Legislative Report #08-03

Report 08-03
May 23, 2008

GENERAL ASSEMBLY REACHES FILING DEADLINES

May 21 marked the last day that legislators could file bills affecting pensions and retirement benefits. The bill containing the recommendations of the Retirement Systems Board of Trustees for 2008 state and local retiree COLAs has been filed but had not been formally introduced as of Thursday. All bills must be formally introduced by May 28.

The Board of Trustees approved a package of recommended benefit enhancements in April. These included:

• A 4.1% COLA for state retirees that would require a state General Fund appropriation by the General Assembly of $114 million to supplement available gains in the retirement system.
• A 2.17% COLA for local government retirees, using all available gains in the Local Governmental Employees’ Retirement System but not requiring an increase in the local government employer contribution rate.

Our Association had requested that the Trustees recommend an immediate increase in the contribution rate to support a 4.1% local COLA. However, the Board recommended an employer study of the appropriate level for the contribution rate with a report to the Board in October.

BUDGET DEVELOPMENT ON FAST TRACK

The subcommittees of the House Appropriations Committee completed work on recommended spending priorities for 2008 in education, human services, public safety, and general government this week. The House is expected to expedite approval of the 2008-09 budget by the first week in June.

Decisions regarding COLAs for retirees and pay raises for state employees are not made at the subcommittee level. These decisions are reserved for the eight co-chairs of the full House Appropriations Committee. The co-chairs are expected to finalize these COLA and pay raise decisions next week.

CONTACT YOUR LEGISLATORS!

With the long Memorial Day weekend before us and the rapid movement of the House on proposed budget, this is a critical time to contact your members of the General Assembly, especially members of the House. Please let them know that the dramatic rise in the prices of food, fuel, and other necessities has taken a toll on retirees. The 1.2% COLA proposed by the Governor does not come close to meeting our needs. Urge your legislators to include the necessary additional appropriation in the budget.

BILLS INTRODUCED THIS WEEK

Senate Bill 1853/ House Bill 2443: State Health Plan
(Primary Sponsors – Sen. Rand and Rep. Holliman)

These identical bills were introduced to re-write the state statutes governing the State Health Plan. Primarily, the revisions adjust the statutes to recognize the transition from the old single comprehensive major medical plan to the three PPO options that now are available to state employees and retirees. However, the bills contain other important provisions that are summarized below.

• Change in Plan Year: Effective January 1, 2009, the State Health Plan will operate on the regular calendar year instead of the current July 1-June30 plan year. This change will ease coordination of benefits for Medicare eligible retirees. Annual deductible and coinsurance amounts are reduced by 50% during the July1 – December 31, 2008 transition period.
• Non-Contributory Option: At least one group option must be available to retirees and employees that does not require the payment of premiums. This option must provide coverage equal to the coverage offered as of July 1, 2008 unless otherwise authorized by the General Assembly.
  
• Medicare Option: The State Health Plan is authorized to develop a Medicare Advantage option in addition to the 3 PPO options that can be offered to Medicare eligible members.
• Over-The Counter Medication: The Plan is authorized to provide coverage for over-the-counter drugs on a limited basis.