Agenda Archives
TPEA's Legislative Agenda for the 78th Legislature
I. TPEA supports pay raises in both years of the 2004-2005 biennium for all state employees. TPEA supports 4.25 % pay increases in both FY 2004 and 2005 for all state employees including non-faculty employees of institutions higher education.II. TPEA supports maintenance of current health insurance benefits for employees and retirees. Specifically, TPEA supports continuation of 100% of the premium paid by the state for employees and retired employees and 50% of the premium paid by the state for dependent coverage. If any out-of-pocket health care costs are increased, state employee compensation should be increased to offset these costs.
III. TPEA supports ad hoc annuity increases for ERS and TRS retirees and, if actuarially sound, the granting of a 13th check in FY 2005. TPEA also supports efforts to assure state retiree interests are equitably represented by the Employees Retirement System (ERS).
Rationale for TPEA’s Legislative Agenda
Pay Raises: State employee salaries lag considerably behind salaries for other employers. The most recent Biennial Report on Recommended Adjustments to Classification Salary Schedules by the State Auditors Office shows that, depending on the comparison basis, state employee salaries lag anywhere from 9 percent to 27 percent behind comparable public and private employers. Since it now seems likely that the contingent pay raise in FY 2003 will not be granted, state employees will have received only three across-the-board pay raises in the past ten years by the end of this current biennium. The last back-to-back state employee pay raises were authorized in FYs 1992-93.
The consequences of the state’s non-competitive employee salary and compensation structure are apparent. State employee turnover, not including employees at institutions of higher education, has averaged nearly 18 percent over the past four years and this has been estimated conservatively to have cost the state over one billion dollars in training, lost productivity and other real costs during that period. Ongoing, excessively high employee turnover, coupled with a rising tide of retirements by the state’s most knowledgeable and experienced employees is depleting state government of its knowledge and experience base and wasting hundreds of millions of dollars that taxpayers have invested in the state workforce.
It is vital that the legislature recognize that the state’s workforce is an asset that requires ongoing investment to allow it to function efficiently. State leaders need to protect taxpayers’ investment in the state workforce by granting an employee pay raise every year. The political reality is that there is a limit on how large an increase the legislature will grant in any single year. So, the only way to begin making up the ground that state employees have lost over the past decade is to get more frequent salary increases, ideally every year.
Health Insurance: Ongoing and rapid increases in health care costs are the single largest contributor to Texas’ budgetary difficulties. Overall health care costs have been increasing at double-digit rates for several years. The legislature has also expanded several state-funded health care programs so that in FY 2003 approximately one of every five Texas residents, 4.2 million people, will receive state-funded health care. Figures from the Legislative Budget Board indicate a stunning 39 percent increase in appropriations for health care programs between the last biennium and the current one. Enactment of legislation that requires the state to provide health coverage for public school district employees represents a massive new financial commitment that Texas cannot afford. Health coverage is an accommodation that employers provide to their employees as part of an overall compensation package, but school district employees are not state employees but rather employees of local independent school districts.
Health insurance is a vital part of the compensation package offered state employees. ERS administers the Uniform Group Insurance Program (UGIP) that provides health insurance to over a half million state employees, retirees and their dependents, this represents one of every thirty nine Texans. The cost for state employee health coverage has been increasing by over 12 percent a year. ERS has stated that the cost in new funds to maintain our current level of health benefits during the next biennium is estimated to be $641 million (all funds) for the 2004-05 budget period, a 27 percent increase from the previous biennium.
Because state salaries lag so far behind other employers, health insurance plays a vital role in enabling state agencies to attract and retain employees. Consequently, maintaining the basic framework of how health insurance is provided by the state is of paramount importance. Any changes in co-payments or co-insurance or adjustments in the quality, accessibility or level of benefits should be offset by salary adjustments.
Retirement Benefits: The Employees Retirement System (ERS) administers the retirement program for non-higher education state employees, while higher education employees receive retirement coverage through the Teachers Retirement System (TRS). During the 2001 legislative session the retirement multipliers for both ERS and TRS were increased to 2.3. In addition, the legislature granted sizeable annuity increases for current retirees under both retirement systems. However, last year both retirement systems had negative returns on their invested assets because of the overall decline in the stock market.
Retirement benefits are the third critical component of the state’s compensation package and play an important role in retaining quality public servants in state government. ERS efficiently administers the retirement program and it functions effectively in providing incentives for a stable and experienced state work force. TPEA supports the granting of a 13th check in January of 2003, since funds have already been set aside for that purpose. In addition, if the funds are actuarially sound to do so, TPEA supports the granting of an ad hoc cost of living increase for annuitants during the next legislative session, as well as a 13th check for ERS retirees in 2005.