“Want to see how people really are? Wait until money is involved.” ~ Anonymous

Review of the 2021 Legislative Session

The legislative session has concluded, the Governor has acted, and now as the show goes on, districts have to adjust. Clearly, the COVID virus, and Federal and state efforts to lessen the financial impacts on
states, businesses, and individuals, came into play during this session.

There were 1,448 bills introduced in this session. In total, 335 bills passed the Legislature. Democrats passed 266 (79.4%) and Republicans passed 69 (20.6%). Of the 335 total bills that passed, 24 bills (7.1%) squeaked through on party line votes. So,
what happened regarding pensions, health care, financials, and other issues? Listed, unless stated otherwise, are bills that have passed both Houses and been signed by the Governor.

Pension/Retirement Related Proposals 

SB 5021 | Re: retirement benefits/ furlough: This bill provides that specified public pensions will not be reduced as a result of compensation
reductions that are part of a public employer’s expenditure reduction efforts during the 2019–2021 and 2021–23 fiscal biennia. It also provides that the pension benefit of an employee covered by a pension system that is administered
by the Department of Retirement Systems is not reduced as a result of participation in an unemployment insurance shared work program, retroactive to July 28, 2013. Effective 7/25/21.

SB 5367 | Retirement Contributions Refunds: This bill directs the Department of Retirement Systems to establish rules for closing and
refunding inactive member accounts with a balance of less than $1,000. Effective 7/25/21.

SB 5453 | was a bill proposing a merger of LEOFF 1 fund balance (Law Enforcement/Fire Fighters) with TRS 1 as a means to reduce the
unfunded liability (UAAL) of TRS Plan 1. The bill never got beyond an introduction. However, legislators, primarily Republican leadership, and Senator Rolfes have been concerned over the UAAL. So much so, that Section 747 of the adopted budget (
ESSB 5092) reads: “The appropriation in this section ($800 Million) is subject to the following conditions and limitations:
The entire general fund—state appropriation is provided solely for expenditure on June 30, 2023, into the teachers’ retirement system plan 1 fund, to be applied to the unfunded actuarial accrued liability.

Comment: When the $800 M gets added to the TRS 1 plan in 2023, the UAAL surcharge (See selected financials below) should go down quite a bit saving employers/school districts money. But¸ there are two sessions left where the legislature could tinker
with the amount or decide not to do it at all.

The unfunded liability balances to date are $3.4 B in TRS 1 and $5.099 B in PERS 1. It is estimated that the UAAL would become fully funded in 2026 and 2027. This is all assuming a 7.5% return on investments since the funds paying over 70% of retirement
payments are from investment earnings.

The Governor has signed the budget and did not veto this section. It stands as an approved intent.

HB 1040 | Concerning health care coverage for retired or disabled school employees. This bill was introduced but had no further action.
It would have allowed PEBB to open a window for earlier retirees who only had one option for PEBB insurance when they retired to re-enter PEBB since there are now a minimum three options available. Although not heard, Section 212 of the adopted budget
reads, “The health care authority shall analyze and report on the potential impacts of providing a one-time enrollment window for retirees to reestablish eligibility for enrollment in retiree benefits under the public employees’ benefit
board program. The authority shall submit the report to the appropriate committees of the legislature by January 1, 2022. At a minimum, the report must include an estimate of the employer cost and a description of the assumptions used.

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

SB 5322 | Re: SEBB and PEBB dual enrollment. This bill has been signed by the Governor. It requires an employee who is eligible for
both Public Employees’ Benefits Board and School Employees’ Benefits Board insurance coverage to choose health, dental, and vision coverage from the same program beginning with the 2022 plan year.

This is not new, but as a reminder: Section 1212 (3) of the budget reads “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 8 January 1, 2022, and incorporate the experiences gained by health care authority during the initial implementation and operation of the school employees’ benefits board program.
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.” The HCA submitted a study that recommended a consolidation. However,
this would require legislation which will be pursued in future sessions. Effective 7/25/21.

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. This bill died by Senate action placing it on the “X” file, but it is expected to return
in some form during the 2022 session. (See future projections below.) Other Bills that may have fiscal/HR impacts for Districts.

Caveat: These bills may or may not impact districts. For unemployment (UI), as an example, many districts belong to insurance pools administered by ESD’s; some districts do not. Changes in UI may affect districts or not. The issue of whether a bill
such as ESSHB 1073 below applies is not clear to this author. When in doubt, it is reported. Human Resource departments or WASBO
are the final arbiters of applicability.

ESSHB 1073 | Re: Paid Leave Coverage: This bill provides grants to certain employees ineligible for paid family and medical leave benefits
due to insufficient hours worked. Provides grants to smaller employers with employees taking leave in receipt of a grant. Effective 7/25/21.

HB 1087 | Family/Medical Leave Continuity: This bill specifies that the Family Leave Act, as it existed prior to January 1, 2020, applies
to valid claims based on conduct before that date and the Paid Family and Medical Leave Act applies to claims after that date. This was viewed as a ‘technical fix’ to ensure employee rights should there be cause for action. Effective 4/16/21.

ESHB 1214 | K–12 safety & Security Services: This bill creates a new safety and security category of classified staff for
public schools. It requires safety and security staff to meet certain training requirements. Directs school districts and charter schools to adopt a policy and procedure with certain elements, adopt an agreement with the law enforcement agency or
security guard company supplying the staff, and collect and submit certain information on safety and security staff to the Office of the Superintendent of Public Instruction. Effective 7/25/21.

SHB 1323 | Long-term Service Trust: HB 1087 passed in 2019 set up this employee-paid long-term trust program. This bill requires that
self-employed persons who wish to elect coverage under the Long-Term Services and Supports Trust Program (newly named Washington Cares Fund) exercise that option by January 1, 2025, or within three years of becoming self-employed for the first time.
It also authorizes federally recognized tribes to elect to collect the premium assessment for their employees under the Trust P