80th Regular Session of the Legislature Adjourns
The 80th Texas Legislature completed its 140-day Regular Session on Monday, May 28 and adjourned Sine Die. Unless called into special session by Governor Perry, the legislature will not return until January of 2009. For legislation approved at the end of the session, the Governor has until June 17 to decide what actions to take, whether to sign, to veto, or to allow a bill to take effect without his signature. Similarly, both the Comptroller and the Governor have responsibilities regarding the General Appropriations Act, the state budget, before it can go into effect. Under the Texas Constitution, Comptroller Combs must certify that there will be sufficient revenues available to fund HB 1, the state budget for the 2008-2009 biennium. And Governor Perry has authority to veto items in the Appropriations Bill.
The media portrayed the 2007 legislative session as the most contentious in recent memory, particularly in the Texas House. Nevertheless, the legislature completed and passed the state budget, arguably its most important responsibility. And with only a few exceptions, all the legislation that was considered "must pass" did pass.
Overview of Legislative Action
There was no single issue or problem that defined the 80th Regular Session of the legislature. Instead, there were a number of bills addressing major state issues and problems. Perhaps the most far-reaching impact of the session for most Texans will be legislators' actions to follow through on their commitment from last year to lower local school property tax rates (HB 2). Other major bills included: legislation to address funding for state parks (HB 12); legislation to better conserve and plan for water use in Texas (HB 3, HB 4, SB 3); legislation to restore cuts to CHIP, the Children's Health Insurance Program, that were enacted in 2003 (HB 109); legislation to fund a ten-year, $3 billion research effort to find cures for cancer (HJR 90, HB 14); and legislation to impose a temporary moratorium on some new private toll roads (SB 792).
The most significant piece of legislation approved by the legislature is the state budget, HB 1. The approved budget for the 2008-2009 biennium that begins on September 1 totals $152.5 billion in All Funds, an increase of $10 billion or 7 percent from current biennial appropriation levels. The two largest areas of state spending are for public and higher education which total almost $61 billion in HB 1, or 40 percent of all spending, and for health and human services, which account for a third of all spending, totaling over $51 billion. In addition to these amounts, the Legislature is using nearly $14.2 billion to "buy down" local school property taxes.
State Employee Pay
All non-higher education state employees will receive at least modest pay raises under the final version of the state budget. The legislature approved a watered-down version of the TPEA pay raise proposal which will give all non Schedule C employees pay raises in both years of the next biennium of 2 percent with $50 a month minimum increases. These raises will begin on September 1 of this year, and again on September 1 of 2008.
While the legislatively approved pay raise did not meet all the expectations or scope of TPEA's original proposal, it is significant that the legislature granted raises in both years of this two-year budget cycle. It is distinctive and signifies progress since the legislature has not approved pay raises in four consecutive years since the mid 1980s (SEE Related Chart). Law enforcement personnel on Salary Schedule C will also receive a raise which varies depending on tenure. The total combined cost for employee pay raises in HB 1 is about $420 million in All Funds. Employee raises are subject to certification by Comptroller Susan Combs that sufficient funds will be available above the amounts estimated in her January Biennial Revenue Estimate. TPEA appreciates the support of legislative leaders and the willingness of Comptroller Susan Combs to help find funding for much needed state employee pay raises.
There were other legislative actions that will affect certain employee groups. HB 2498 by Rep. Gonzalez Toureilles will increase hazardous duty pay for full-time Correctional Officers with the Texas Department of Criminal Justice from $10 a month for each year of qualifying service to $12 a month. This would, for example, increase annual hazardous duty pay for a 10 year veteran Correctional Officer by $240. HB 1 also reclassifies certain positions to higher pay grades, which could result in pay increases for employees in those positions. Please inquire with your agency's human resources office to see if a particular position may have been reclassified or reallocated.
Although TPEA's merit pay proposal was included in virtually every draft of the legislative budget, a provision which would have provided each agency with a baseline level of funding to assure that higher performing employees had a reasonable opportunity for additional pay raises, ultimately this provision was not funded.
Web Links:
TPEA Pay Raise Proposal: http://www.tpea.org/legislative/200809biennum.html
Salary Increase Chart: http://www.tpea.org/legislative/salary_increase.shtml
Employee and Retiree Health Insurance Benefits
TPEA believes that the legislature appropriated sufficient funds for health insurance benefits at the Employee Retirement System so that state employees and retirees can look forward to another two years without any significant increases in health care costs. As TPEA proposed, the state will continue paying the full insurance premium for active, full-time employees and qualifying retired employees, and the state will maintain its commitment to fund half of the cost for spousal and other dependent coverage. Based on this level of funding, ERS is maintaining current HealthSelect premium rates for fiscal year 2008, which begins on September 1, and there are no changes expected in any co-payments, deductibles or other out-of-pocket cost sharing features under HealthSelect. Current information suggests all HMOs participating under ERS will continue to participate next year, but there may be increases in monthly HMO premium costs. For the FY 2009, which begins on September 1 2008, TPEA is hopeful there will not need to be any significant increases in premiums or out-of-pocket costs for HealthSelect.
The most significant threat to employee and retiree health benefits during the session was HB 1269 by Rep. Crownover, which would have created an optional high deductible health plan with an associated health savings account. HB 1269 was opposed by every state employee group because of concerns it would undermine our traditional health insurance plan as a result of adverse selection. HB 1269 was twice prevented from being debated on the House floor after points of order were raised against consideration because of inaccuracies in bill analyses. Supporters of the legislation later added an HSA amendment to an unrelated bill, SB 23, but it was taken off in conference committee and SB 23 was later voted down by the House. TPEA thanks Rep. Joe Deshotel and the other legislators who worked to prevent passage of HSA legislation.
Retirement Issues
The biggest disappointment of the session for TPEA was the failure to win approval for legislation that would have enabled ERS to issue a 13th check for state retirees. See the related Austin American-Statesman article.
TPEA had worked out an agreement with Senator Robert Duncan wherein TPEA agreed to support SB 1847, which would have increased active employee retirement contributions to ERS to 6.4 percent from the current 6 percent. Enactment of SB 1847 or similar legislation would have triggered an increase in the state retirement contribution from 6.45 percent to 6.7 percent. The combination of the increased employee contribution and the enhanced state contribution would have put ERS in an actuarial position to issue a supplemental payment or 13th check for ERS retirees.
It is important to note that TPEA's support for this arrangement was contingent on the legislature's approval of across the board pay raises that would have at least offset the cost of this additional employee contribution. After being approved in the Senate, SB 1847 failed to get out of House committee, and a back up plan to amend the provisions of SB 1847 onto another bill were foiled when SB 1848 was killed on a point of order. State retirees have not had any type of benefit enhancement since January of 2002. Separately, legislation was enacted that should enable the Teachers Retirement System to grant a 13th check to TRS retirees. TPEA believes it is inherently unfair to approve a benefit increase for TRS retirees without providing a comparable increase for ERS retirees.
No statutory changes were made to any of the ERS retirement eligibility rules, such as the "rule of 80", or to laws governing allowable use of sick and annual leave for retirement purposes. The only other major ERS legislation that was approved was HB 957 by Rep. Rob Orr, which provides for automatic enrollment in the ERS Texa$aver 401(k) plan for new state employees hired after January 1, 2008 at the rate of one percent of salary, with an opt-out provision.
Web Link:
http://www.tpea.org/news/2007/0528/retireebenefits.html
Don Green Leads Runoff for ERS Board
Results of the Trustee election for the Employees Retirement System were released on May 11, and, as expected given the number of candidates, there will a runoff with Don Green, the current ERS Trustee, who lead the first round of voting with nearly 42 percent of the vote. TPEA and other state employee and retiree groups have endorsed Don Green based on his record of accomplishment as Trustee as well as his superior experience and qualifications. Ballots for the runoff election will be mailed June 4, and voting will be open until July 13. More information is available at http://www.ers.state.tx.us/news/articles/2007-05-15.aspx and online voting will be enabled on the ERS website beginning June 6.
Web Link:
http://www.ers.state.tx.us/news/articles/2007-05-15.aspx
Other Legislation of Interest
HB 957-by Rep. Rob Orr, Will establish an automatic 1 percent TexSaver 401k contribution for new state employees after January 1, 2008, who could opt out. Approved and sent to the Governor.
HB 1297-by Rep. Diane Delisi ,Will create a new office to coordinate state employee wellness efforts at the Department of State Health Services, including developing and disseminating model programs and expanding optional incentives. Most of the provisions of SB 72 were added to this legislation. Approved and sent to the Governor.
HB 2365- by Rep. Vicki Truitt, Will allow the state and political subdivisions to use an alternative means of financial reporting for post-retirement health benefits, as opposed to the requirement imposed by the GASB 45 rule which conflicts with the Texas Constitution. Approved and sent to the Governor.
SB 247-by Senator Rodney Ellis, Will require ERS and TRS to not invest in companies involved in Sudan. Approved and sent to the Governor.