Progress of 80th Regular Session of Texas Legislature

The 140-day Regular Session of the Texas Legislature ends on May 28.  So there is about a month left in the 20-week session of the 80th Legislature. The legislature's workload is heavily backloaded, so most legislation that will ultimately be enacted is still working its way through the legislative process.

Both the Texas House and Senate have now passed their respective versions of HB 1, the state budget bill. The three most important issues affecting state employees and retirees—employee pay raises, health insurance benefits for active and retired employees, and state retirement contributions--are largely decided within the appropriations process.  A ten member conference committee composed of five House members and five Senators has now been appointed and will work out differences between their respective versions of the state budget. Appointment of the conference committee on the appropriations bill is a major juncture in the process to approve a state budget. A more detailed explanation of the status of particular budget issues is provided below.

Budget Conferees Named

The final decisions on state budget matters will be decided by the conference committee on HB1 in consultation with Lt. Governor Dewhurst and Speaker Craddick.  Please consider contacting the Capitol offices of the budget conferees to encourage their support for funding state employee and retiree needs for pay raises, health insurance and retirement funding.

The five House conferees are:
Appropriations Committee Chairman Warren Chisum (R-Pampa), (512) 463-0736
Vice Chair Ryan Guillen (D- Rio Grande City), (512) 463-0416
Rep. Lois Kolkhorst (R-Brenham), (512) 463-0600
Rep. Sylvester Turner (D-Houston), (512) 463-0554
Rep. Dan Gattis (R-Georgetown), (512) 463-0309

The five Senate conferees are:
Finance Committee Chairrman Steve Ogden (R-Bryan), (512) 463-0105
Vice Chair Judith Zaffirini (D-Laredo),  (512) 463-0121
Senator Robert Duncan (R-Lubbock), (512) 463-0128
Senator John Whitmire (D-Houston), (512) 463-0115
Senator Tommy Williams (R-The Woodlands), (512) 463-0104

Get Involved - Contact Your State Legislators

It is important that legislators hear from state employees and retirees on our key issues of employee compensation, health insurance benefits and retirement.  TPEA encourages everyone who receives this email to contact the budget conferees identified above, and to identify their State Senator and State Representative and contact them by phone or E-mail. If you do not know who your elected state legislators are, utilize the online feature at http://www.fyi.legis.state.tx.us/ and then use the telephone number or email messaging service available on legislators’ home pages to contact them.  Use your own words but let them know that you want their support for TPEA’s pay raise proposal, for maintaining our health insurance benefits without increased out of pocket costs, and for increased retirement contributions to allow for a benefit increase for retirees. Use the updated information below for more detail on these issues.

TPEA is also requesting that all state employees and retirees contact their State Representative and ask them to vote against HB 1269, the Health Savings Account bill by Representative Myra Crownover.  HB 1269 is opposed by all state employee groups since it would undermine our health insurance program.

Anyone interested in trying to find or track a particular piece of legislation can use the free web site at http://www.capitol.state.tx.us/. Or, if you are a TPEA member, contact TPEA by phone or e-mail.

Employee Pay Raise Issues

The version of the appropriations bill, HB 1, passed in the House did not actually appropriate any funds for state employee pay raises. Instead, the package of employee pay enhancements recommended by Rep. Dawnna Dukes (D-Austin) was placed in Article XI of the budget, which is effectively the budgetary “wish list”. However, inclusion of these items in Article XI means that employee pay will be an item to be considered in conference committee.

To recap from the prior TPEA email, Rep. Dukes’ package of proposed pay enhancements included: the TPEA-backed 2.5 percent raises with $75 a month minimum increases in both years of the biennium; TPEA’s merit pay proposal; additional raises of 4 percent for correctional staff at TDCJ and TYC and DFPS caseworkers. The package also proposed an increase in longevity pay to $30 a month for every two years of service during the first 10 years of state service. Targeted pay increases for Schedule C law enforcement personnel were also included. All of the first year pay increases were pushed back to January1, 2008 to lower their overall cost.   

In the Senate version of HB 1, funds were appropriated for merit pay to all non higher education state agencies in the amount of 1 percent of agency payroll for both years of the 2008-09 biennium to target employee turnover.  An additional 1 percent of payroll in each year was also funded at agencies with the highest turnover, TDCJ, TYC, DSHS and DADS. The Senate also included across the board raises of 2 percent with $50 a month minimum increases in both FY 2008 and 2009, but these increases were included in Article XI, the budgetary wish list.

At this time it is impossible to predict how budget conferees and legislative leaders will address state employee pay issues.  Employee pay will be seriously considered in the budget conference committee and TPEA believes there are sufficient funds available to fund the sort of pay raise package proposed by TPEA. TPEA believes there is a reasonable likelihood that modest across the board raises will be approved for both years of the biennium, and additional funds may be approved for targeted pay increases for high turnover positions and agencies, and possibly for agency merit pay.

Related Web Link:
TPEA Pay Raise Proposal: http://www.tpea.org/legislative/200809biennum.html

Health Insurance Issues

The primary issue regarding employee and retiree health insurance has been sufficient funding for the ERS Group Benefits Plan (GBP) to avoid increased co-payments, deductibles or other out of pocket cost sharing. ERS has requested an additional $76 million in All Funds and $47 million in General Revenue above the amounts appropriated in the introduced version of HB1 to maintain current benefits and allow a reasonable financial reserve in the event cost trends increase unexpectedly.

The Senate version of the budget added approximately one percent each year, or about $20 million in General Revenue, to GBP funding. ERS projects that with this level of funding it may be able to get through the first year of the next biennium without any benefit changes, but that it will have no margin for error if cost trends change and may be forced to increase co-payments or other participant expenses for fiscal year 2009, which starts on September 1, 2008. The House version of the budget included a similar increase as the Senate, but again in Article XI, the wish list portion of the budget.

Retirement Issues

TPEA supports increasing retirement contribution rates to restore actuarial soundness to ERS, and hopefully to allow for issuance of a supplemental payment or 13th check for retirees. TPEA has closely analyzed the actuarial status of the ERS retirement fund, which has a reasonably substantial unfunded liability, and the ability of current and likely future contributions to support an actuarially sound retirement fund.  Based on this analysis, TPEA is supporting SB 1847 and the proposed increase in the employee retirement contribution rate to 6.4 percent. TPEA believes this is essential to avoiding a change to a “rule of 85” or other changes in basic retirement eligibility standards.  TPEA is also working with Senator Robert Duncan (R-Lubbock), the author of SB 1847, to ensure that employees will receive across the board pay raises that will offset the impact of any increase in retirement contributions. 

Both the House and the Senate versions of HB 1 try to make the ERS retirement fund more actuarially sound through increased retirement contributions, but their methods to do this differ significantly. The House version of the budget funds ERS at a 7.3 percent retirement contribution rate by the state, along with the current 6 percent employee contribution. This combined level of contribution would likely bring ERS back within its statutory funding period of 31 years and, depending on investment returns, could allow for the issuance of a 13th check for retirees.  The Senate version of the budget increases the state’s contribution rate to 6.7 percent, contingent on passage of Senate Bill 1847 or other legislation that increases the employee retirement contribution rate to 6.4 percent from the current 6 percent rate. Employees under the TRS system already contribute 6.4 percent. Even with the possible 6.4 percent employee contribution, the state would probably need to contribute 7 percent for retirement to maximize the possibility of a 13th check for ERS retirees.

Based on the volume of inquiries we have received, TPEA wants to respond to two common questions. First, there is essentially no chance that there will be any type of retirement incentive approved this session. And second, no legislation has been filed that would change any of the basic eligibility rules for retirement eligibility or retiree health coverage.

Legislation of Interest

HB 957-by Rep. Rob Orr, Would establish an automatic 1 percent TexSaver 401k contribution for new state employees, who could opt out. TPEA supported this bill in committee. Approved by the full House and sent to the Senate.

HB 1269-by Rep. Myra Crownover, Establishes a high deductible health plan with an associated health savings account option for ERS participants.  TPEA and all other state employee groups opposed this bill in committee.  Approved by the House committee and waiting to be scheduled for floor debate.

HB 1297-by Rep. Diane Delisi and SB 72-by Senator Lucio, Would expand wellness programs for state employees to help control health care costs. TPEA supports both bills. Both bills have been approved in their house of origin and sent to the other body.

SB 247-by Senator Ellis, Would require ERS to not invest in companies involved in Sudan. Approved by the Senate and heard in committee in the House.

SB 769-by Senator Zaffirini, Would reform a number of state contracting practices, including some aspects of outsourcing of state services. TPEA supported in committee. Approved in Senate committee and awaiting consideration by the full Senate.

HB 1613-by Rep. Dan Gattis and HB 3454-by Rep. Bill Callegari, Legislation pushed by local pharmacists that could negatively impact the ERS mail order pharmacy benefit. Both bills have been approved in House committee and await scheduling for floor debate.