Legislative Report

Report 09-06
March 6, 2009

Busy Week Ahead

Next week should prove to be a busy time for everyone associated with General Assembly activities. On Monday evening, Governor Perdue is scheduled to present the State of the State message to a joint session of the General Assembly. Although the formal introduction of the Governor’s recommended budget for the 2009-11 biennium is not expected before mid month, the Governor likely will highlight the state’s revenue outlook and some of the major changes that will be included in the budget.

On Tuesday, March 10, the Senate Select Committee on Employee Hospital and Medical Benefits will meet to consider Senate Bill 287 which proposes additional funding and significant benefit changes for the State Health Plan. Our Legislative Report for last week (sent on Friday, February 27) summarized the main components of SB 287 and highlighted our concerns.

Action Requested

We expect that Senate Bill 287 will receive expedited consideration by the Select Committee and may be sent to the Senate floor by the end of the week. We would urge our members who have not already done so to contact your State Senators and ask that our concerns be addressed when the bill is considered. In a meeting earlier this week, we conveyed our main concerns to the bill sponsor, Senator Tony Rand. These concerns are summarized below.

• Too much of the money to re-balance the State Health Plan would come from Plan members. Specifically, SB287 would raise the annual out-of-pocket maximum that may be paid by a member from the current $1,750 to $2,750 in the PPO Standard Plan and from $2,500 to $3,250 in the PPO Basic Plan. We believe that the General Assembly should appropriate additional money from the Rainy Day Fund to reduce these proposed increases.

• The same concern applies to the proposed increases in the member annual deductible. Members of the PPO Standard Plan would be subject to a $600 annual deductible, up from the current $300. The PPO Basic Plan deductible would increase from $600 to $800 per year. Again, we believe that additional state appropriations should be made to offset these increases.

• SB 287 proposes to eliminate the PPO (90/10) Plus Plan effective July 1, 2009 due to a high loss ratio (150.7%).  This option has only been available for 2 years. We believe that it would be more acceptable to members who currently enrolled in this option to raise the monthly member premium rather than eliminating it entirely. Elimination of the PPO Plus Plan would save only $5 million per year.

Pension Committee Meets

The House Committee on Pensions and Retirement held an initial meeting on Wednesday. The Committee received a briefing on the status on the state’s retirement funds from Treasurer Janet Cowell and her staff. The Committee also gave approval to the following two bills.

House Bill 94: Clarify Definition of Retirement
(Primary Sponsor – Rep. Owens)

This bill would allow retired employees to serve as bona fide unpaid volunteers in local school administrative units at any time following retirement without affecting retirement benefits or the ability to return to work after a six-month separation from service. The bill received a favorable report.

House Bill 5: Increase Fire and Rescue Benefits
(Primary Sponsors – Reps. Howard, Williams, Randleman, and Brubaker)

This bill as amended in committee proposes to raise the monthly benefit for retired members of the Firemen’s and Rescue Squad Workers’ Pension Fund from $170 to $172.

The Committee Substitute for HB 5 received a favorable report and was re-referred to the House Appropriations Committee.

Bill Introduced this Week

House Bill 429: Retirement System Cost-Of-Living Adjustments
(Primary Sponsor – Rep. Tucker)

This bill represents the recommendations of the Retirement Systems Board of Trustees on COLA for 2009. The bill proposes a retiree COLA equal to the raise granted state employees not to exceed 1%. As currently written, HB 429 covers retired teachers, state employees, local government employees, and members of the judicial retirement system. (However, local government retirees will be removed from the bill since the Board of Trustees already has approved a 1.0% COLA for retired local government employees effective July 1, 2009 using gains available in the Local Governmental Employees’ Retirement System. This does not require approval by the General Assembly.)
This bill has been referred to the House Committee on Pensions and Retirement.

Senate Bill 411: Amend Survivor’s Alternative Benefit
(Primary Sponsor – Sen. Brunstetter)

The bill would extend the survivor’s alternative benefit to the principal beneficiaries of state and local law enforcement officers with 15 or more years of service who are killed in the line of duty.

The bill was referred to the Senate Committee on Pensions, Retirement, and Aging.