Legislative Report #05-21

Report 05-21
June 24, 2005

BUDGET CONFEREES BEGIN NEGOTIATIONS

The Senate and House have appointed members to the Conference Committee to resolve differences in the budget bills approved by the two chambers. The Senate appointed 28 members and the House appointed 54 members. Conference Committee membership is listed on the General Assembly web page (www.ncga.state.nc.us).

The conferees held initial meetings on Wednesday in subcommittees to review Senate and House versions of the proposed budget. The joint subcommittees are expected to complete work by Tuesday, June 28 and forward recommendations to the co-chairs of the full Appropriations Committee. Many veteran observers do not expect a quick resolution of the budget issues.

RETIRED EMPLOYEE ISSUES IN THE CONFERENCE

Retired State Employee COLA

We are asking the conferees to provide state retirees with a percentage Cost-Of-Living Adjustment equal to the raise that is granted to active state employees. The Senate budget contained a 2.0% COLA for active employees but the House has proposed a flat dollar amount increase equal to 2.5% of the average state employee salary.

The Senate and the House budgets are identical with regard to a state retiree COLA of 2.0%.  Generally, the rules of budget Conference Committee negotiations do not allow conferees to make any changes to items that are identical in both budget proposals.

Retired Local Government Employee COLA

The Senate budget included a 2.0% COLA for local retirees. The House proposed a 2.5% increase. We have asked the conferees to accept the higher House figure. Local retirees did not receive a COLA last year. The Local Governmental Employees' Retirement System has sufficient gains to fund the 2.5% increase and still leave a significant reserve to be carried forward to next year. The emplyer groups (cities and counties) also support the higher figure.

STATE HEALTH PLAN

We are asking the conferees to accept the House proposal which does not increase member co-pays or the annual out-of-pocket maximum. The Senate budget proposed increases in drug and hospital service co-payments and raised the annual out of pocket maximum from $1,500 to $2,000.

OTHER ACTIVITIES

The House Committee on Pensions and Retirement met on Wednesday and considered two bills. The Committee's actions are summarized below.

House Bill 701: Retired School Professionals Return to Work (Rep. Faison)
A committee substitute for this bill was approved. The amended bill would permit retired public school teachers, principals, assistant principals, and central office administrative personnel to return to full time employment after a six-month separation from service without loss of pension benefits and without an earnings limitation. School boards re-employing these retired personnel would be required to make an 11.7% contribution to the retirement system. The amended bill was re-referred to the Appropriations Committee.

House Bill 1653: Mandatory COLA for TSERS Retirees (Rep. Bernard Allen)
The Committee held a preliminary discussion of this bill which would require annual COLAs equal to the Consumer Price Index for state retirees. It was decided that the proposal needed further study. The bill will be modified to call for a legislative study and will be brought back before the Committee next week.