We are entering the final days of a very difficult Legislative session.
House Joint Resolution 29, Legislative Direction to the Public Employees' Benefit and Insurance Program sponsored by Representative Brad Dee passed the House of Representatives late Wednesday afternoon with a 57 yes; 14 no; 4 absent vote. This resolution will change the employer/employee split on the health insurance premium from a 98/2 to a 95/5 split. The health insurance increase is $17.3 million with $6 million funded through PEHP reserves; $6 million funded by increasing the employer/employee split in premium; and the rest of the increase funded by adjusting the benefits within the plans.
UPEA had encouraged its members to contact their legislators about funding the entire health insurance increase. The legislature chose to adjust the employees’ share of premium in lieu of suspending the 1.5% contribution into employees’ 401(k) fund and did not mandate furloughs throughout state government. Several options were discussed regarding the PEHP increase including placing high deductibles and creating out of pocket minimum and maximum amounts on health insurance. Other alternatives that were discussed would have been a greater burden on the employee. While this is not the best-case scenario it is certainly a better outcome than was originally considered by the Legislature.
During the floor debate, Representative King asked the sponsor of the bill if he had communicated with UPEA regarding HJR29. Representative Dee indicated that House leadership had met with UPEA regarding the health insurance increase.
Senate Bill 195 - Senator Dan Liljenquist has indicated he will withdraw Senate Bill 195, Public Employee Defined Contribution Amendments, which would suspend the 1.5% state 401(k) match for all state employees for one year. However, the bill has been placed on the Senate second reading calendar and circled. UPEA will continue to watch this bill.
Thank you for your telephone calls and emails to legislators.
Wednesday, March 11, 2009
Tuesday, March 10, 2009
Surprise! HB 451 & Updates
House Bill 451, sponsored by Brad Dee, R-Ogden, requires the state to bid out its health insurance program for state employees every two years. The bill appeared on the House Floor yesterday, as the house was finishing up its regularly scheduled bills. The house suspended its rules to bring the bill to the floor without first having heard it in a committee.
The bill caught many legislators off-guard, but still passed 51-22. UPEA is analyzing the impact of the bill. It could create a paradigm for fitting benefits to costs in contrast to the current system which tries to preserve benefits. Currently, PEHP determines how the benefit will be adjusted to fit a funding shortfall. Many legislators feel that they have no input on the benefit adjustments with PEHP. The bill is currently in Senate Rules for further consideration. UPEA anticipates that the sponsor will send the bill to interim study.
UPDATE
The legislature has discussed options regarding the $17.3 million increase in health insurance. UPEA has maintained an ongoing dialogue with PEHP and the legislature regarding health care options. At this time, the legislature has discussed using $6.3 million from PEHP reserves and taking the employer/employee split from 98/2 to 95/5.
UPDATE
As of today, house leadership is scrapping employee furloughs. Instead, representatives have been back-filling their base-budget to reduce the need for furloughs. However, due to program cuts in various departments, agencies may reduce personnel.
The bill caught many legislators off-guard, but still passed 51-22. UPEA is analyzing the impact of the bill. It could create a paradigm for fitting benefits to costs in contrast to the current system which tries to preserve benefits. Currently, PEHP determines how the benefit will be adjusted to fit a funding shortfall. Many legislators feel that they have no input on the benefit adjustments with PEHP. The bill is currently in Senate Rules for further consideration. UPEA anticipates that the sponsor will send the bill to interim study.
UPDATE
The legislature has discussed options regarding the $17.3 million increase in health insurance. UPEA has maintained an ongoing dialogue with PEHP and the legislature regarding health care options. At this time, the legislature has discussed using $6.3 million from PEHP reserves and taking the employer/employee split from 98/2 to 95/5.
UPDATE
As of today, house leadership is scrapping employee furloughs. Instead, representatives have been back-filling their base-budget to reduce the need for furloughs. However, due to program cuts in various departments, agencies may reduce personnel.
Thursday, March 5, 2009
Legislative Update
Thank you for your emailing your legislators. Your voice is being heard on Capitol Hill. Members of both houses have approached UPEA about the emails they are receiving from UPEA members regarding the PEHP health insurance increase.
Senator Gene Davis and Senator Luz Robles approached UPEA during the Democratic Senate caucus and wanted UPEA to know that the Democrats’ proposed budget was to keep state government whole. The Democrats’ budget was presented today at a press conference at 12:30 p.m.
Hopefully, more information will be available tomorrow. Executive Appropriations is scheduled to meet to finalize the budget.
Senator Gene Davis and Senator Luz Robles approached UPEA during the Democratic Senate caucus and wanted UPEA to know that the Democrats’ proposed budget was to keep state government whole. The Democrats’ budget was presented today at a press conference at 12:30 p.m.
Hopefully, more information will be available tomorrow. Executive Appropriations is scheduled to meet to finalize the budget.
Wednesday, March 4, 2009
Letter to your legislator
UPEA needs your help. It is critical for UPEA members to contact their legislators regarding the PEHP health insurance increase. The health insurance increase for state employees is $17.3 million. In the face of furloughs, RIF’s and the possible, and probable, underfunding of the state’s 1.5% contribution into your 401(k), state employees should not have to fund this increase.
Last year state employees were encouraged to move from the PEHP Preferred Plan to the less expensive managed care plans in an effort to reduce costs and save money. Once again the legislature wants state employees to sacrifice to reduce costs and save money by funding the FY2009-2010 health insurance increase.
The legislature is backfilling public education, higher education, and other programs within state government. State employees are sacrificing enough ask your legislator to prioritize state employees and fund the PEHP health insurance increase.
Please email your legislator on your own time and using your own equipment. Legislative email addresses can be accessed at www.le.utah.gov. Click on the “Legislator” tab on the left hand side of the page and type in your address to find your senator and representative.
Below is a sample email for you to use.
Dear ______________:
I am a constituent and a public employee. I would like to express my concern over the PEHP health insurance increase. Last year I changed my PEHP coverage to help reduce costs. Please prioritize state employees and fund the PEHP health insurance increase. The proposed furloughs will create enough of a financial burden.
Thank you.
Name
Contact Info
Last year state employees were encouraged to move from the PEHP Preferred Plan to the less expensive managed care plans in an effort to reduce costs and save money. Once again the legislature wants state employees to sacrifice to reduce costs and save money by funding the FY2009-2010 health insurance increase.
The legislature is backfilling public education, higher education, and other programs within state government. State employees are sacrificing enough ask your legislator to prioritize state employees and fund the PEHP health insurance increase.
Please email your legislator on your own time and using your own equipment. Legislative email addresses can be accessed at www.le.utah.gov. Click on the “Legislator” tab on the left hand side of the page and type in your address to find your senator and representative.
Below is a sample email for you to use.
Dear ______________:
I am a constituent and a public employee. I would like to express my concern over the PEHP health insurance increase. Last year I changed my PEHP coverage to help reduce costs. Please prioritize state employees and fund the PEHP health insurance increase. The proposed furloughs will create enough of a financial burden.
Thank you.
Name
Contact Info
S.B. 195 Update
Senate Bill 195, Public Employee Defined Contribution Amendments, sponsored by Senator Dan Liljenquist was heard in the Senate Retirement and Independent Entities Committee yesterday morning. SB195 would suspend the 1.5% employer defined contribution made on behalf of employees for one year. Senator Gene Davis moved to amend the suspended contribution amount to .75%. Senator Davis’ amendment passed unanimously. The bill also passed out of committee with four senators voting yes and Senator Brent Goodfellow voting no. UPEA, along with UEA and USEA, made public comment in opposition to the bill. The fiscal note on SB195 changed from $13.5 million to $30 million. The bill will now go to the Senate Rules Committee to be prioritized for a full Senate vote. Please contact your senator to oppose Senate Bill 195.
House GOP Caucus
House GOP Caucus met today discussing the federal stimulus package. They noted that public education will receive a net deduction of 6%, and higher education will receive a net deduction of 9% for FY 2010. The legislatures are currently reviewing what state agencies will be funded or restored through the federal stimulus money. They are going to look at each agency line item by line item. Rep. Bigelow said that they would have this information by next Caucus meeting.
$19 Million Discrepancy in SB 195
Senate Bill 195, sponsored by Senator Daniel Liljenquist, R-Davis, was heard on Friday, Feb. 27th. The bill seeks to suspend the 1.5% 401(k) contribution for one year beginning July 1st, 2009 and ending June 30th, 2010. In the interest of saving jobs, UPEA did not publicly oppose the bill on Friday; however, we are concerned about the legislature balancing the state budget using public employee benefits. Friday’s committee meeting concluded without a vote on the bill.
On Monday, UPEA found the bill was due in committee once again. At this point, UPEA was prepared to oppose the bill because the broad change in benefits only saved the state $13.2 million while leaving employee benefits open to further cuts down the line. Yesterday, the committee reviewed Senate Bill 195, but this time, the fiscal note showed the 401(k) suspension would save $32 million. We do not know why there was a $19 million discrepancy.
In light of the newly-discovered savings, Senator Gene Davis, D-Murray, proposed an amendment that suspended only half of the 401(k) contribution for one year. UPEA spoke favorably of the compromise but maintains its overall opposition.
On Monday, UPEA found the bill was due in committee once again. At this point, UPEA was prepared to oppose the bill because the broad change in benefits only saved the state $13.2 million while leaving employee benefits open to further cuts down the line. Yesterday, the committee reviewed Senate Bill 195, but this time, the fiscal note showed the 401(k) suspension would save $32 million. We do not know why there was a $19 million discrepancy.
In light of the newly-discovered savings, Senator Gene Davis, D-Murray, proposed an amendment that suspended only half of the 401(k) contribution for one year. UPEA spoke favorably of the compromise but maintains its overall opposition.
Monday, March 2, 2009
Senate Bill 195
Senate Bill 195, Public Employee Defined Contribution Amendments, sponsored by Senator Dan Liljenquist, will be heard in the Senate Retirement and Independent Entities Committee meeting on Tuesday, March 3, 2009, at 7:00 a.m. This bill will suspend the 1.5% employer defined contribution made on behalf of employees who participate in the URS Noncontributory Retirement System. The bill will exempt certain employees who elected to move from the contributory retirement system to the noncontributory retirement system.
This bill is moving very quickly. Please contact your Senator or one of the Senators on the committee and encourage them to preserve your retirement benefit. The House Republican caucus discussed several revenue enhancements at their meeting last week including:
This bill is moving very quickly. Please contact your Senator or one of the Senators on the committee and encourage them to preserve your retirement benefit. The House Republican caucus discussed several revenue enhancements at their meeting last week including:
- Repeal the state sales tax cut on food. This would increase state revenue by $150-180 million.
- Increase vehicle registration fees by $20 per vehicle. This would increase state revenue by $50 million.
- Increase the tobacco tax. This would increase state revenue by $45 million.
- Bond for capital projects (buildings). It was indicated there was leadership support in both the House and the Senate to bond for no more than $115 million.
- Use some of the $420 million in Rainy Day Funds.
- Use the federal stimulus money. The state will receive more than $1.7 billion from the American Recovery and Reinvestment Act. There was discussion and questions about when the state would receive this money.
SB195 will most likely make it out of committee on Tuesday and very likely the Senate. UPEA will provide updates on the votes and progress of this bill.
The Senators on the Retirement and Independent Entities Committee are:
- Senator Dan Liljenquist – dliljenquist@utahsenate.org
- Senator Curtis Bramble – cbramble@utahsenate.org
- Senator Gene Davis – gdavis@utahsenate.org
- Senator Brent Goodfellow – bgoodfellow@utahsenate.org
- Senator Jon Greiner – jgreiner@utahsenate.org
- Senator Chris Buttars – dcbuttars@utahsenate.org
House Republican Caucus
Todd Sutton attended the House Republican Caucus on behalf of UPEA. The caucus discussed the following items:
- All state employees (including higher education) will have annual work hours reduced from 2,088 hours to 2,000 hours for FY2009-2010. Latitude will be given to agencies and managers as to when individual furloughs will occur. The reduction in hours will save the state approximately $51.7 million.
- Public education will receive a reduction of five teacher preparation days for FY2009-2010. There will be no reduction in the number of days students attend school. This will save the state approximately $60 million.
- PEHP has an increase of $17.3 million for FY2000-2010. The legislature has told PEHP to present options so no cost increase will occur for employees.
- The 1.5% 401(k) contribution for FY2009-2010 for all state employees, including public education, will be suspended for one year. This will save the state $21 million.
There was also discussion, but no action, about state revenue enhancements including:
- Repeal the state sales tax cut on food. This would increase state revenue by $150-180 million.
- Increase vehicle registration fees by $20 per vehicle. This would increase state revenue by $50 million.
- Increase the tobacco tax. This would increase state revenue by $45 million.
- Bond for capital projects (buildings). It was indicated there was leadership support in both the House and the Senate to bond for no more than $115 million.
- Use some of the $420 million in Rainy Day Funds.
- Use the federal stimulus money. The state will receive more than $1.7 billion from the American Recovery and Reinvestment Act. There was discussion and questions about when the state would receive this money.
Potential Spending Offsets Options
On Tuesday, the House Democratic Caucus was presented with a list of potential spending offset options regarding state employees to help them with the FY10 budget. These options included the following:
Personnel
-Agency Optional- An agency may reduce budget and have discretion to choose options (i.e. RIF, furlough, pay cuts, etc…).
-Reduction in force (RIF)- Lay off selected employees based on less essential programs/services, and job performance.
-State Agency and Higher Education Staff Furlough- Provide leave without pay for X number of days for state agencies and higher education institutions.
-Higher Education Faculty Furlough- Provide leave without pay for faculty members for X number of days for higher education institutions.
-Public Education Furlough- Amend annual contract days/instructional hours. Provide leave without pay for employees for X number of days for all staff.
Health Benefits
-Increase employee premium share – change current employer/employee funding ratio of health benefits. Employee premium share would increase.
-Enhanced High Deductible Health Plan- Add health savings account component to existing health programs.
-PEHP Reserve/Benefit Changes- Use a portion of the current PEHP funding reserve to fund some of the health care increase for FY2009-2010 one-time cost savings measure. Employee premium share would increase.
Retirement Defined Contribution
-Repeal Re-employment 401 (k)- This is also known as “double dipping”. Repeal the requirement that a re-employed retiree gets a full retirement contribution at the same time they are collecting a retirement allowance from URS.
-401(k) Contribution Freeze- Suspend for the next fiscal year the employer contribution into the employees 401(k) of members of the Noncontributory Retirement System. 1.5% of a member’s salary.
-Higher Education 401 (k) Freeze- Reduce the state’s 401(k) contribution to Higher Education (TIAA/CREF). Currently each employee receives 14.2% of their gross salary.
UPEA spoke to each of these issues and raised concerns regarding taking benefits away. This is a concern, because once a benefit is taken away it is historically not given back. It was also mentioned, if given the choice between RIF’s and furloughs, UPEA would be in support of furloughs because jobs would be saved.
Personnel
-Agency Optional- An agency may reduce budget and have discretion to choose options (i.e. RIF, furlough, pay cuts, etc…).
-Reduction in force (RIF)- Lay off selected employees based on less essential programs/services, and job performance.
-State Agency and Higher Education Staff Furlough- Provide leave without pay for X number of days for state agencies and higher education institutions.
-Higher Education Faculty Furlough- Provide leave without pay for faculty members for X number of days for higher education institutions.
-Public Education Furlough- Amend annual contract days/instructional hours. Provide leave without pay for employees for X number of days for all staff.
Health Benefits
-Increase employee premium share – change current employer/employee funding ratio of health benefits. Employee premium share would increase.
-Enhanced High Deductible Health Plan- Add health savings account component to existing health programs.
-PEHP Reserve/Benefit Changes- Use a portion of the current PEHP funding reserve to fund some of the health care increase for FY2009-2010 one-time cost savings measure. Employee premium share would increase.
Retirement Defined Contribution
-Repeal Re-employment 401 (k)- This is also known as “double dipping”. Repeal the requirement that a re-employed retiree gets a full retirement contribution at the same time they are collecting a retirement allowance from URS.
-401(k) Contribution Freeze- Suspend for the next fiscal year the employer contribution into the employees 401(k) of members of the Noncontributory Retirement System. 1.5% of a member’s salary.
-Higher Education 401 (k) Freeze- Reduce the state’s 401(k) contribution to Higher Education (TIAA/CREF). Currently each employee receives 14.2% of their gross salary.
UPEA spoke to each of these issues and raised concerns regarding taking benefits away. This is a concern, because once a benefit is taken away it is historically not given back. It was also mentioned, if given the choice between RIF’s and furloughs, UPEA would be in support of furloughs because jobs would be saved.
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