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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.
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Appropriations Bill Passed by Senate, House to Act this Week
Senate and House budget writers have been hard at work, holding hearings and going through the “mark up” process as they put together their respective versions of the state budget bill, the General Appropriations Act (GAA). Although each house has its own version of the Appropriation bill (SB 1 and HB 1), by custom the Senate and House alternate every other session to determine which house’s version of the bill will become law. This is a Senate bill year, so SB 1 will be the budget bill this session.
The full Senate passed SB 1 on Wednesday, April 1, by a vote of 26 to 5 (see this Houston Chronicle article). As passed in the Senate, SB 1 totals $182.2 billion in spending over the two-year 2010-11 biennium, which begins on September 1, 2009. The $182.2 billion represents a 7.3 percent increase over the estimated 2008-2009 expenditure level of $169.7 billion, or an increase in All Funds spending of $12.5 billion. In an important development, all of the net funding growth in the Senate version of SB 1 is based on increased federal funds, primarily from the federal stimulus package (the American Reinvestment and Recovery Act, ARRA). Overall, federal funds increased by $12.6 billion compared to the current biennium, and federal stimulus funds totaled $10.9 billion. Use of the federal stimulus funds also freed up approximately $5.5 billion in state funds. Areas where funding has increased under the proposed Senate budget include: $1.9 billion in new funding for public education, as well as funding for enrollment growth in public schools; over $700 million in new funding for higher education; $5.3 billion in funding increases for Medicaid, as well as additional significant increases in funding for other health and human services programs; and $303 million in All Funds and $185 million in new general revenue funds to maintain ERS health benefits.
The Senate version of SB 1 also includes a significant reduction in the number of beds at the Texas Youth Commission, and it appropriates new funding for community placement of clients with mental retardation while starting a downsizing of DADS State Schools.
After the Senate passed SB 1, the House Appropriations Committee substituted its version of the budget into the bill and passed it out of committee on April 7. The full House is slated to consider SB 1 on the floor on Friday April 17. Presuming that the House passes SB 1, that will set the stage for appointment of a conference committee comprised of five members from each house that will decide the final version of the General Appropriations Act.
The version of SB 1 passed out of the House Appropriations Committee totaled $178.4 billion in All Funds, nearly $4 billion less than the Senate version of SB 1. The major funding differences in the House version are: $2 billion less in highway bonds for TXDOT; $1 billion less for Medicaid because of lower caseload projections and cost reimbursement increases; and $300 million less in bond proceeds for cancer research. The House version of SB 1 is as reliant on federal stimulus funds as the Senate version.
Although there are significant differences between the Senate and House versions of SB 1, particularly regarding state employees and retirees, both are essentially “hold the line” budgets that largely maintain current programs. Legislative leaders are pessimistic about the prospects and timeline for economic recovery in Texas. They have legitimate concerns about increasing baseline spending levels given what appears to be a growing structural gap between anticipated revenue growth and spending needs. See this Dallas Morning News article to better understand these looming fiscal problems.
TPEA focuses its legislative advocacy efforts on three primary issues: improving employee compensation; maintaining quality health insurance for active and retired employees; and preserving a strong retirement system that can provide periodic benefit enhancements to ERS annuitants. We have a detailed discussion of these issues and the differences between the House and Senate versions of SB 1 below.
Differences on State Employee Pay Between Senate and House
The Senate version of SB 1 includes targeted pay increases for specific occupational groups, but no across-the-board compensation increases for most other state employees. The Senate included funding for a 10 percent pay increase for TDCJ correctional and parole staff, including laundry and food service managers. TPEA has supported the TDCJ LAR request for a 20 percent increase for these employees based on the State Auditor’s analysis that shows correctional employees are the most underpaid employees in state government. The Senate also funded targeted pay raises for TYC Juvenile Correctional Officers, state law enforcement personnel under Salary Schedule C, certain DPS employees, and it authorized equity adjustments for certain TPWD employees and for some employees of Article VIII regulatory agencies.
By contrast, the House version of SB 1 includes a 5 percent pay raise for TDCJ correctional and parole staff and TYC Juvenile Correctional Officers. All other employees who earn less than $100,000 would receive a one-time $1000 payment instead of an ongoing pay raise. For more information, see the Austin American Statesman article, “House budget raises pay for state workers”.
TPEA believes that it is important to fund targeted pay raises for correctional staff and other occupational categories where pay is the furthest behind the market and turnover is highest. TPEA supports a minimum 10 percent pay increase for correctional and parole staff. TPEA also believes that all state employees deserve some increase in compensation every year and that this approach helps preserve the taxpayers’ investment in an experienced and efficient state workforce. Given legislative leaders’ growing fiscal concerns, TPEA supports the $1000 one time payment for most state employees proposed in the House version of SB 1. However, given increased health care costs and the likelihood state employees will be asked to contribute more towards retirement, TPEA believes all state employees should be granted a cost of living increase of 3 percent for FY 2011.
Differences on Retirement Issues between Senate and House
Another major difference between the Senate and House versions of SB 1 is in providing funding for a supplemental payment for ERS retirees, sometimes called a 13th check. The Senate version provides no such funding, while the House version of SB 1 provides a one-time $1000 supplemental payment to ERS annuitants (retirees) paid for with appropriated funds, not out of the ERS retirement fund. The House version of SB 1 also provides funding for a supplemental payment for TRS retirees.
The Senate version of SB 1 also attempts to fund retirement benefits at the normal cost level, with the state and employees both contributing 6.685 percent, contingent on enactment of legislation raising the employee contribution rate. The House version continues state funding at the current 6.45 percent level. The Senate also provides normal cost funding of 2.18 percent to the LECOS supplemental retirement fund (for law enforcement and custodial officers), while the House continues the current 1.59 percent LECOS contribution rate. TPEA believes that retirement contribution rates for employees and the state will likely be decided in legislation that attempts to restore ERS to actuarial soundness.
Senate and House Maintain Health Benefits, But Dependent Costs Rise
Both the Senate and House versions of SB 1 provide funding levels that should be sufficient to maintain the state’s current health insurance premium contribution policy for active and retired employees and prevent any increases in co-payments or other out-of-pocket expenses. This is good news generally, but employees and retirees who have spousal or dependent coverage will experience increased costs to maintain their coverage. ERS health insurance premium costs are expected to increase by 6.8 percent in FY 2010 and 6.5 percent in FY 2011. TPEA has worked hard to maintain the current health insurance contribution policy, and both versions of SB 1 appropriate over $300 million in new funds to maintain the current funding structure for employee and retiree health insurance benefits.
Currently, the state pays the total insurance premium cost for full time employees and qualifying retirees, and half the insurance premium cost for any spousal or dependent coverage. Because roughly half of all ERS health plan participants provide some type of insurance coverage to other family members, costs for their 50 percent share will increase. The vast majority of ERS participants, approximately 92 percent, receive coverage through HealthSelect, which is a self-funded risk pool administered by Blue Cross Blue Shield of Texas on behalf of ERS. Based on current HealthSelect insurance premium costs, TPEA estimates (NOTE: these are unofficial estimates, the legislature and ERS Board of Trustees will approve actual rates) that FY 2010 rates for Member and Family coverage will increase by approximately $23 a month; rates for Member and Spouse will increase by approximately $14 a month; and, rates for Member and Children will increase by $10 a month. These are unofficial estimates for HealthSelect rates, rates for HMO participants will be determined in the ERS bidding process. Participants with dependent coverage will experience a similar increase in costs in FY 2011 based on the projected 6.5 percent premium increase.
TPEA is also working with Senator Judith Zaffirini (D-Laredo) and Representative Abel Herrero (D-Corpus Christi) to make sure ERS provides a comprehensive smoking cessation benefit for state employees and retirees. Despite the fact that all other major state health insurance plans (TRS, UT, TX A&M) provide a comprehensive smoking cessation benefit for school district employees and retirees and employees of the University of Texas and Texas A&M University, ERS continues to deny state employees access to a comprehensive smoking cessation benefit despite the fact every major public health study demonstrates huge cost savings for employers and health plans that take an enlightened position on assisting employees to quit smoking.
Vote for Cheryl MacBride, ERS Election Ends on April 16
The 2009 election for the ERS Board of Trustees ends on Thursday, April 16. Cheryl MacBride has been endorsed as the best qualified candidate by the Texas Public Employees Association (TPEA), by the Department of Public Safety Officers Association (DPSOA), by the Retired State Employees Association (RSEA), and by the Texas Game Wardens Association (TGWA). Mrs. MacBride has an impressive background in finance and management that makes her the best qualified candidate among the four contenders.
All state employees, retirees, and other eligible ERS participants should participate in this election. As explained in this Austin American-Statesman article the value of the ERS Retirement Fund declined by an astounding $6.5 billion in the six months prior to the recent February 28 ERS valuation. Members of the Teachers Retirement System (TRS) do not get to directly decide who serves on the TRS Board of Trustees, so it is important that all ERS members participate in this election and select the best qualified candidate.
Voting in the ERS Trustee election concludes this Thursday, April 16. Eligible voters should have received a ballot in the mail. You can vote by mail, or you can vote online through the ERS web site. You’ll need the ERS personal identification number that is listed on the ballot information you received in the mail to vote online.
Other Legislation of Interest to State Employees and Retirees
TPEA has been monitoring and analyzing legislation as it has been introduced. We have listed below some legislation of interest to state employees and retirees. The best public web site to find or monitor legislation can be found at http://www.capitol.state.tx.us/.
SB 336 (Sen. Duell)– Expands authority to close DADS State Schools.
SB 888 (Sen. Nelson) – Creates a voluntary pill splitting program for state health plans.
SB 1007/HB 2203 (Sen. Hegar/Rep. Isett)– Sunset legislation for Texas Department of Insurance.
SB 1019/HB 300 (Sen. Hegar/Rep. Isett)– Sunset legislation for Texas Department of Transportation.
SB 1020/ HB 3689 (Sen. Hinojosa/Rep. McLendon)– Sunset legislation for the Texas Youth Commission.
SB 1404/HB 2559 (Sen. Duncan/Rep. Truitt)– Omnibus ERS legislation.
SB 1548 (Sen. Ogden)– Expands oversight of state retirement systems and their investment policies.
SB 1912/HB 4207 (Sen. Duncan/Rep. Giddings)– Makes public employees dates of birth confidential under the Texas Public Information Act to prevent identity theft.
HB 1176 (Rep. Crownover)– Establishes an optional High Deductible Health Plan with a Health Savings Account under ERS.
HB 1346/SB 1147 (Rep. Quintanilla/Sen. Carona)– Allows an elected ERS Trustee to continue serving after retiring.
HB 2026 (Rep. Zerwas)– Requires ERS to study bariatric surgery and provide coverage if it is cost effective.
HB 2097 (Rep. Hodge)– Requires most state employees to pay for any personal use of a state vehicle.
HB 2283 (Rep. Truitt)– Attempts to expand participation in the ERS TexaSaver 401k program by making all employees opt of participation, allows the state to contribute matching funds.
HB 3106/SB 2304 (Rep. Madden/Sen. Williams)– Equalizes hazardous duty pay for all eligible TDCJ employees at $12 a month.
Watch TPEA’s website www.tpea.org for special event announcements and to read about TPEA’s future schedule.