Review of 2022 Legislative Session

Definition of “An embarrassment of riches”.
So many good things that it is difficult to fund just one.

Pensions, Health Care, SEBB, PEBB, & Other

The legislative session has concluded, the Governor has acted, and now as the show goes on, districts have to adjust.

The supplemental budget (ESSB 5693) approved by the Legislature and the Governor increased general fund spending to $64 billion, an increase of $5 billion
over the budget approved in April 2021. The final budget increased state spending by 24% over the previous biennium and by more than 50% since 2017.

The spending growth was fueled by stronger than expected tax collections and an infusion of Federal one-time dollars. The Legislature chose to dedicate more than 80% of these unexpected revenues toward new spending programs.

The final budget only maintains $821 million, or 2.8% of the budget, in reserves. However, it is also important to consider the general fund’s ending balance, the budget stabilization account (BSA) balance, as well as the new Washington Rescue Plan
Transition Account (WARPTA). There is a cushion of sorts. But even so, should the economy ‘tank,’ then the next session could be one of cutbacks…or as some call them, ‘claw backs’.

Similar to the last session, dollars were spread like peanut butter among many different entities, K–12 being one.

So, what happened regarding pensions, health care, financials, and other issues? Listed, unless stated otherwise, are bills that have passed both Houses and signed by the Governor.

Pension/Retirement Related Proposals

Retirement Related Proposals

SB 5676 | This bill will provide a one-time 3% benefit increase to certain retirees of the public employees’ retirement system
plan 1 and the teachers’ retirement systems up to the first $44,000 of pension income. ($110/month/maximum). This bill passed and was signed by the Governor. Effective July 1, 2022.

EHB 1699 passed. It will permit individuals retired from the PERS, TRS and SERS retirement systems additional opportunities to work
for a school district for up to 1,040 hours per school year while in receipt of pension benefits until July 1, 2025, including administrators in districts less than 2,000 students. The Governor signed the bill and because of its emergency clause it
became effective March 23, 2022.

EHB 1752 adds the option of Roth-qualified contributions to the public employee deferred compensation plan operated by the Department
of Retirement Systems. It has been signed by the Governor and becomes effective June 9, 2022.

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

Last session (2021), Section 1212 (3) of the 2020 budget read “The health care authority must study the potential cost savings and improved efficiency in providing insurance benefits to the employers and employees participating in the public employees’
(PEBB) and school employees’ benefits board (SEBB) 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,
assume a consolidation date of January 1, 2022.”

The HCA submitted a study that recommended consolidation and SB 5718 was introduced in the 2022 session. The concept was to keep K–12
non-Medicare retirees in the SEBB pool rather than currently moving them into PEBB. But there was too much complexity to make what was assumed to be an easy change, so the health care authority withdrew the proposal. It is likely to be reintroduced
in the 2023 session.

Other Bills

SSB 5326 (ESHB 1813)
mandates that the costs of contracted employee health and retirement benefits must be built into school district contracts for pupil transportation.

Both bills died in their respective houses last session, but the Senate version was reintroduced in 2022 and put immediately on the floor calendar. The Senate chose to place in the “X” file (which is, the graveyard for proposed bills), but
it is expected to rise from the dead again in some form during the 2023 session. (See future projections below.)

Other Bills That May Have Fiscal/HR Impacts For Districts.

SHB 1617 | Specifies that all state holidays are also school holidays on which school may not be taught clarifying that Juneteenth
is to be a school holiday. This bill was signed by the Governor and becomes effective July 1, 2022.

SHB 1732 | The implementation of many of the activities related to the Long-Term Services and Supports Trust Program (Trust Program)
are delayed. The date for beginning the collection of premium assessments under the Trust Program for both employees and self-employed persons is delayed by 18 months from January 1, 2022, until July 1, 2023. Premiums collected from employees before
July 1, 2023, must be refunded to the employee within 120 days of collection by the employer or by the Employment Security Department through the employer. Persons born before January 1, 1968, who do not pay the premium for the required 10 years needed
to become vested in the full number of benefit units may receive partial benefits under the Trust Program. For each year that persons in this population make the premium payments for the minimum of 500 hours, they may receive 10 percent of the maximum
number of benefit units. Persons in this population may still qualify for full benefits if they have paid the premium for three years within the last six years. This bill signed by the Governor on 1/27/2022 became effective immediately.

ESHB 1733 | Voluntary exemptions from the payment of premiums under the Long-Term Services and Supports Trust Program (Trust Program)
are established for employees in one of four categories:

1. An employee who is a veteran of the United States military who has been rated by the United States Department of Veterans Affairs as having a service-connected disability of at least 70 percent may apply for an exemption from the Trust Program.
2. An employee who is the spouse or registered domestic partner of an active-duty service member of the United States Armed Forces may apply for an exemption from the Trust Program.
3. An employee who holds a nonimmigrant visa for temporary workers who is employed by an employer in Washington may apply for an exemption from the Trust Program.
4. An employee who is employed in Washington but maintains a permanent residence outside of Washington as the employee’s primary location of residence may apply for an exemption from the Trust Program.

Unless a specified condition for termination of the exemption occurs, employees approved for an exemption are not required to pay the premium assessment, may not become a qualified individual or eligible beneficiary, and are permanently ineligible for
the Trust Program. This bill signed by the Governor on 1/2/7/2022 becomes effective June 9, 2022.

ESHB 1795 | Silenced No More Act: Non-disclosure agreements (NDA’s) are often standard parts of dismissal settlements. This act
makes void and unenforceable provisions in agreements between an employer and employee that prohibit the disclosure of conduct that is illegal discrimination, harassment, retaliation, a wage and hour violation, or sexual assault, or that is against
a clear mandate of public policy, occurring in the workplace. The bill signed by the Governor becomes effective June 9, 2022.

SHB 1902 provides for reopening a workers’ compensation claim where the provider fails to submit the application. This bill signed
by the Governor becomes effective June 9, 2022.

ESSB 5115 creates an occupational disease presumption for frontline employees during a public health emergency for the purposes of
workers’ compensation. • Requires employers to notify L&I when a certain percentage of their workforce becomes infected during a public health emergency. • Requires employers to provide written notice to employees on the premises
and their union of p