State Employee Legislative Update

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Progress of 80th Regular Session of Texas Legislature

The three biggest issues affecting state employees-- employee pay raises, health insurance benefits, and retirement contributions-- are determined within the appropriations process. Legislators in both the House and the Senate have been hard at work on their respective budget bills, HB 1 and SB 1. By tradition, the House and the Senate take turns originating the General Appropriations Act, and this year the House bill, HB 1 by Rep. Chisum (R- Pampa), will be the state budget bill. Currently, HB 1 is expected to be voted out of committee within the next week and is slated to be considered by the full House beginning on March 26 or 27.

Friday March 9 was the 60th day of the legislative session, which was also the "bill filing deadline". Nearly 6,000 bills were filed as of March 9, with 1944 bills filed in the Senate, and 3977 bills filed in the House. Monday, March 19 is the 70th day, the halfway point, of the 80th Regular Session.

Get Involved—Contact Your State Legislators

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.

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 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 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.

Update on Employee Pay Issues

Working for adequate state employee pay raises has proven to be the most difficult issue for TPEA this session. TPEA has proposed a reasonable and affordable pay raise package that asks for raises of 2.5 percent, with $75 a month minimum raises, in both years of the 2008-2009 biennium. The proposal also calls for funds to be appropriated to each state agency to establish a baseline level of merit pay increases.

In the House, the Appropriations subcommittee chaired by Rep. Dawnna Dukes (D-Austin) developed an ambitious package of proposed pay enhancements that includes: the TPEA-backed 2.5 percent raises with $75 a month minimum increases; TPEA's merit pay proposal; as well as additional raises of 5 percent for correctional staff at TDCJ and TYC and DFPS caseworkers. The subcommittee 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, although it is unclear how this would work without seeing the related statutory changes. Targeted pay increases for Schedule C law enforcement personnel were also included. All of the first year pay increases were pushed back to January 1, 2008 to lower their overall cost. Chairwoman Dukes and her subcommittee members deserve a lot of credit for trying to address the problems affecting the state workforce-lagging pay and excessive turnover in certain occupational groups and among newer employees. However, the entire state employee pay package was ultimately put into Article XI of HB 1, the budget bill, which is effectively the legislative "wish list".

In the Senate, no final decision has yet been made on state employee pay issues. TPEA commends the Senate leadership for taking a serious look at the important issues regarding state employee compensation. A working group of three influential Senators, Duncan, Ogden and Zaffirini, has been considering different approaches, whether to target raises to high turnover groups or occupational categories whose pay lags the furthest behind market pay, or to combine TPEA's approach with other targeted pay strategies. In addition to determining how to best address employee pay, Senators have not yet committed to devoting sufficient resources to fund adequate pay raises. TPEA's pay package would cost an estimated $374 million in General Revenue for the biennium, but, faced with spending demands for health and human services programs and higher education, the Senate has not yet committed to funding levels that would support TPEA's modest pay raise package.

Health Insurance Issues

The primary issue regarding employee and retiree health insurance this session has been attempting to get sufficient funding for the ERS Group Benefits Plan (GBP) to avoid increased copayments or deductibles and to maintain a reasonable financial reserve in the event cost trends increase unexpectedly. ERS estimated it would require an additional $76 million in All Funds and $47 million in General Revenue above the amounts appropriated in the introduced version of HB1 and SB 1 to maintain current benefits.

ERS projected that if it did not receive sufficient funding it would have to impose a series of increases in deductibles or copays in the second year of the biennium. These could have included a doubling of the drug deductible, along with increases in office visit copays and other significant out of pocket cost increases. In response, both the House subcommittee chaired by Rep. Carl Isett (R-Lubbock) and the Senate Working Group chaired by Senator Robert Duncan (R-Lubbock) added approximately $20 million to GBP funding. ERS projections suggest that with this level of funding it may be able to get through the next biennium without any benefit changes, but that it will be forced to spend down its reserve and will have no margin for error if cost trends change.

A number of bills have been filed that would affect the ERS health plan. Several bills would add more non-state employee groups to the ERS health insurance plan. These include HB 543, regarding adjunct faculty, and SB 1930 and HB 3852 which would add retired local juvenile probation department employees to the ERS GBP. TPEA is sympathetic to groups trying to find affordable health coverage, but because the ERS health plan is self funded groups that have higher average health care costs would essentially shift their excess costs to the state and to all the other plan participants. Consequently TPEA opposes these bills. Another bill of great concern to TPEA is HB 1269 which would require ERS to establish a Health Savings Account option.

Retirement Issues

Both the House and the Senate are considering increasing the state contribution rate to ERS to try to make the retirement fund more actuarially sound. The House subcommittee chaired by Rep. Isett has recommended funding ERS at a 7.3 percent contribution rate by the state, the actuarially determined rate that would enable ERS to get back within its statutory funding period of 31 years. The Senate is also considering increasing the state's contribution rate, although no decision has yet been made about the rate. In addition, the Senate has discussed increasing the employee contribution rate, possibly to 6.4 percent from the current 6 percent rate. Legislation to accomplish this has been filed, SB 1847 by Senator Duncan. Employees under the TRS system already contribute 6.4 percent.

TPEA supports increasing retirement contribution rates to bring ERS within its actuarial funding period, and hopefully allow for a benefit increase for state retirees either in the form of a supplemental payment or 13th check, or an annuity increase.

Thus far no legislation has been filed that would change any of the basic eligibility rules for retirement or retiree health coverage.

Re-elect Don Green to ERS Board of Trustees

The election for the ERS board of Trustees began on March 14 and continues through April 19. Eligible employees, retirees and former employees can vote online by going to the ERS website (http://www.ers.state.tx.us/) and clicking on the VOTE NOW button at the top of the page. All eligible voters should also receive a paper ballot in the mail. TPEA encourages all eligible voters to participate in this election.

The ERS Board of Trustees oversees the investment of $23 billion in retirement funds and administers health benefits for over a half million Texans. TPEA and most other employee and retiree groups are supporting current Board Chairman Don Green for re-election based on his demonstrated leadership, and because he is clearly the best qualified candidate for this important position. For more information on Don Green, visit the TPEA web site for TPEA's endorsement piece and accompanying article in our last magazine.

Legislation of Interest

HB 613 and HB 3748-Would create a retiree position on ERS Board of Trustees.
HB 957-Would establish an automatic 1 percent 401 k contribution for new state employees, who could opt out.
HB 1297-Would create a statewide wellness program for state employees.
SB 247-Would require ERS to not invest in companies involved in Sudan.
SB 769-Would reform a number of state contracting practices, including outsourcing.

State Employee Legislative Update - March 2007

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