Retirement & Health Benefits: 2015 Session Review

Review of 2015 Legislative Session: Health Care, Pensions, Financials, and Other Issues

Many policy bills that have been proposed earlier in the Session failed to advance by the numerous Sine Die’s. Therefore, the legislative focus on these issues and resulting legislation has shifted and they appear to be “dead” or in a deep sleep until the start of the next shorter session in January 2016 where they may be revived and returned to their house of origin.

“Ay, but to die, and go we know not where.” Measure for Measure

The key themes to these bills to continue monitoring focus on are:

1. Efforts to increase the state’s minimum wage for all employees.
2. Funding and providing sick and safe leave for all employees in the state.
3. Fundamentally changing any aspect of the state’s current pension system.
4. Addressing the need to increase the substitute teacher candidate pool.
5. Moving to a state-wide consolidated health care insurance model for K–12 employees.

Successes from the recently concluded session include:

1. The Senate budget proposed cut to the health care insurance benefit for school Medicare retirees from the present $150/month to a proposed $110/month. This insurance is purchased through the Public Employee Benefit Board (PEBB). This cut did not survive thanks to the efforts of the House Democrats. The $150 reduction in insurance costs for those retirees remains in place.
2. The health care benefit was increased from $768/month to $780/month which was an increase considering the original proposals from both houses maintained the present $768/month.

Minimum Wage/ Sick/Safe Leave

These bills represent issues dear to the House Democrats. They failed to advance this session but are expected back next session.

HB 1355: Increasing the minimum hourly wage to twelve dollars over four years passed the House on March 3rd (51 to 46 with 1 excused). No action to advance the bill taken in the Senate.

HB 1356: Establishing minimum standards for sick and safe leave from employment passed the House on March 3rd (51 to 46 with 1 excused). No action to advance the bill taken in the Senate. This proposal could have expensive costs to school districts. A fuller discussion was made in the March 27th TWIO.

Substitute Teachers

Even though districts and most legislators know of the critical need for substitute teachers, major bills to increase the pool of those available ‘died’. Senator Bailey, (Gig Harbor) and Senator Schoesler (Ritzville) were adamantly opposed to these bills and so they failed to advance in the Senate. A continuing effort will be made to have the Select Committee on Pension Policy (SCPP) formally address this issue and make a recommendation to the Legislature for action. A caveat is that both Senator Bailey and Schoesler sit on that committee.

SHB 1737: Addressing the availability of retired teachers as substitutes passed the House on a 97–1 vote. It was sent to the Senate Ways and Means Committee. Chairman Senator Andy Hill ‘pulled’ the bill from any further consideration by the Senate. This was mixed news, since the committee had before it a striker that would have changed the bill to limit the hours to 216 instead of the House version that allowed 630 hours.

Sadly, Senator Parlette (Wenatchee) had earlier in the Session proposed SB 5148 which would have allowed members who retire early under the alternative early retirement provisions to work as substitute teachers and continue to receive retirement benefits at the same time with no restrictions. But this effort was stymied by Bailey and Schoesler’s opposition.

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. Although, it passed out of the House Education Committee on March 26 no further action was taken by the House.

On another front, Helen Paroff of WASA, and I are working with the Professional Educator Standards Board (PESB) to update the certificates for substitute teachers. One change would allow student-teachers to not only continue subbing for their master teacher but also sub in any position within their building or the district for which they are seeking an endorsement. Any changes adopted by PESB will not come before October.

Pensions

There were no bills passed that dealt with pension reform. However, ‘negative’ reform bills were introduced in the Senate by critics of the present system that still remain alive for potential action in the upcoming short session. Senator Braun, from Chehalis was the prime sponsor of most of these proposals. He is the vice-chair of the Senate Ways and Means Committee, (WM), with a great deal of influence over its actions. In fact, any move to change the pension system, such as proposed and passed in HB 1109 which simply allowed certificated OSPI staff to belong to the TRS system failed to advance in the Senate.

SB 5982: Addressing retirement age provisions for new members of the state retirement systems administered by the department of retirement systems by moving retirement age from 65 to 67. This saw no movement beyond its introduction and a public hearing before the WM committee.

SB 6005: Establishing the state average annual wage as the maximum compensation to be used for calculating state retirement benefits. (60% of approximately $53,000) This saw no movement beyond its introduction and a public hearing before the WM committee.

SB 6076: Garnishing up to 50% 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. This saw no movement beyond its introduction and a public hearing before the WM committee.

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. This saw no movement beyond its introduction and a public hearing before the WM committee.

Health Insurance

SSB 5976: Establishing a consolidated purchasing system for public employees was proposed. This bill would have created 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. This bill had a public hearing before the Senate WM but no further action was taken. Instead, the Health Care Authority released its report on the pros and cons of a consolidated health care plan. See discussion below:

A Brief Summary and Analysis of the Heath Care Authority’s Report on Consolidating Health Care Benefits.

Background: The 2012 Legislature passed and the Governor signed ESSB 5940 which had the following goals:

1. Improve transparency of the health benefit and financial data,
2. Create greater affordability for full family coverage compared to employee only coverage with the goal being a cost ratio no greater than 3:1,
3. Significantly reduce administrative costs, and
4. Assess the advantages and disadvantages of consolidated purchasing of health insurance for certificated and classified staff either through the establishment of a separate employee group, School Employee Benefit Board (SEBB) or through the existing Public Employee Benefit Board (PEBB).

The Health Care Authority (HCA) delivered a report to the Legislature on June 1, 2015. Said report will then be presented to the Joint Legislative Audit and Review Committee (JLARC) in December 2015 with the final report to be presented January 2016 for legislative consideration and possible action.

Brief summary: Presently in the K–12 world, there are 9 carriers and 764 different health care plans. The cost of these has risen over 25% during the last three years. Consolidation under PEBB governance versus SEBB governance, using PEBB eligibility and contribution rules, results in the greatest advantages to K–12 employees selecting full family coverage in terms of premium costs and value, but either advantage increases costs to single users and adds a significant cost to the State and school districts. Increased costs to school districts range from $31 million to $117 million depending if the SEBB or PEBB model is selected. There is also a cost impact to individual rates. Rates would increase for individuals but significantly decrease those choosing family coverage. Currently the aggregate premium ratio for individual rate versus family is 10:1. The legislation seeks and the study succeeds in achieving a 3:1 ratio. There is a great deal of data contained in the lengthy report including detailed fiscal impacts on individual school districts. The following is a link to the whole report: http://www.hca.wa.gov/documents_legislative/K12EmployeeBenefits.pdf

Selected Financials

ESSB 6052 State Budget

Below are selected financial figures from the adopted and signed 2015–2017 budget:

Interesting side-note: The carve-out remittance requirements shall not apply to employees who purchase insurance benefits through contracts with the Health Care Authority.

If you have any questions, please feel free to contact me.

Fred Yancey
The Nexus Group