Retirement & Health Benefits for January 15, 2021

Fred Yancey | The Nexus Group
Jan 15, 2021
Retirement Blog

Health, Pension and Other Benefit Issues

As the vaccines continue to make their presence felt to all, we still live in a COVID–19 world. The pandemic may well be on its way out, but until that time, the Washington State Legislature is operating in a “Zoom” world. This not only impacts how AWSP operates but also affects employers and present and future school retirees.

Although the main task of the 2021 session is to create and adopt a new biennial budget for 2021–2023, many policy related bills have been introduced. And since money will be on the table, there will be much competition, so the Legislature will look elsewhere for funds. No surprise, but many of the proposed bills will fall on employers as unfunded mandates, saving the state dollars.

The need for AWSP and our members to be involved is even more critical than usual. The previous sessions where in-person and timely contact with legislators was the norm, this year the process has changed. (As an aside, there is concern that many pieces of legislation will be settled in back rooms and little, if any opportunity to modify said legislation will be available.)

Moving, here are some focus areas and goals.

Protect Retiree Healthcare Benefits.

  • The Legislature lowered the Medicare Healthcare Benefit from $183 to $150 in 2011. In 2018 and 2019 WSSRA successfully lobbied for increases back to $183 per month. Protecting the Medical Benefit at $183 per month is critical in helping to keep retiree medical premiums affordable. Legislators may feel the need to reduce and/or eliminate this benefit to help fund other areas in the budget.

Make the Actuarially Recommended Pension Payment.

  • During many past recessions, the Legislature had reduced their share of the pension payments. That increased the unfunded liability in the pension funds, incurring a 7.5% annual interest penalty for the state. This is far more costly in the long run but skipping or reducing the state’s pension contribution is a means to allow those dollars to be spent elsewhere.

Manage Covid–19 Risk in Schools by Reducing Early Retirement Penalties. (HB 1032)

  • Reducing early retirement penalties for older school employees will help protect our vulnerable older teachers and classified employees from health risks. As an example, school employees with 30 years and at age 62 can retire with full benefits. WSSRA proposes lowering the age to 60 until such time as the Governor’s proclamation of emergency is repealed. The penalty for early retirement for those with less than 30 years would also be reduced. If passed, this would allow older employees most at risk to the virus an option to retire earlier. If passed, it would also save district dollars by losing the higher paid employees. This bill is currently before the House Appropriations Committee awaiting a hearing.

Address the potential loss of years and service and pension calculation due to the furloughing of state employees. (SB 5021).

  • This bill attempts to correct the effect of expenditure reduction efforts on retirement benefits for public employees, including those participating in the shared work program. This bill is scheduled for a public hearing on 1/18/20 before the Senate Ways and Means Committee @ 4 PM.

Other Benefit Issues

There are also a number of bills proposed to expand or loosen the requirements for unemployment insurance, workman’s compensation, labor and industry claims and paid family and medical leave.

There is even a bill (SB 5169) that concerns provider reimbursement for personal protective equipment during the state of emergency related to Covid–19. Many of these could have fiscal impacts on districts. WASA and WASBO are tracking these bills. Stay tuned.

In conclusion, no one association is as effective as a legislator’s own constituent who tells his/her own story and the impact of selected legislation on one’s life or school. That is why member involvement is so valued and critical to any legislative success AWSP may have. Be informed, engaged, and passionate about this process.

Fred Yancey
The Nexus Group LLC

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