Legislative Report #06-01

Report 06-01
May 5, 2006

GENERAL ASSEMBLY PREPARES FOR SHORT SESSION

The General Assembly will reconvene on Tuesday, May 9. Several of the subcommittees of the joint Appropriations Committee conducted meetings this week to review the budgetary needs of state agencies.

Adjustments to the state budget for the second year of the biennium (2006-07) will be the main focus of this session. The General Assembly returns to Raleigh with the best budgetary outlook in the past five years. State tax collections are running well ahead of expectations and expenditures are lower than forecast. As a result, the General Assembly will have nearly $2 Billion available to address unmet needs.

The budget restrictions of the past few years have produced a backlog of needs and continuing population growth has generated demands that include:

• Replenishment of the state’s Rainy Day Fund

• Cost-Of-Living Adjustments for active and retired state employees

• Funding for deferred major capital projects

• Funding of increased enrollments in public schools, community colleges, and the University System

•Inflationary adjustments in Medicaid and other public assistance programs.

OUTLOOK ON RETIREE COLAS

The Association’s Executive Committee and the Retirement Systems Board of Trustees have adopted goals on Cost-Of-Living increases for retired state and local governmental employees. These goals are summarized below.

• Retired Teachers and State Employees: seek a COLA equal to either the rate of inflation for the most recent year (3.4%) or to the COLA granted to active state employees, whichever is higher.

• Retired Local Governmental Employees: use all available gains in the Local Governmental Employees’ Retirement System to fund a COLA. (Available gains are sufficient to fund a 2.8% COLA).

STATE HEALTH PLAN

We do not anticipate any changes in premiums, deductibles, or co-payments in this session. However, the General Assembly may consider legislation carried over from 2005 to change the vesting period for post retirement State Health Plan benefits. Currently, employees vest after 5 years of service. Various proposals would delay vesting to 10 years or provide for graduated vesting. Please note that the proposed vesting changes would affect only future employees. They would have no effect on the benefits of current retirees.

LEGISLATIVE REPORT SCHEDULE

Our Legislative Report will be sent every Friday afternoon during the 2006 Session. We would appreciate any feedback you wish to offer on the format and content of these reports.