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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 Almost Over
With the current Regular Session of the Texas Legislature adjourning on Monday, June 1 and a series of procedural rules limiting consideration of legislation, the 2009 session is almost over.
However, because there have been a number of late breaking decisions affecting state employees and retirees, TPEA is sending this quick flash update. TPEA will provide a more comprehensive update upon conclusion of the session.
Quick Update on State Employee Pay
The ten-member conference committee on SB 1 has concluded its negotiations and approved a $182 billion state budget for the FY 2010-11 biennium. SB 1 includes funding for targeted pay raises for certain occupational and agency groups. The budget 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, but averaging between 4 and 5 percent. Certain TPWD employees will receive raises contingent on approval of agency-approved fees. Financial examiners in various agencies will receive a pay increase.
TPEA was concerned and disappointed when budget conferees concluded their deliberations without taking action on any type of general compensation increase for most state employees. TPEA had 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 TPEA proposed a second year pay raise of 3 percent.
When it became apparent the legislature was prepared to do nothing for most state workers, TPEA’s leadership convened an emergency meeting of its Executive Committee. The purpose of the meeting was to determine if the organization could continue to support the proposed changes in the ERS reform bill (HB 2559), particularly the proposed increase in the employee contribution rate for the ERS retirement system.
Based on TPEA’s concerns, key legislative leaders worked to find funds to pay for a one-time $800 “retention payment” for most state employees who won’t receive targeted pay raises. While the $800 payment is less than state employees truly deserve, it is better than nothing. 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 for the $800 retention payment approved. The retention payment was added to the Supplemental Appropriations bill (HB 4586) by Senator Steve Ogden (R-Bryan). The $800 retention payment will be paid in August to non-higher education state employees who earn less than $100,000 annually and who are continuously employed with the state from March 31, 2009 to August 1, 2009. See the Austin American-Statesman article regarding the $800 payment.
Update on State Retiree Issues
TPEA has also been working to find a way to assist state retirees. ERS retirees have not received any type of benefit enhancement since a 13th check was issued in January of 2002. Under current law ERS cannot provide for a 13th check or any other benefit enhancement when the retirement fund is not actuarially sound. Consequently, TPEA asked the legislature to make a direct appropriation for a $1000 supplemental payment for ERS annuitants in SB 1.
The legislature did approve a one-time $500 supplemental payment for both ERS and TRS retirees, subject to the Attorney General finding that such a payment would not violate Article 3, Section 44 of the Texas Constitution. In the event the Attorney General finds that such a payment is not constitutional, the funds will be used to increase the state contribution rate for ERS, from the current 6.45 percent to 6.95 percent. TPEA will be filing a legal brief with the Attorney General to provide legal support for the constitutionality of the proposed $500 supplemental payment. See the Dallas Morning News Article regarding the $500 bonus to state retirees.
HB 2559--Changes to Stabilize ERS Retirement Fund
The other major legislation that could significantly affect state employees and retirees is HB 2559, which was amended in the Senate to include significant changes to current law that should help put the ERS retirement fund back on track towards actuarial soundness. TPEA has been discussing this issue in our emails since the beginning of this legislative session, and we conducted a large scale survey of state employees to better understand employee attitudes and preferences with regard to possible changes in retirement contributions and benefits. TPEA has repeatedly informed our email recipients that HB 2559 would be the legislative vehicle for any significant changes to ERS, and the specific changes have been under discussion for months.
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. So 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 bone 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.
The combination of these changes will help restore the ERS retirement fund to actuarial soundness, over time, if ERS can begin to experience positive investment returns in line with actuarial assumptions.
While these are difficult changes, TPEA and the Department of Public Safety Officers Association (DPSOA) are supporting HB 2559 as amended in the Senate. Without such changes, the actuarial condition of the ERS fund will continue to deteriorate and there would be little chance that current or future retirees would ever be able to receive any type of post-retirement benefit enhancement.
Cheryl MacBride In ERS Runoff
Voting in the run-off election for the Board of Trustees of the Employees Retirement System will begin on June 3rd and continue through July 7th. Participation in the initial round of voting was disappointing, with only 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.
Watch TPEA’s website www.tpea.org for special event announcements and to read about TPEA’s future schedule.