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Legislative Report

Report 10-03
May 21, 2010

SENATE ADOPTS BUDGET CHANGES

This week the Senate put budget deliberations on the fast track and completed work on adjustments to the 2009-11 biennial state budget. The Senate reduced the budget for 2010-11 by roughly $600 million to reflect lower than expected revenue collections and sent the proposal to the House for consideration. As noted below, the House will initiate review of the budget with a statewide public hearing on May 24.

We were disappointed with the Senate response to the request for additional funding for the Teachers’ and State Employees’ Retirement System (TSERS). The state’s actuary had reported earlier this year that the General Assembly would have to provide an additional $181 million that, together with projected investment returns, would bring the system back to full funding. This $181 million is referred to as the Annual Required Contribution (ARC) that is calculated by the state’s actuary each year. The Senate budget proposes $20 million, a fraction of the ARC.

AN OPPORTUNITY! HOUSE APPROPRIATIONS HOLDS HEARING

The House Appropriations Committee will conduct a Public Hearing on Monday, May 24 from 7:00 until 10:00 PM. The hearing will be held at the McKimmon Center in Raleigh and will be broadcast to three other live sites at the following locations:

  • Bladen Community College (Teaching Auditorium), Dublin, NC
  • Central Piedmont Community College (Central Campus), Charlotte, NC
  • Southwestern Community College (Balsam Center, 3rd Floor), Sylva, NC.

Participants who attend any of these three remote locations will have an opportunity to offer testimony via an interactive link with the central site at the McKimmon Center. Any participant may sign up to speak at the hearing. Each speaker will be limited to two minutes to allow for comments from the maximum number of attendees. You may also submit written comments by e-mail or online. There is an electronic comment form posted on the General Assembly web page at www.ncleg.net  These written comments may be submitted until 12:00 Midnight on May 25th.

We will offer testimony at the hearing and submit a written statement as well. We would urge you to take this important opportunity to make your views known to the Appropriations Committee of the House.

Our Message

Here are a few important points that need to be stressed to the House Appropriations Committee. We hope that you will express these concerns in your own words if you decide to testify or submit written comments.

  • Delay in funding the Annual Required Contribution (ARC) will be more costly for the state. If the General Assembly defers action on the required $181 million until next year, the Department of State Treasurer estimates that the ARC will more than double (to $365 million).
  • North Carolina has a long-standing tradition of fully funding the Teachers’ and State Employees’ retirement System (TSERS). The General Assembly has funded TSERS at or above the Annual Required Contribution for the entire 69-year history of the system. Failure to fund the ARC this year will set a bad precedent.
  • A retirement system that is not fully funded will not generate gains to cover Cost-Of-Living Adjustments or other benefit enhancements in the future.

OTHER ACTIVITY THIS WEEK

House Bill 1707: Age-Out Dependents; Tobacco Use Testing

The House Insurance Committee approved this bill on Thursday. The legislation allows dependent children who were enrolled in the State Health Plan on or before May 1, 2010 and who are less than 26 years old to remain on the plan until the end of the month following their 26th birthday provided that they are not eligible for other employer provided health insurance. These dependents can remain covered to age 26 regardless of whether or not they are students.

The bill also requires the Executive Administrator of the State Health Plan to consult with the Committee on Employee and Hospital Medical Benefits prior to implementing any program to verify tobacco usage through testing of Plan members.

The bill received a favorable report and was re-referred to the Appropriations Committee.