the Senate floor calendar for debate and a vote.

ESSB 5473 | Requires the Employment Security Department to study the impacts to the unemployment trust fund and employer contributions for unemployment insurance by allowing exceptions to provisions disqualifying individuals from receiving unemployment benefits for leaving work voluntarily without good cause related to: 1. inaccessible care for a child or vulnerable adult; 2. substantial increases in job duties or working conditions without commensurate increase in pay; 3. separation from a minor child. Requires ESD to meet at least three times with business and worker representatives to discuss the information gathered by ESD. Removes modifications to the term good cause for unemployment purposes for the separation due to inaccessible care for a child or vulnerable adult and related to separation from work related to the death, illness, or disability of a family member.

The bill passed the House (57–40) and has been sent back to the Senate for concurrence.

SB 6123 | Allowing state employee leave for organ donation. Requires agencies to allow employees to take paid leave as needed, not exceeding 30 days in a two-year period, for participate in life-giving procedures.

This bill is in House Rules.

Addendum: Another area that legislators have focused on which easily can be viewed as benefits concerns prescription medications. Numerous bills have been proposed to deal with the high cost/affordability of prescription medication.

Some bills of note, if interested, are:

• E2SSB 6087
• E2SHB 2662
• SSB 6113
• SSB 6088

Unsolicited editorial: One of the most significant bills this session is SSB 6191, which seeks to assess the prevalence of adverse childhood experiences (ACES) in middle and high school students to inform decision making and improve services. My professional experiences have shown me that ACES are the key determiner that affects student (and even adult) behavior. If districts are given the resources to hire counselors who can assess the presence of and address issues associated with ACES, identified students will thrive. But the cynic in me says fiscal resources will never be enough to really address this need.

March 5, 2020 SEBB Meeting Recap

The SEB Board held a half-day meeting covering a few subjects. Use the briefing book to follow along the tabs below.

Three items that may be of interest are:

Tab 6

Lays out the legislative mandate SEBB/Health Care Authority (HCA) has to look at the consolidation of PEBB and SEBB programs.

Legislation was passed that stated the HCA must study the potential cost savings and improved efficiency in providing insurance benefits to the employers and employees participating in the public employees’ and school employees’ benefits board systems that could be gained by consolidating the systems.

The consolidation options studied must maintain separate risk pools for Medicare eligible and non-Medicare eligible employees and retirees and assume a consolidation date of January 1, 2022. The study must be submitted to the committees of the House of Representatives and the Senate overseeing health care and the omnibus operating budget by November 15, 2020.

Tab 7

Presents an update on SEBB program appeals. Since SEBB is up and running, beginning March 1, any subscriber appealing to the HCA will be directed to appeal directly with their district’s benefits’ administrator. The subscriber will have 30 days to appeal the benefit administrator’s decision to the HCA.

As a point of information, the bulk of appeals concerns dental plans (41%), dependent verification (28%) and other plan enrollment corrections (31%).

Training of the Benefit Administrators is ongoing. (See Tab 9)

Tab 8

Gives an overview of the SEBB implementation of medical Flexible Spending Arrangements (FSA) and Dependent Care Assistance Program (DCAP).

These are both salary reduction plans funded through voluntary payroll deductions. The briefing book gives some key specifics of these two options. Most notable is that if one doesn’t use the dollars ‘banked’ in the program, he/she will lose those dollars which will be forfeited to the HCA. According to HCA staff, from their PEBB experience – for the 10 years from 2009 through 2018 –an average annual forfeiture of about $382,000 was defaulted to the HCA.

There are a few technical refinements that affect the forfeit. See Tab for more info. For example, FSA grants a 2 ½ month grace period to claim funds after the end of the plan year. There are a few other details that can help an individual avoid a total forfeit.

FSA has 10,485 subscribers; DCAP has 1,666 subscribers. HCA is interested in improving participation. They are preparing a Request for Information from industry companies to gain more information.

Other:

The only public comment of note was by Julie Salvi, WEA. She asked in reference to Tab 6 above, that the SEBB not consider more changes in the health insurance arena. Districts and employees are still dealing with the huge changes involved in this new conversion into SEBB. “Let this settle in, before advocating for any more changes.”

She also mentioned the efforts that interested parties and the HCA are doing to address the issue of an employee maintaining eligibility for coverage if his/her hours are reduced due to absences related to the Covid–19 virus. Language has been developed to be added to ESSB 6189 to ensure that no employee loses benefits due to this issue. A draft of the proposed fix is attached.

New Section in RCW 41.05 (Concerning COVID–19)

(a) During any school closures or changes in school operations for the school employee;
(b) While the school employee is quarantined or required to care for a family member, as defined by RCW 49.46.210(2), who is quarantined; and
(c) In order to take care of a child as defined by RCW 49.46.210(2), who is enrolled in school employee benefits, when the child’s:

i. school is closed,
ii. regular daycare facility is closed, or
iii. regular child care provider is unable to provide services.

(2) Requirements in section (1) of this act expires when the Governor’s State of Emergency the state of Washington related to the novel coronavirus (COVID–19) ends.

(3) When regular school operations resume, school employees shall continue to maintain their eligibility for the employer contribution for the remainder of the school year so long as their work schedule returns to the schedule in place prior to February 29, 2020 or, if there is a change in schedule, so long as the new schedule, had it been in effect at the start of the school year, would have resulted in the employee being anticipated to work the minimum hours to meet benefits eligibility.

(4) Quarantine, as used in subsection (1)(b) includes only periods of isolation required by the federal government, a foreign national government, a state or local public health official, a health care provider, or an employer.

Fred Yancey/ Mike Moran
The Nexus Group