Retirement & Health Benefits for May 19, 2023

Fred Yancey, The Nexus Group LLC
May 31, 2023

Retirement Blog


Let your work speak for itself: If poor, it will remain silent. If average, it will whisper.

If good, it will talk. If great, it will shout.”

Matshona Dhliwayo

Session has concluded, and the Governor has acted. Below is a brief summary of pension, health care, and other benefit legislation that will impact school districts, present and future retirees. The following is a summary of approved legislative actions that affect present employees, districts, future retirees and present retirees. The work continues...

Retirement Related Proposals

SHB 1007: Concerning interruptive military service credit for members of the state retirement systems.

Comment: The definition of "period of war" is expanded for veterans' benefits in state pension systems, legal assistance, scoring criteria on civil service exams, and other programs to include any armed conflicts where an expeditionary medal was awarded. Members that retired prior to the effective date of this act will have their retirement benefits adjusted retroactively.

The Governor signed the bill. Effective 7/23/2023.

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

Comment: It allows certain individuals who separate from a position covered by the Public Employees', School Employees', and Teachers' Retirement System Plans 2, without retiring, the opportunity to participate in retiree benefits of the Public Employees' Benefits Board.

This bill has been signed by the Governor and is effective 1/1/2024.

SHB 1056: Repealing some postretirement employment restrictions.

Comment:Changes the postretirement employment restrictions on benefits eligibility for Public Employees' Retirement System, Teachers Retirement System, and School Employees Retirement System Plans 2 and 3 members that retired under the 2008 Early Retirement Factors (ERFs). • Permits 2008 ERF members to work in retirement system–covered employment for up to 867 hours per year without suspension of retirement benefits. • Adjusts benefits for individuals that chose the 3 percent per year early retirement reduction to the level of reduction in the 2008 ERFs for future benefit payments.

The Senate adopted a striker with an amendment that reads: Removes the recalculation of retirement benefits for retirees that were eligible to take a 2008 early retirement factor but took a higher reduction in benefits so that they could return to work.”

The Governor signed the bill, effective 1/1/2024.

ESHB 1222: Requiring coverage for hearing instruments.

Comment: A health carrier offering a large group health plan and health plans offered to public employees and their covered dependents must include coverage for hearing instruments, except for OTC hearing instruments. The coverage must include the hearing instrument, the initial assessment, fitting, adjustment, auditory training, and ear molds, as necessary, to maintain optimal fit. A health carrier and health plan offered to public employees must provide coverage for hearing instruments at no less than $3,000 per ear with hearing loss every 36 months. Effective 1/1/2024.

The Governor signed the bill, effective 7/23/2023.

SHB 1804: Concerning eligibility for participation in the public employees' benefits board for retired or disabled employees of counties, municipalities, and other political subdivisions.

Comment: The retirees of local government employers, counties, municipalities, or other political subdivisions that ceased participating in the Public Employees Benefits Board (PEBB) health benefits program for active employees are permitted to continue to purchase retiree coverage from the PEBB program. Medicare-eligible retirees from local government employers who have ceased participation must purchase the coverage without the explicit subsidy provided in the state biennial operating budget.

The Governor signed the bill, effective 5/4/2023.

SSB 5275: Expanding access to benefits provided by the school employees' benefits board.

Comment: Allows tribal compact schools, employee organizations representing school employees, and school board directors the option of providing health care through the School Employees Benefits Board through SEBB beginning January 1, 2024. Employers opting into coverage under SEBB may determine the terms of employee and dependent eligibility and must pay premiums set by HCA.

Passed House 97/0. The Governor signed the bill on 3/30/23, effective 1/1/2024. The HCA will be reaching out to eligible parties prior to that date with information. HCA has a projected start date for rule development beginning 9/1/2023.

ESSB 5294: Concerning actuarial funding of state retirement systems.

Comment: The existing minimum UAAL (Unfunded Liability) rates end after fiscal year 2023. The following UAAL contribution rates are established for TRS/PERS 1:

TRS 1:      FY 2024  0.5%      FY 2025 0.5%    FY 2026 0.0%     FY 2027  0.0%

PERS 1:   FY 2024  2.0%      FY  2025 2.0%   FY 2026 1.5%     FY 2027   0.5% 

The Governor signed the bill, effective 6/20/2023.

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: A one-time, 3 percent benefit increase is provided to PERS plan 1 and TRS plan 1 retirees up to a maximum of $110 per month. The benefit increase goes into effect on July 1, 2023. To be eligible for the increase the member must be retired on or before July 1, 2022. This increase only applies to members that are not receiving a minimum benefit. The Select Committee on Pension Policy is directed to study and recommend an ongoing COLA for plan 1 retirees. The recommendation must consider employer contribution rate stability and coordinate the effective date with the reduction or elimination of the unfunded actuarial accrued liability.

One additional positive assist to the budget is adjustments to pension contribution rates. SB 5294, as adopted, reduces contribution rates for the Unfunded Liability in the Public Employees’ Retirement System (PERS) Plan 1 and the Teachers’ Retirement System (TRS) Plan 1. This is helpful for local governments, including school districts—AND it provides an $804 million savings for the state in 2023–25 (and projected to grow to $1.9 billion over the next five years). SB 5294 also reduces (from $800 million to $250 million) a scheduled early payment into the Teacher Retirement System Plan 1. This saves another $550 million.

The Governor signed the bill, effective 7/1/2023.

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

Comment: A retired or disabled employee who was eligible to defer coverage when they left employment but failed to do so and later applied for retiree coverage and was denied solely for failure to notify HCA of their plan to defer coverage, and appealed the denial of benefits by December 31, 2022, may enroll in retiree health care. A retired or disabled employee enrolling in benefits may only enroll in a fully insured Medicare Advantage or Medicare supplement plan. A retiree taking advantage of this provision must apply by the end of the open enrollment period for the plan year beginning January 1, 2024.

The Governor signed the bill. Effective 3/30/2023.

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

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

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

This bill was amended, then approved by the Senate. One adopted amendment reads, “Requires (1) the worker to provide seven calendar days' notice to the entity scheduling the exam that the independent medical exam will be recorded and (2) the department of labor and industries to adopt rules to define the notification process. Another adopted amendment reads, “Removes the prohibition on recording neuropsychological exams. Prohibits the worker from materially altering the recording or posting it to social media.”

The Governor signed the bill. Effective 7/23/2023.

ESHB 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 a good cause. Senate adopted amendments expands access to unemployment insurance (UI) benefits by adding circumstances where a person may voluntarily quit for good cause and requires a report to the legislature regarding UI claims related to benefits for separations from employment because of inaccessible care for a child or vulnerable adult. Another adopted amendment provides that benefits paid because care for a child or vulnerable adult in the claimant's care is inaccessible shall not be charged to the experience rating account of any contribution paying employer.

The Governor signed the bill. Effective 7/23/2023.

ESHB 1187: Concerning privileged communication between employees and the unions that represent them.

Comment: Creates a privilege from examination and disclosure for a union representative and a union employee concerning any communication between the union representative or union employee made during union representation and creates exceptions to this privilege. • Applies the privilege from examination and disclosure to the union members and organizations that represent employees of college districts, employees of school districts, public employees, faculty at public four-year institutions of higher education, civil service employees, ferry employees, port employees, and labor unions.

The Governor signed the bill, effective 7/23/2023.

SHB 1200: Requiring public employers to provide employee information to exclusive bargaining representatives.

Comment: The bill requires certain public employers to provide exclusive bargaining representatives employee information, such as contact information, date of hire, salary, and jobsite location, of employees in bargaining units if the employer has that information in its records. It allows an exclusive bargaining representative to bring a court action if a public employer fails to comply with the requirement to provide information.

The Governor signed the bill, effective 7/23/2023.

EHB 1210: Concerning the recording of school board meetings.

Comment: Requires all school district board meetings to be audio recorded, subject to exceptions for executive sessions and emergencies, with recordings kept for one year. • Specifies that a public records request for recordings of meetings of a school district board of directors must include the date of the meetings requested or a range of dates. • Encourages school districts to make the content of school board of directors meetings available in formats accessible to individuals who need communication assistance and in languages other than English.

The Governor signed the bill 4/13/2023, effective 6/30/24.

SHB 1217: Concerning wage complaints.

Comment: For all wage complaints filed on or after January 1, 2024, if the Department offers the employer the option to resolve the complaint without a citation and NOA, and the employer accepts the offer, any settlement must include interest of 1 percent per month on amounts owed. The employee may request a waiver or reduction of interest as part of the settlement process.

The Governor signed the bill, effective 7/23/2023.

SHB 1521: Concerning the duties of industrial insurance self-insured employers and third-party administrators.

Comment: This bill specifies that self-insured employers and third-party administrators have a duty of good faith and fair dealing to workers with respect to all aspects of workers' compensation. • Requires the Department of Labor and Industries to enforce the duty of good faith and fair dealing. • • Provides penalties for violations of this duty. One adopted amendment reads, “Provides that nothing be interpreted as allowing a private cause of action outside of the original jurisdiction of the Department to assess penalties and rights to appeal.” Another adopted amendment reads, “Limits the duty of good faith and fair dealing and related penalties to self-insured municipal employers and their third-party administrators.”

The Governor signed the bill, effective 7/1/2024.

HB 1656: Concerning unemployment insurance benefits appeal procedures.

Comment: This bill streamlines UI benefits appeals when there is no challenge to eligibility. It eliminates provisions stating that during a UI appeal, all issues related to a claimant’s eligibility for waiting period credit or UI benefits are considered, regardless of the reasons in the notice of appeal. It also eliminates the claimant’s work availability from being assessed independently of other matters. It will also simplify for the employer the once complicated and time-consuming task of benefit appeals. (Summary provided by Washington Retail Association)

It was signed by the Governor, effective 7/23/2023.

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.

The Governor signed the bill. Effective dates vary by Section of bill. Section 14, July 1, 2023. Section 15 expires July 1, 2021. Section 16, July 1, 2021. Section 17, July 1, 2025.

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

Comment: This bill was amended by the House. It 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. The House amended the bill to excludes from the bill persons seeking positions: • with a general authority law enforcement agency; Senate Bill Report - 3 - ESSB 5123 • with a fire department, fire protection district, or regional fire protection service authority; • as a position as a first responder; and • as a position as a corrections officer. It also codifies the underlying bill in chapter 49.94 RCW, rather than chapter 49.44 RCW, subjecting its provisions to enforcement by the Attorney General and other limitations provided under the Fair Chance Act.

The Governor signed the bill, effective 1/1/2024.

SSB 5127: Clarifying school districts' ability to redact personal information related to a student.

Comment: Creates a new exemption to the Public Records Act for personal information in any records pertaining to a student currently or previously enrolled in a local education agency.

The Governor signed the bill, effective 7/23/2023.

ESSB 5217: Concerning the state's ability to regulate certain industries and risk classes to prevent musculoskeletal injuries and disorders.

Comment: This bill repeals the law prohibiting the Department of Labor and Industries (Department) from adopting rules related to ergonomics or musculoskeletal disorders. • Provides limitations on the adoption of new rules, including allowing rules only for industries or risk classifications where compensable claims involved musculoskeletal injuries and disorders that are at a rate greater than two times the overall state claim rate for these types of injuries and disorders over a recent five-year period. • Requires the Department to: (1) identify industries and risk classifications most likely to be selected for rulemaking; (2) review and report certain claims data; and (3) consider certain factors during • Allows the Department to provide funding to certain employers to purchase additional equipment and requires up to three additional ergonomists to provide consultation to certain employers. Provides that no rule may be effective prior to July 1, 2026. (6) Modifies the review of claims data to data identified as compensable claims over the five-calendar year period that ended two calendar years before the report is published. Requires L&I to provide up to three additional ergonomists, funded from the accident and medical aid funds, to provide consultation to employers in the industries and risk classifications in the published list. Requires L&I annually to identify a list of industries or risk classes most likely to be selected for future rule making and prioritize efforts to provide technical assistance to those employers.

Amendments included a delay rule implementation for three years, exclusion of those industries within a sector that do not exceed an accident threshold, correction of data collection processes, and addition of technical assistance resources to L & I to make it easier and less punitive to employers.

The Governor signed the bill, effective 7/23/2023.

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

Comment: Modifies the statutory formula for determining the premium rates for the Paid Family and Medical Leave Program.

The legislation modified the premium calculation formula for the PFML program, ensuring employees and employers share the cost of premiums instead of the burden falling solely on employers.

The Governor signed the bill, effective 7/23/2023.

Selected Financials

Unless noted otherwise, funds are apportioned for ‘allocation purposes’ only.

 Substitute Teachers (2023-2024 and 2024-2025 school years): Four (4) days per formula generated staff at $151.86/day.

 Fringe benefits/formula-generated staff: 

                        Certificated/administrative Range: 2023-2024  17.33-17.97%

                                                                                      2024-2025  17.33-17.97%

                        Classified staff Range:                       2023-2024  18.56%-22.06%

                                                                                      2024-2025  18.06%-21.56%

SEBB Insurance Benefit per formula generated staff: 2023-2024 $1,100

                                                                                               2024-2025 $1,157

PEBB Insurance Benefit per formula generated staff: FY: 2024;  $1,145

                                                                                               FY: 2025;  $1,195

Health care remittance paid to HCA: Per FTE   $68.41 Sept. 1. 2023

                                                                                  $78.50 Sept. 1, 2024

                                              Part-time Staff          $68.41 Sept. 1, 2023

                                                                                 h2 $78.50 Sept. 1, 2024

Pension Contributions:  0.12% increase in PERS, SERS and 0.23% increase in TRS 1 to fund SB 5350 (TRS capped 3% pension increase) 

What Will The Future Hold?

Predictions are an exercise in fantasy, but what the heck!

  1. Clearly, with Governor Inslee opting out of a future run for Governor, many candidates will emerge as wannabes. Attorney General Ferguson and State Lands’ Commissioner Hilary Franz are the leading Democrat candidates, although Sen. Mark Mullet, Issaquah, has indicated interest. Republican candidate names bandied about include Dave Reichert, former Congressman/Sheriff, and former Congresswoman Jamie Herrera Butler.  

  2. The 2024 elections are coming. There will be some very expensive races: Governorship, Attorney General, and others yet to be announced. A reminder that all House members and half the Senate members will be up for re-election. The 2024 Session will see/hear many proposals by members and member statements aimed at bolstering one’s electability.

  3. The ‘progressive’ wing of the Democrat Party will continue to advocate for socially liberal policies. This has led to the fracturing of unanimity with the caucus as the more moderate Democrats object. The recent scuffle over fixing the Blake situation is a good example of the D’s failing to pass a solution leading to the need for a Special Session. This internal conflict is exploited by the R’s, whose positions often are supported by the more moderate D’s. Stay tuned.

  4. Some bills that did not pass in 2023 are likely to reappear. These include:

    • SHB 1248 Re: Pupil Transportation. Of concern is the bill 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.

    • SB 5059 Re: Prejudgment Interest. Of concern is that interest in judgments for tortious conduct of public agencies, individuals, and other entities is modified to run from the date on which the cause of action accrues. Interest in judgments for tortious conduct that occurred while a plaintiff was a minor begins to run from the date the action commenced or the date the minor turns 18 years old, whichever is earlier, at the same rates as currently provided in statute.

    • SB 5174 Re: Student Transportation. Of concern is an adopted amendment that provides that, no earlier than for a contract affecting the 2024-25 school year, school districts may only enter into a pupil transportation services contract if that entity provides the following to, or on behalf of, employees who choose to opt-in for coverage: A health benefit contribution equal to the employer payment dollar amount in effect for the first year of the contract for health care benefit rates for the SEBB, and; an amount equivalent to the salaries of the employees of the contractor multiplied by the employer normal cost contribution rate determined under the entry age cost method for the school employees' retirement system.

Fred Yancey
The Nexus Group LLC

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