Retirement & Health Benefits for April 2, 2021

Fred Yancey | The Nexus Group
Apr 01, 2021
Retirement Blog

“I say money has no value; it’s just the way you spend it.” ― William Faulkner, The Sound and the Fury

The good news is that K–12 got all the dollars they needed and more. The bad news is that April Fool’s Day ran long.

Most of the policy and fiscal bills are moving to their respective Rules Committees where they may then move to floor action. Lurking in the background are the two proposed budgets with the fiscal leaders of both houses beginning to discuss compromise and agreement. Floor action, opposite house reaction, and debates are occurring to move bills out of the opposite house by their April 11th deadline. Budget negotiations are going on behind closed doors as adjournment will occur on April 25th.

Earlier bills that have either passed or ‘died’ have been covered in previous reports. This summary covers what is still in play.

Retirement Related Proposals

*New: HB 1565: House Appropriations Committee approved a budget amendment offered by Representative Jesse Johnson to grant a one-time 1.5% COLA to TRS1/PERS1 members. HB 1565 was introduced to implement this COLA proposal. The bill is still awaiting a public hearing by the House Appropriations Committee. While the gesture is appreciated by retirees, the details of the bill are troublesome. Past COLA bills (2018, 2020) granting 3%, set the maximum benefit increase at $62.50/month on a $25,000 base. (In other words, the 3% applied to the first $25,000 of a person’s pension.) This 1.5% proposal lowers the base to the first $17,600 and sets a new maximum at $22/month. WSSRA is concerned that setting this lower base will be bad for future COLA’s. (Besides, $22 a month? Are you kidding? These retirees do not get regular COLA’s like the other 14 retirement plans and have lost substantial purchasing power over the years. Even WSSRA’s proposed change to $31.25 at half the previous COLA amounts, although better than nothing, is next to nothing for a Plan 1 retiree.)

SB 5021 | Concerning the effect of expenditure reduction efforts on retirement benefits for public employees, including those participating in the shared work program. (Signed by both houses and sent to Governor.)

SB 5367 | Directing the department of retirement systems to create rules regarding automatic refunds of retirement contributions in the retirement systems listed in RCW 41.50.030. (This bill has been moved for placement on the House Calendar.)

SB 5453 | Concerning plans 1 and 2 of the state retirement systems by combining LEROFF 1 and TRS Plan 1 assets to retire the unfunded liability of TRS 1. As a reminder, employers are currently paying a surcharge for their retirement contributions to help retire the debt of both plans: TRS 1 liability is $2.8 B; PERS 1: $4B. (This bill was introduced, and no hearings were held. It is likely dead but see below for comments.)

Comments: The Senate budget chose to deal with the unfunded liability by budgeting $800M to be spent on June 30, 2023. The House budget did not address this issue. Rep. Stokesbary, however, offered an amendment to allocate $1.6B for retiring the liability. It did not pass. As chair Ormsby remarked, “We live in volatile times and need to be prudent.”

Decreasing the unfunded liability will lower the surcharge and fully fund the Plans earlier. This would save school districts and other employers money.

WSSRA (WA State School Retirees’ Assn.) is continuing to work on this issue to ensure the Senate proposal ends up in the final budget.

Comment: It is important to keep in mind that the Senate proposal is one of intent, not the actual expenditure. The commitment to spend those dollars as proposed will occur, if at all, in 2023. This idea is a ‘win-win’ idea since it is a fiscally responsible thing to do using GF dollars that are to be replaced with one-time federal dollars. And it could be viewed as being in reserve, a placeholder, in case of unforeseen demands yet to arise.

School Employee Benefit Board (SEEB)

SB 5322 | Prohibiting dual enrollment between school employees’ benefits board and public employees’ benefits board programs. (Signed by both houses and sent to the Governor.)

Other Bills

There are a number of bills proposed that deal with expanding various employee benefits and qualifications. They address such areas as unemployment compensation, family and medical leave, and workmen’s compensation. They are worth monitoring because they may add personnel costs to school district operations.

As an aside, both budgets proposed using federal dollars to replenish the Unemployment Insurance fund ($500 M in Senate; $600 M in House). This would help mitigate the potential increase in future rates for employers.

Two bills (E2 SHB 1073 and ESSB 5097 ) in the 2021 virtual legislative session are proposing changes.

E2SHB 1073 expands coverage of the paid family and medical leave program. (This bill is scheduled for Executive Session on 4/2 before Senate Ways and Means.)

ESSSB 5097 expands coverage of the paid family and medical leave program. (Executive action was taken on 3/31 by House Appropriations.)

2SHB 1076 | Allowing whistleblowers to bring actions on behalf of the state for violations of workplace protections. (This bill is scheduled for Executive Session 4/2 before Senate Ways and Means.)

ESHB 1214 | Creates the category of safety and security staff for kindergarten through grade 12 public schools. (This bill has been moved for placement on the Senate Calendar.)

SHB 1323 | Concerning the long-term services and supports trust program. Among other provisions, it specifies that employees who apply to opt-out of the Long-Term Services and Supports Trust Program (LTSS Trust Program) must attest to having long-term care insurance prior to the effective date of this act. (The bill has been moved for placement on the Senate Calendar.)

SHB 1363 | Addressing secondary trauma in the K–12 workforce. (This bill has been moved for placement on the Senate Calendar.)

ESSB 5061 | Concerning unemployment insurance. Limits unemployment insurance rate increases by:

  1. capping the social tax;
  2. suspending the solvency surcharge tax; and
  3. relieving certain benefit charges.

Increases access to benefits by:

  1. expanding eligibility for those in high-risk households; and
  2. waiving the waiting period when federally reimbursed.

Modifies weekly benefit amount thresholds by:

  1. increasing the minimum from 15 to 20 percent of the average weekly wage; and
  2. limiting benefits to a person’s weekly wage.

The bill also ends deductions of lump-sum pensions from weekly benefit amounts. It modifies the voluntary contribution and shared work programs, and certain training eligibility. (Governor signed.)

ESSB 5115 | Establishing health emergency labor standards. Creates an occupational disease presumption for frontline employees during a public health emergency for the purposes of workers’ compensation. (House Rules Committee.)

SSB 5425 | Concerning extended benefits in the unemployment insurance system. (House Rules’ Committee.)

SSB 5254 | Concerning the use of protective devices and equipment during a public health emergency. (This bill has been scheduled for Executive Session in House Appropriations 4/1.)

Fred Yancey
The Nexus Group LLC

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