Retirement & Health Benefits: 2018 Session Review

“The future depends on what we do with the present.”

Mahatma Gandhi

Review of 2018 Legislative Session

Pensions, Health Care, SEBB, PEBB, Other……

At the risk of repetition, the legislative session and Governor’s actions have concluded. This was a session that was akin to a sprint to the finish line with the Democrat majorities in both houses pushing many pieces of legislation that had stalled in previous sessions. There were 1,425 new bills introduced and 310 passed during this 60-day session. In 2017, for comparison, for the 193 days of regular and special sessions, 377 bills passed.

So, what happened regarding pensions, health care, financials and other issues?

Pension Related Proposals

Cost of Living Adjustments:

The original SSB 6340would have provided a 2% cost of living adjustment (COLA) to TRS1 and PERS1 members. As part of the final budget, ESSB 6032, the COLA was reduced to 1.5%. This passedboth houses and has been signed by the Governor. It provides certain retirees of Plan 1 of the Public Employees’ Retirement System (PERS) and Plan 1 of the Teachers’ Retirement System (TRS) who are receiving a monthly benefit on July 1, 2017, a one-time benefit adjustment of 1.5% multiplied by their monthly benefit, not to exceed $62.50, effective July 2018. (By request of the Select Committee on Pension Policy.)

In a separate part of the budget, the Medicare health insurance benefit subsidy was increased from the current $150/month to $168/month in 2019. This was done to insure the state Health Care Authority (HCA) continues to receive federal funds in excess of $20 million dollars for paying this subsidy/benefit.

SB6210B waspassedby both houses and signed by the Governor. It would allow tribal compact schools the option of participating in Plans 2 or 3 of the Teachers’ Retirement System (TRS) and Plans 2 or 3 the School Employees’ Retirement System (SERS).(By request of the Select Committee on Pension Policy.)

Retirement Plan Default:

HB 1560would have allowed Public Employees’ Retirement System (PERS), School Employees’ Retirement System (SERS) and Teachers’ Retirement System (TRS) members who don’t choose between Plan 2 and Plan 3 within 90 days of initial employment would default into Plan 2. Currently, such members default into Plan 3.  

This bill died. The Chair of the Senate Ways and Means Committee indicated she was uncomfortable dealing with this issue until the Select Committee on Pension Policy (SCPP) made a recommendation. 

Substitute Options for early Retirees

There were a number of bills that dealt with expanding opportunities for early retirees to return to work in various substitute capacities. They were consolidated into E4SHB 1827. Thiswas a large bill whereexpanding the current and future educator workforce supply was just one part of the proposal. Although it passed the House, it failed to pass the Senate. Last session(s), the law was changed to allow early retirees to return to school as substitutes under certain conditions. This proposal would have removed both the August 1, 2020 sunset date for that allowance and the directive regarding substitute pay. It would have allowed retirees to return to work in any non-administrative capacity including classified employees such as bus drivers, OT’s, PT’s, etc. 

SB 5310 would have allowed a temporary return to work for early retirees to work as K-12 coaches up to 867 hours. Although it passed the Senate, it made no progress in the House.

School Employee Benefit Board (SEEB)Health Related Proposals

ESSB 6241 This bill was a ‘clean up’ bill requested by the Health Care Authority (HCA). It was amended and a number of changes lobbied by WEA and PSE and clarifications were made. 

A couple of interesting additions included permission to negotiate eligibility for benefits on behalf of employees who work less than 630 hours. (A reminder than any employee expected to work 630 or more hours is eligible.) Another one would allow districts to provide other employee benefits as long as they do not compete with PEBB/SEBB offerings. 

The bill passedboth chambers and has been signed by the Governor.  

It’s important to briefly review EHB 2242 whose title is “Funding fully the state’s program of basic education by providing equitable education opportunities through reform of state and local education contributions”. Although it passed and was signed in 2017, it laid out the SEBB conversion requirements and plan. 

An important date approaching concerns bargaining. Section 817(3) reads in part: “…Employee bargaining shall be initiated after July 1, 2018,36 over the dollar amount to be contributed beginning January 1, 2020, on behalf of each employee for health care benefits. Bargaining must subsequently be conducted in even-numbered years between the governor or governor’s designee and one coalition of all the exclusive bargaining representatives impacted by benefit purchasing with the school employees’ benefits board established in section 801 of this act, consistent with RCW 28A.400.280 and 28A.400.350. The coalition bargaining must follow the model initially established for state employees in RCW 41.80.020. The governor shall submit a request for funds necessary to implement the collective bargaining agreement for the dollar amount to be expended for school employee health benefits, or for legislation necessary to implement the agreement….

The Governor vetoed Section 819 which ends the reporting requirements for school employee health insurance benefits to the Office of the Insurance Commissioner. However, reporting requirements for districts to supply requested information to the HCA in support of making the conversion to a SEBB model remain in effect.

The SEB Board was/is directed to also look at what to do with the aging non-Medicare and Medicare retirees. Section 804(4) reads in part: “ By December 15, 2018, the health care authority, in consultation with the public employees’ benefits board and the school employees’ benefits board, shall submit to the appropriate committees of the legislature a complete analysis of the most appropriate risk pool for the retired and disabled school employees, to include at a minimum an analysis of the size of the non-Medicare and Medicare retiree enrollment pools, the impacts on cost for state and school district retirees of moving retirees from one pool to another, the need for and the amount of an ongoing retiree subsidy allocation from the active school employees, and the timing and suggested approach for a transition from one risk pool to another…”

ESHB 2408 Relating to preserving access to individual market health care coverage throughout Washington state.For plan years beginning January 1, 2020, a health carrier must offer in the Washington Health Benefit Exchange (Exchange) at least on Silver and one Gold qualified health plans (QHP) in any county in which it offers a fully insured health plan that was approved, on or after the act’s effective date, by the Public Employees’ Benefits Board (PEBB) or the School Employees’ Benefits Board (SEBB). The rates for a PEBB or SEBB-approved health plan may not include the administrative costs or actuarial risks associated with the QHP offered by the carrier. 

This bill has passedboth chambers. 

Post-Session re: Health CarePost-session is when the SEEB process begins in earnest. The Select Committee on Pension Policy will also restart.

Recent meetings have been held by the SEB Board and the PEB Boards. A summary of content with assorted links to the materials is below. Topics and issues discussed have significant consequences to districts. 

Family and Medical Leave

HB 2702 makes technical corrections requested by the Employment Security Department in the Family and Medical Leave Act passed last session. It passed both houses and is awaiting action from the Governor.  

ESHB 1434 Adding the use of shared leave for employees who are sick or temporarily disabled because of pregnancy disability or for the purposes of parental leave to bond with the employee’s newborn, adoptive or foster child. 

The purpose of the Shared Leave Program (Program) is modified to permit employees to help fellow employees who are sick or temporarily disabled due to pregnancy disability or for parental leave. Agency heads may permit employees to receive shared leave for parental leave, or for sickness or temporary disability due to pregnancy disability. Employees are not required to deplete all of their annual and sick leave and may maintain up to 40 hours of annual leave and 40 hours of sick leave in reserve.

For purposes of the Program, “parental leave” i