Legislative Report #07-16

Report 07-16
May 11, 2007

HOUSE APPROVED BUDGET

The House of Representatives approved the proposed 2007-09 budget (HB 1473) early this morning . The bill now goes to the Senate for consideration. The House version of the budget falls short of our goals regarding COLAs for state retirees. A preliminary summary of budget provisions affecting retirees is presented below.

COST-OF-LIVING ADJUSTMENTS (COLA)

The House budget provides a 2.0% COLA effective July 1 for retired teachers, state employees, members of the Judicial System, and retired legislators. The budget includes a $29.6 million appropriation to supplement the available gains in the Teachers’ and State Employees’ Retirement System (TSERS). The available gains would cover only a 1.0% COLA.

Local government retirees will receive a 2.2% COLA effective July 1. This increase uses all available gains in the Local Governmental Employees’ Retirement System.

STATE HEALTH PLAN

The proposed House budget appropriates $318.6 million for the 2007-09 biennium to cover rising costs of the State Health Plan. The budget also includes several changes in State Health Plan benefits.

The annual deductible will increase to $450 for individual members. The co-payment for office, home, and skilled nursing facility visits is increased from $15 to $25 per visit.

The co-payment for preferred brand prescription drugs is increased from $25 to $30.

The budget also includes increases in premiums for dependent coverage. The premiums for dependents coverage in the indemnity plan will increase by 14.9% for the 2-year period. Premiums for dependent covered by the PPO option will rise by 12.8%.

TAKE ACTION

We now turn our attention to the Senate. We will ask the Senate to increase the appropriation to supplement the Teachers’ and State Employee’ Retirement System above the level approved by the House. We believe that state retirees deserve the same COLA as the increase provided for active employees. The House approved a 4.25% raise for active state employees. Please contact your members of the state Senate and urge them to give priority to a higher COLA for retired teachers and state employees in the Senate budget.

OTHER BILLS THIS WEEK

Two important House bills were introduced this week. A summary of these proposals is presented below.

House Bill 1985: State Health Plan/Repeal Indemnity Plan
(Primary Sponsor – Rep. Holliman)

This bill authorizes the Executive Administrator and the Board of Trustees of the State Health Plan to discontinue the existing indemnity plan and to replace it with an alternative health benefits option. This new option must be non-contributory (no premiums to members) and provide benefits that are similar to the benefits of the existing indemnity plan. The new option would become available no earlier than July 1, 2008 and the existing indemnity plan could not be discontinued until then. The bill has been referred to the House Committee on State Personnel.

House Bill 1987: Retiree Health Benefit Funds
(Primary Sponsor – Rep. Folwell)

The bill would increase the state employer contribution rate for benefits to 8.82% of payroll. 5.8% would be earmarked for employee and retiree health benefits under the State Health Plan, including the state’s long term liability for post-retirement health coverage. The bill has been assigned to the House Appropriations Committee.