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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.
Follow this link to submit your home email address to TPEA.
81st Legislative Session Adjourns
The Regular Session of the 81st Texas Legislature adjourned Sine Die on Monday, June 1. Governor Perry can still take action to veto legislation, or to line-item veto specific appropriation items. It was a roller coaster of a session, first with big changes in the state’s budgetary outlook after the Comptroller’s January Biennial Revenue Estimate, then again after passage of the federal stimulus package. Ultimately, the legislature approved a $182.3 billion two year budget that uses over $11 billion in one-time stimulus funds and leaves the estimated $9.1 billion in the state’s “Rainy Day” fund untouched.
Most of the increases in funding over the current biennium were in three programmatic areas: health and human services, primarily for growth in caseloads and costs for Medicaid; public education, including legislatively funded pay raises for teachers; and higher education.
Five Agencies Need Sunset Fix
The legislature functioned fairly harmoniously during most of the session. However, the process was thrown off course near the session’s end when prolonged debate caused by a partisan dispute effectively killed many bills. This delay and the failure to reach agreement in a timely fashion on several Sunset bills resulted in five agencies not being reauthorized. Normally, the legislature passes “safety net” legislation to safeguard agencies so that they are not inadvertently “sunsetted”. Unfortunately, the safety net legislation, HB 1959, was itself killed when a procedural time limit expired before the conference committee report could be considered. A final effort to fix the problem by the House was rebuffed by the Senate.
The net result of all this is an unprecedented situation where two major state agencies, the Texas Department of Transportation (TXDOT) and the Texas Department of Insurance (TDI), as well as three smaller agencies, the Texas Racing Commission, the Office of Public Insurance Counsel, and the Texas State Affordable Housing Corporation, are slated to go out of existence by September of 2010.
TPEA’s current understanding of the legal issues involved suggests that the only way to avoid having these agencies go out of existence is for the Governor to call a special session and for the legislature to extend the agencies’ Sunset dates to 2011 or beyond. Governor Perry and the legislative leadership have all made positive statements that the problem will be addressed, although no timelines have been discussed. TPEA stands ready to assist in any way to resolve this problem.
Outcome on Employee and Retiree Health Benefits
Since the increased costs and health plan changes enacted in 2003, TPEA has been working to stabilize and preserve our health benefit plan for state employees and retirees. TPEA has had two goals: first, to maintain the premium contribution structure with the state paying the full cost for eligible employees and retirees and half the cost for spouses, children and other dependents, and second, to avoid increases in co-pays, deductibles and other out-of-pocket costs. TPEA was able to work with key legislators to achieve these goals in SB 1.
The legislature appropriated $280 million in new funds to maintain the premium contribution structure currently in place, and current projections are that no new or increased co-payments or deductibles will be necessary over the 2010-2011 biennium. Because overall health care costs have been increasing, costs for the 50 percent share of health insurance will increase. Follow this link: http://www.ers.state.tx.us/insurance/rates/health_rates_fte.aspx to see health insurance premium rates for HealthSelect and participating HMOs for the plan year beginning September 1, 2009. Some state employees will no longer have an HMO option since First Care will no longer be a participating HMO in 78 counties areas around Abilene, Amarillo and Lubbock. Scott & White will extend its coverage area to Tom Green County. For more information, see http://www.ers.state.tx.us/news/articles/20090520.aspx.
TPEA was also pleased that language was added to HB 2559 that should enable ERS to provide a comprehensive smoking cessation benefit. Legislation that would have required ERS to establish a Health Savings Account (HSA) option was defeated after it was opposed by every state employee and retiree group.
TPEA is grateful for the work of key legislators in providing sufficient funding to maintain current health benefits for employees and retirees. Key champions for our health benefits included House Appropriations Chair Jim Pitts (R-Waxahachie), Representative John Otto (R-Dayton), Senator Robert Duncan (R-Lubbock), Senator Juan “Chuy” Hinojosa (D-Mission), and Senator Royce West (D-Dallas).
Outcome on State Employee Pay
The most difficult challenge TPEA faces every session is gaining sufficient legislative support for adequate pay raises for all state employees. This session was no exception, and our task was made more difficult by the state’s difficult fiscal situation and fear of a looming fiscal crisis. See the Dallas Morning News article covering this subject at http://www.tpea.org/news/newsarticle.php?id=51.
TPEA had requested targeted pay increases for the highest turnover occupational categories where data from the State Auditor’s Office showed the most significant pay disparities, primarily among correctional employees. In addition, TPEA proposed that all employees who did not receive a targeted pay increase would be eligible for a one-time $1000 payment in September 2009, and a second year pay raise of 3 percent.
In the end, the legislature funded the targeted raises at a reduced level. SB 1 includes 3.5 percent pay raises in both FY 2010 and FY 2011 for TDCJ uniformed security staff, unit assigned employees, and parole officers. TYC juvenile correctional staff will also receive the same 3.5 percent pay raises. State law enforcement personnel on Salary Schedule C will also receive raises, depending on their tenure. Pay raises for some TPWD employees will be contingent on approval of agency-approved fees.
Late in the session TPEA was able to salvage additional compensation for most other state employees after SB 1 had already been decided. TPEA convinced legislative leaders to find $88 million to pay for a one-time $800 “retention payment” for most state employees who won’t receive targeted pay raises. This was added to the Supplemental Appropriations bill (HB 4586) by Senator Steve Ogden (R-Bryan). TPEA appreciates the efforts of Senator Robert Duncan (R-Lubbock), House Appropriations Chair Jim Pitts (R-Waxahachie), and the office of House Speaker Joe Straus (R-San Antonio) in working to get funding approval for the $800 retention payment. The $800 retention payment will be paid in August to state employees (not including employees of state institutions of higher education) who earn less than $100,000 annually and are continuously employed with the state from March 31, 2009 to August 1, 2009.
Outcome on Enhanced Benefits for State Retirees
One of TPEA’s primary legislative goals for the 2009 session was to find a way to provide some type of benefit enhancement for state retirees. ERS retirees have not received any type of benefit enhancement since a 13th check was issued in January of 2002. However, under current law, ERS cannot provide for a 13th check or any other retirement benefit enhancement when the retirement fund is not actuarially sound. In response TPEA asked the legislature to make a direct appropriation for a $1000 supplemental payment for ERS annuitants in SB 1, which had never been done before.
HB 2559 Passed - Changes Needed to Stabilize ERS Retirement Fund
The final major goal of TPEA’s legislative agenda was to find a way to begin restoring the ERS retirement fund to actuarial soundness. TPEA has been studying the growing problems with the retirement fund for several years (see our feature magazine article about the issue). It became clear that, unless significant corrective action was taken, state retirees were unlikely to ever again receive any type of post-retirement benefit enhancement, and the long term financial viability of the retirement fund would be in danger. At the most basic level, there are only two ways to improve the retirement fund’s actuarial condition: either someone has to contribute more, or benefits will need to be changed. In the end, HB 2559 did a little of both.
The two biggest challenges in fashioning the provisions of HB 2559 were how to be fair to current employees, and how to make sure that retirement benefits would remain attractive for future employees. TPEA is pleased to report that the final version of HB 2559 addressed each of the issues raised by TPEA. This was due in large part to the input received from state employees based on their responses to TPEA's statewide survey, conducted at the beginning of this legislative session. Legislators involved with the drafting of the legislation relied heavily on survey results showing overwhelming support by employees to raise the employee contribution rate to no more than 6.5% to preserve the viability of the current retirement system. Additionally, the legislature agreed to TPEA's proposals to make all retirement benefit design changes prospective, effectively grandfathering current employees. Employee participation in the survey by both TPEA and non-TPEA members was a critical factor in the success of this legislation.
The retirement-related provisions of HB 2559, as passed by the Senate, include:
- All current state employees and non-contributing ERS members will be completely grandfathered for all retirement benefit design changes. New employees hired after September 1, 2009 will be subject to a new normal retirement age of 60 (or age 55 for LECOSRF members), although members will be able to retire after meeting the rule of 80 with a five percent annuity reduction for each year under 60, up to 5 years. Annuities for new employees will be calculated based on the highest 48 months pay rather than the highest 36 months. New employees will not be able to use accrued sick and annual leave to meet retirement eligibility. Additionally, vesting for retirement benefits will require 10 years rather than the current 5, so a new employee will be able to retire at age 65 with ten years service, as is currently required to qualify for retiree health insurance.
- The employee contribution rate for ERS will be tied to the state contribution rate, up to 6.5 percent. Employees currently contribute 6 percent and the state has been contributing 6.45 percent since 2005. The state contribution rate to ERS is determined in the General Appropriations Act, and a statutory requirement to require the state to contribute at a higher rate is not enforceable. Under HB 2559, employees will contribute more than 6 percent only if the state contributes at a higher rate, up to 6.5 percent. Law enforcement and custodial officers who participate in the LECOSRF plan will also be required to contribute an additional half percent to help support the enhanced retirement benefits under this fund.
- Employees who retire and return to service on May 31, 2009 or later will be required to wait 90 days to return to service to assure bona fide separation. Agencies that hire a return to service retiree after September 1, 2009 will be required to pay a surcharge equivalent to the state contribution rate to the ERS retirement fund.
For additional information on these changes, see this ERS posting: http://www.ers.state.tx.us/news/articles/20090527.aspx. TPEA appreciates the efforts of the Department of Public Safety Officers Association in trying to find the best path to reforming the retirement fund. Change is always difficult, particularly when there is no short term benefit. TPEA deeply appreciates the leadership of Senator Robert Duncan and Representative Vicki Truitt on this matter.
Cheryl MacBride Endorsed in ERS Board Runoff
Voting in the run-off election for the Board of Trustees of the Employees Retirement System began on June 3rd and continues through July 7th. Participation in the initial round of voting was extremely disappointing, with only 12.25 percent of eligible voters participating, and 32,197 votes out of 262,801 eligible voters.
TPEA again encourages all eligible voters to participate and we ask for your support for Cheryl MacBride as the best qualified candidate. TPEA has been joined by the Department of Public Safety Officers Association (DPSOA), the Retired State Employees Association (RSEA), and the Texas Game Wardens Officers Association in endorsing Cheryl MacBride as the best qualified candidate.
In assessing ERS Trustee candidates, it is important to focus on the actual responsibilities of Board members. Although candidates have listed their support for items such as cost of living adjustments (COLAs) for state retirees, this is a decision that can only be made by state legislators, not ERS Board members. Instead, ERS Trustees’ primary functions are to assure the sound and prudent investment of your retirement funds and to oversee the efficient administration of the ERS health plan, the largest health plan in the state.
There is no comparison between the two remaining candidates’ credentials. Cheryl MacBride has a degree in Finance, has worked as a banker, and is a Certified Government Financial Manager and a Certified Fraud Examiner. She also has significant high-level management experience overseeing complex state business operations.
Please vote today. Either return your ballot by mail or vote online on the ERS web site at http://www.ers.state.tx.us/news/articles/20090602.aspx. To vote online you will need your 11 digit employee ID number, which is on the lower left hand corner of the ballot you should have received in the mail, and, in most cases, on your ERS health card. You can also call ERS for questions about your Employee ID Number, in Austin at (512) 867-7711, or toll free from elsewhere at (877) 275-4377.
Other Legislation of Interest
(Author/Sponsor noted in parentheses)
Bill has been sent to the Governor unless otherwise noted.
HB 518 (Kolkhorst/ Van de Putte) Creates a pilot student loan repayment assistance program for correctional officers attending Sam Houston State University.
HB 605 (Farabee/Estes) Allows state employees to bill for mileage for the safest route, not just the shortest, and does away with the state mileage guide.
HB 1043 (Orr/Nelson) Creates an employment preference at state agencies for former foster children.
HB 1176 (Crownover) Creates an optional Health Savings Account program under ERS - DID NOT PASS.
HB 2097 (Hodge/Hegar) Required some state employees to keep detailed records and reimburse for personal use of state vehicles - DID NOT PASS.
HB 2283 (Truitt/Deuell) Allows state contributions toward employee 401k accounts and other changes to increase state employee retirement savings.
HB 3097 (McClendon/Corona) Creates new Department of Motor Vehicles.
SB 704 (Nelson/Kolkhorst) Requires disclosure and limits certain pricing differentials related to pharmacy benefit manager services.
SB 2298 (Watson/Farabee) Provides state agencies with additional flexibility to pay employees for compensatory time related to declared disasters and emergencies.
SB 2304 (Williams/Madden) Equalized Hazardous Duty Pay at $12 a month for each year of service for all qualifying TDCJ employees - DID NOT PASS.
SB 2577 (Jackson/Zerwas) Requires ERS to require coverage for bariatric surgery but at a cost neutral or cost positive basis.
Watch TPEA’s website www.tpea.org for special event announcements and to read about TPEA’s future schedule.