Retirement & Health Benefits for January 27, 2023

Fred Yancey, The Nexus Group LLC
Jan 27, 2023

Retirement Blog

“And the band plays on…as the beat slowly increases...”

There’s a certain rhythm to the Legislature as the session continues.  The action begins to move from the public hearings to executive ones, to rules and dribbling onto the floor for action. The 17th of February is the first cut-off, and in all likelihood, the 6th is a closer measure of when new bills will cease being introduced. (It takes time to schedule, hear, etc. in order to meet the February deadline)

Previous reports have covered other bills that have been introduced but as yet, show no further movement.

Retirement Related Proposals

HB 1007/SB 5296: Concerning interruptive military service credit for members of the state retirement systems.

Comment: Retirement credit can be awarded if in any armed conflicts if the participant was awarded the respective campaign or expeditionary badge or medal…the ‘expeditionary badge qualifier was added.

HB 1007 has been moved to Rules Committee.

HB 1008/SB 5420: Concerning participating in insurance plans and contracts by separated Plan 2 members of certain retirement systems.

Comment: This bill would simply make retiree insurance provisions uniform and equitable for Plan 2 and 3 members.

HB 1008 has been moved to Rules Committee.

HB 1056/ SB 5349: Repealing some postretirement employment restrictions.

Comment: Beginning January 1, 2024, any current or future retiree under the provisions of early retirement may utilize the 32 postretirement employment provisions of RCW 41.32.802(2) for up to 867 hours per year. This includes administrators. DRS wanted this in order to simplify the current system, particularly when it came to using retired contract services.

The substitute bill summary states: “ The restrictions on receiving benefits during postretirement employment for PERS, TRS, and SERS Plans 2 and 3 retirees that retired under the 2008 ERF are lifted to allow receipt of pension payments during employment of up to 867 hours per year of employment with a retirement system employer. Benefits for retired members that choose the 3 percent ERF are adjusted to the reductions in the 2008 ERF for purposes of benefit payments made after the effective date of the act.”

SHB 1056 has been moved to Rules Committee.

**HB 1057/SB 5350: Providing a benefit increase to certain retirees of the public employees' retirement system plan 1 and the teachers' retirement system Plan 1.

Comment: This bill would provide a 3% increase not to exceed $110/month for TRS1/PERS1 Plan retirees. The Governor included this one-time increase in his released supplemental budget. Same COLA as granted last session. However, there is an addition: During the 2023-2025 fiscal biennium, the SCPP will study and recommend a permanent ongoing cost-of-living adjustment for beneficiaries of the public employees' retirement system Plan 1 and the teachers' retirement 2 system Plan 1.

Scheduled for public hearing 1/26 before House Appropriations Committee.

SB 5121: Extending the expiration date of the joint select committee on health care oversight.

Comment: The expiration date of this committee is to be extended. Its goal must be to ensure that these multiple health and insurance regulatory agencies are not duplicating their efforts and are working toward a goal of increased quality of services leading to reduced costs to the health care consumer.

This bill is on the Senate floor calendar for action.

**HB 1201/SB 5294: Concerning actuarial funding of state retirement systems.

Comment: This bill deals with eliminating the unfunded liability (UAAL) of TRS/PERS Plans 1. The intent is that by so doing, the employer surcharge currently being paid to decrease the UAAL, will be reduced to a zero (0%) added charge: PERS on 6/30/25; SERS on 8/31/25 and TRS on 8/31/24. This will save the state in excess of $4B and school districts whose staffing exceeds state reimbursement will also save dollars. Cities and counties will also save money. This bill also repeals the commitment made last session to pay $800 M toward eliminating the TRS 1 unfunded liability, assuming investment returns will make up the difference.

HB 1201 is scheduled for Executive Session on 2/2 before House Appropriations. A key legislator has indicated that HB 1201 and HB 1459 are a ‘package deal’. Both must pass. The reason being that if HB 1201 is done, then there is an opportunity to restore a permanent COLA for Plans 1 members.

**HB 1459: Providing an annual adjustment in the public employees' retirement system and teachers' retirement system plan 1 benefits capped at $110 per month by adjusting the long-term investment rate of return assumption.

Comment: This is basically a capped permanent COLA proposal.

This is scheduled for Executive Session on 2/2 before House Appropriations. See remarks above under HB 1201 regarding linkage of passage of this with HB 1201.

SB 5169: Concerning health care plans administered by the health care authority that are available to Medicare eligible retirees.

Comment: The public employees' benefits board must allow Medicare-eligible retirees access to the uniform medical plan classic (UMP) Medicare. This is in reaction to an earlier attempt by the Health Care Authority to remove UMP as a future offering due solely to the huge cost increase and differential compared to the newly added PEBB Advantage (United Health Care) plans. The outrage among school retirees forced the agency to back off that attempt. This is designed to insure they don’t do it in the future.

Scheduled for public hearing on 1/27 before Senate Health Care Committee.

HB 5490Concerning health care coverage for retired or disabled employees denied coverage for failure to timely notify the authority of their intent to defer coverage.

This bill came to Sen. Rolfes from an agitated constituent who missed the deadline to continue membership in PEBB post-retirement. This bill allows a ‘second bite at the apple’ if certain conditions and timelines are met.

Committee passed by Executive Session.

Other Areas of Potential Fiscal Impact and (often, unfunded) to Districts

HB 1068: Concerning injured workers' rights during compelled medical examinations.

Comment: This allows an injured worker to make an audio and video recording of a compelled medical examination, and to have one person of the worker's choosing present during the examination. 

This bill has been moved to House Rules.

HB 1099: Requiring certain wages in public works contracts to be at least the prevailing wage in effect when the work is performed.

Comment: Requires public works contracts to specify that wages paid to workers will not be less than the latest prevailing wage rate in effect at the time the work is performed.

This bill has been moved to House Capital Budget Committee for hearing.

HB 1106: Concerning qualifications for unemployment insurance when an individual voluntarily leaves work.

Comment: Expands access to unemployment insurance benefits by adding circumstances where a person may voluntarily quit for good cause.

This bill has been referred to House Rules Committee.

HB 1136: Requiring employers to reimburse employees for necessary expenditures and losses.

Comment: An employer shall reimburse an employee for all necessary expenditures and losses incurred by the employee in direct consequence of the discharge of the employee's duties. Reimbursement must be paid within 30 days of the employer's actual or constructive notice of the expenditure or loss.

This bill is scheduled for Executive Session on 1/27.

HB 1187: Concerning privileged communication between employees and the unions that represent them.Comment: To effectuate the public policy favoring effective collective bargaining, it is necessary to protect confidential union–employee communications in the course of union representation against disclosure.

Scheduled for Executive Session on 1/27 before House Labor Committee.

HB 1200/SB 5273: Requiring public employers to provide employee information to exclusive bargaining representatives.

Comment: Requires certain public employers to provide exclusive bargaining representatives' information, such as contact information, date of hire, salary, and job site location, of employees in bargaining units if the employer has that information in its records. • Allows an exclusive bargaining representative to bring a court action if a public employer fails to comply with the requirement to provide information.

Scheduled for Executive Session on 1/27.

HB 1246Concerning eligibility for health benefits from the school employees' benefits board for school employees.

Comment: School employees anticipated to work less than 630 hours in any single school employees' benefits board organization may establish eligibility for benefits by working for more than one school employees' benefits board organization if the combined hours the school employee is anticipated to work is at least 630 hours per school year. Employer contributions for an employee eligible under this subsection (6)(d)(ii) shall be prorated across the employee's school employees' benefits board organizations based on data reported.

Scheduled for a Public hearing on 1/26 and Executive Session 2/1 before House Appropriations Committee.

HB 1248: Concerning pupil transportation.

Comment: One important part of the proposal is that it requires that school district contracts for pupil transportation services must include sufficient funds to provide employees of the contracting employer with health benefits and pension contributions equivalent to those of school district classified employees.

This bill had a public hearing on 1/23 and has not been scheduled for further action to date but it remains a bill to monitor.

HB 1649: Concerning prejudgment interest.

Comment: This appears to be a change from SB 5059. A section reads: “..Except as otherwise provided in (((a) of)) this subsection (3), judgments founded on the tortious conduct of individuals or  other entities that are not a "public agency" as defined in RCW 18 42.30.020, whether acting in their personal or representative capacities, shall bear interest from the date ((of entry)) the cause 20 of action accrued.”

 This proposal removes the calculation of interest from date the offense first occurred. This is a new bill introduced 1/27/23.

SB 5059:  Concerning prejudgment interest.

Comment: This was proposed last session. Briefly stated, judgments founded on the tortious conduct of a "public agency" shall bear interest from the date ((of entry)) the cause of action accrued. So if a district is found liable for neglecting to act in a child’s best interest, years after the fact, it will pay a penalty and interest from the day the neglect/damage first occurred. from the date the action is commenced or the date the minor attains the age of eighteen years, whichever is earlier.

Passed Executive Session on 1/26 before Senate Law and Justice Committee.

SB 5084: Creating a separate fund for the purposes of self-insured pensions and assessments.

Comment: Creates a self-insurance reserve fund for payments from self-insured employers related to workers' compensation pensions and from the overpayments reimbursement fund.

Scheduled for a public hearing 1/30 before the Senate Ways and Means Committee.  

SB 5123: Concerning the employment of individuals who lawfully consume cannabis.

Comment: Prohibits employers, with some exceptions, from discriminating against a person in hiring if the discrimination is based on the person's use of cannabis outside of work or on certain employer-required drug screening tests.

Scheduled for Executive Session action on 1/31 before Senate Labor Committee.

SB 5237: Establishing complaint procedures to address noncompliance with certain state education laws.

Comment: This is an act relating to establishing complaint procedures to address noncompliance with certain state education laws. Complaints are to be filed and investigated by OSPI. The PESB may hold the Superintendent responsible and act accordingly. School directors can also be removed from office.

Passed Executive Session 1/26 before Senate Education Committee.

SB 5240: Concerning unemployment insurance benefits appeal procedures.

Comment: A dispute of an individual's initial determination, determination of allowance or denial of allowance of benefits, or redetermination of allowance or denial of benefits, all matters covered by such initial determination, determination, or redetermination shall be deemed to be in issue subject to appeal.

Has been sent to Senate Rules Committee.

SB 5286: Modifying the premium provisions of the paid family and medical leave program.

Comment: Amends the premium rate calculation in the Paid Family and Medical Leave Program (PFML) to be based on a specified formula rather than the Family and Medical Leave Insurance Account (Account) balance ratio on September 30th of the previous year. Sets a maximum rate of 1.2 percent and removes the Employment Security Department's authority to assess a solvency surcharge if the Account balance ratio falls below a certain threshold.

Currently before Senate Rules Committee.

SB 5327Concerning paying interns.

Comment: Requires any state or local governmental body or agency, or educational, charitable, or nonprofit organization receiving public funds who provides an internship, to pay the intern at least the state minimum wage for the hours of the internship.

Even though there has been no further movement since the Public Hearing on 1/23, this may be a sleeper bill that will continue life under the radar until it pops up again. The concern is that student teachers could fall under this qualification.

SB 5505: Addressing learning loss by expanding the school year.

Comment: This bill would increase the number of instructional hours for grades K-12. Scheduled for a Public Hearing on 2/2 before the Senate Education Committee.

Fred Yancey
The Nexus Group LLC

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