Get Better Informed, Provide Your Home Email Address
TPEA has been working to inform state employees about relevant issues and concerns through our legislative update email program since 2003. TPEA takes pride in being the most reliable source of accurate and timely information on legislative developments and other concerns for active and retired state employees.
However, because this information is sent to your state email address, TPEA is necessarily constrained in the types of information and recommendations that we can provide. TPEA is therefore encouraging all interested state employees to provide their home email addresses, or other non-state email address, so that TPEA can offer you the full range of information we have available. TPEA will not sell or otherwise permit access to these addresses to any other party.
Follow this link to submit your home email address to TPEA.
TPEA’s Legislative Agenda and Prospects for 2009 Session
The membership of TPEA has approved our Legislative Agenda for the 2009 legislative session. As has been the case since 2001, TPEA’s Legislative Agenda is focused on the three core economic issues that broadly affect active and retired state employees—employee compensation, health insurance for active and retired employees, and retirement benefits. TPEA is involved on many other issues affecting state employees and retirees, but the Legislative Agenda lays out our highest priorities for the upcoming session.
A variety of factors affect TPEA’s ability to achieve our legislative goals, but the most important one by far is the state’s overall fiscal outlook. Until recently, Texas’s fiscal outlook has been good. Tax revenues have been exceeding projections and most analysts were projecting that the State would end this biennium with a surplus of $2 billion or greater. In addition, most projections estimate the State’s “Rainy Day Fund” will have $6 billion, or more, available for use by the end of the 2009 legislative session. And a growing Texas economy normally generates new state revenues from one budget period to the next, often in the $3 to $5 billion range.
Recent events have caused concern about the State’s fiscal situation as we prepare for the 2009 legislative session. The Texas Health and Human Services Commission has indicated that costs for the Texas Medicaid program during the current biennium may exceed budgeted amounts by $1.2 billion, and it is expected that Hurricane Ike will cost Texas at least $2 billion. Finally, the recent financial markets meltdown has raised the specter of an economic slowdown, or even a recession. Ultimately, Comptroller Susan Combs will determine the fiscal parameters for the next biennium when she issues her Biennial Revenue Estimate in January.
As detailed below, the elements of TPEA’s 2009 Legislative Agenda will require significant new expenditures by the legislature. The total cost for TPEA’s pay raise package is estimated at $610 million in General Revenue and $967 million in All Funds. Similarly, the Employees Retirement System estimated in its Legislative Appropriation Request (LAR) that it will require an additional $193 million in General Revenue and $312 million in All Funds to maintain current health benefits over the next biennium. Additional funding will also be required to put the ERS retirement fund on a path to actuarial soundness and to allow for some type of benefit enhancement for state retirees. As always, funding requests to benefit state employees and retirees will be in fierce competition with many other meritorious needs that the legislature will be asked to consider. In this competitive budgeting environment only mobilized constituencies that effectively advocate with the legislature are likely to succeed.
State Employee Compensation—TPEA’s Three Part Proposal
The TPEA Compensation Proposal for 2010-11 biennium has three parts: 1) Across the board pay raises of 3.5% in 2010 and 4 % in 2011 for all general government state employees to maintain the competitiveness of state employee pay relative to other competing employers; 2) Additional incremental pay raises of 2 percent in both 2010 and 2011 for occupational categories that have been experiencing the highest turnover rates; and, 3) Funding to all general government state agencies to allow for consistent and adequate use of merit pay to reward above average performance and incent higher productivity.
Follow this link to see the specific components of TPEA’s compensation proposal and the associated costs.
TPEA’s employee compensation proposal is based on an analysis of a variety of data showing the disparity in state employee pay relative to other public and private employers in Texas and among the states. For additional information on Texas state employee pay and the comparative status of employees in Texas download this PDF file to read the article by economist Stuart Greenfield in TPEA’s most recent magazine. In addition, follow this link to see TPEA’s fact sheet on why state employees deserve adequate annual pay raises.
Employee and Retiree Health Insurance Benefits
Since the significant and painful changes in health insurance costs that occurred in 2003, state employees and retirees have experienced over five years of relative stability in our health plan. During that span there have been no changes in deductibles or other out of pocket costs, and increases in insurance premium levels have been fairly minimal. Moreover, because TPEA has successfully worked to maintain the state’s health insurance premium contribution policy, employees and retirees have only seen increased premium costs for their 50 percent share of any dependent coverage. ERS deserves much of the credit for working to contain health insurance costs, but employees have also done their part by being responsible in utilization of health benefits.
TPEA’s Legislative Agenda has two goals for the 2009 session. The first is to maintain current health benefit plan costs for active and retired employees, with the state continuing to pay the full insurance premium costs for full-time employees and qualifying retirees, and half the premium cost for dependent coverage. As shown in the ERS LAR, this will require additional appropriations over the next biennium of $193 million in General Revenue and $312 million in All Funds.
TPEA is also supporting additional steps to promote wellness among state health plan participants as a means to begin lowering longer term health care costs. In particular, TPEA will be supporting efforts to assure all participants have access to the full range of smoking cessation benefits.
Retirement Issues
TPEA’s legislative goals for 2009 with regard to retirement benefits are to restore the ERS trust fund to long-term actuarial soundness and to provide a 13th check or other comparable benefit enhancement for ERS retirees. Dealing with retirement issues may be the most significant and complicated challenge we face in 2009.
Although the ERS retirement fund is in relatively good shape, it is likely the fund’s actuarial status will continue to deteriorate given current funding streams. There are a number of reasons for this negative actuarial trend. Most importantly, state employees are retiring sooner and in greater numbers than ERS had projected based on past experience. When pensions are paid out sooner than actuarially assumed, ERS experiences an actuarial loss. These earlier retirements appear to be driven by increased use of annual and sick leave, as well as utilization of other service credits. And, to a lesser extent, employees are retiring and returning to service as return to work (RTW) retirees. The availability of the RTW option may cause some employees to retire sooner, and it compounds the system’s actuarial problems since no retirement contributions are made for RTW retirees. Finally, it is important to recognize that two thirds of retirement fund asset growth derive from investment returns. For actuarial purposes, ERS assumes it will generate an 8 percent annual investment return. When investment returns are negative, such as last year when the fund had a negative 4.5 percent rate of return, it diminishes the fund’s ability to “heal itself” and requires extraordinary future returns to make up for loss of value.
ERS’ actuarial problems are occurring at the very time that ERS retirees have gone without any type of benefit enhancement since January of 2002. The basic problem is that current contribution levels by employees, 6 percent, and the state, 6.45 percent, are insufficient to fund currently accruing retirement benefits (which is the Normal Cost estimated at 12.77 percent), much less to also pay down the actuarially accrued liability (which is the Actuarially Required Contribution, estimated at 14.45 percent). Consequently, the only three possibilities to restore ERS to actuarial soundness are: increased contribution rates by employees or the state, or both; changes in the retirement benefit structure for current or future employees; or extraordinary returns on ERS investments. Since it is impossible to predict future investment returns, the only plausible means to stabilize ERS are through increased contributions or changes in the benefit structure.
TPEA believes it is vitally important to restore the ERS retirement system to a stable actuarial basis for the long term. Defined benefit retirement plans such as ERS are increasingly rare and, as the recent turmoil in the financial markets has demonstrated, such plans provide greater long term financial security than 401k plans or other defined contribution plans. TPEA intends to provide significant discussion of this issue and any possible options in future emails, and we may attempt to survey employees on these issues.
TPEA Upgrades Web Site, Has Added New Features
The Texas Public Employees Association has represented state employees for over 60 years, and as the times change, so do our methods of communication. As an organization that is supported by an active, engaged membership, TPEA understands that its role includes not only legislative representation of state employees, but also providing its members with the resources to share ideas, goals, and tools to advocate on their own behalf.
To that end, TPEA has committed to the ongoing renovation and reworking of our website to provide state employees with new resources and channels of communication. The overwhelming response to last November’s survey reveals that many state employees want ways of expressing their opinions regarding important legislative issues, and TPEA has developed a variety of tools to achieve that goal.
New web features include a message board for all state employees, an exclusive members-only section featuring special benefits, announcements, advocacy tools, and blogs for chapters and regions that want easier methods of communicating with each other. By expanding the avenues of information, TPEA is working to help you stay informed and active. For more information, visit our updates page at http://www.tpea.org/updates.html.
TPEA is making some scheduling changes! Based on the results of last year’s survey TPEA’s leadership is charting a new course for association activities. TPEA’s two-year schedule is being revamped. Some of the major changes include:
- Unsung Hero Awards – Nominations for the Unsung Hero Awards will be held every other year, rather than annually. This gives state employees a two-year time period to perform exemplary public service. The Unsung Hero Awards are designed to give all state agencies an opportunity to recognize those employees who represent the ideals of a public servant and define public service. The nomination process will begin in October, 2009 and end with a luncheon in March, 2010.
- Professional Development Conference – Because of a decrease in attendance, the changing modes of communication, and opinions expressed in the survey, TPEA’s annual conference will now be held in even-numbered years only. The conference will also be reduced in time away from the office and family. It will begin on a Friday afternoon and end Saturday around 5:00 p.m. – now just a 1 ½ day action-packed conference!
- Leadership Retreat/Boot Camp – In addition to the Professional Development Conference, TPEA will initiate a new meeting. Its purpose is to educate the new/future leaders of the association. The retreat will be held in odd-numbered years and be by invitation only. Each Chapter President within TPEA will invite 2-3 guests from their area. They will be identifying active members who have fresh and innovative ideas; those who are investing in their future. If this describes you, get involved with your chapter so you can participate in this all-expenses-paid retreat.
Watch TPEA’s website www.tpea.org for special event announcements and to read about TPEA’s future schedule.