House Retirement and Independent Entities Committee

This afternoon the House Retirement and Independent Entities Committee met to hear and discuss SB Second Substitute 43 and SB Second Substitute 63.

Before the discussion began, Rep. Sandstrom motioned to adopt Third Substitute SB 43. The new substitute bill requires that a retired employee take one year off public employment before rehiring on with a public entity. After such year, if the employee rehires he/she has the option of either suspending his/her pension and accruing additional service credit or the employee can continue to receive their pension and new salary. In addition, the employer would have to pay the amortization rate that currently goes into employees' 401k to the retirement system (for instance, 14.22% in the big system).

After Sen. Liljenquist explained both bills, many of the Committee members had questions. Rep. Duckworth asked if he thought there would be a mass of retirements because of fear, even though both bills don't affect current employees' pension. Liljenquist responded saying, "I would hope not...there is some risk with SB 43...but we have to start somewhere." Rep. Hansen asked Liljenquist if these two bills will remedy the $6.5 Billion losses experienced in 2008. Liljenquist responded "no these bills will not remedy the gap now, they will overtime." Rep. Christine Watkins asked if employees would still be allowed to purchase up to five years of service credit in the new system. Liljenquist said yes, after 30 years of service in the new system. Rep. Watkins also questioned if by dropping the multiplier to from 2% to 1%, would the legislature create a whole new class of poor people?

In addition to the Committee member's questions, members of the public asked how such a complex issue could continue being amended and substituted throughout the session, even only an hour prior to the committee meeting.

Sheri Waters spoke on behalf of UPEA reemphasizing and stating, "there are many positive spin offs of a solid pension program that go beyond recruitment and retention of competent and qualified employees and educators. Utah is a great state because it has a great foundation. Even pension dollars sent to Utah recipients are largely spent helping Utah's economy. UPEA appreciates Sen. Liljenquist's ideas and his attempts to maintain a pension program, along with his desire to hold [current] public employees harmless for the market downturn. While we are not happy with the momentum these retirement bills have taken, we are respectful of the process and we continue to communicate our hope for the future. We do agree there are areas that should be tweaked. UPEA's one request is simply to hold back the tides of change for a year and allow the independent actuaries to review the data before drastic changes are made to the Utah Retirement System. The argument continues to be made that there will be time to make additional changes once the actuarial review has been completed, however we are all keenly aware of the time and effort that is involved in adjusting a bill once it has been signed into law. It seems to me that we are trying to dig a foundation for a house without doing the Blue Stakes check first. With the projected agency budgets as they are, it is anticipated that there will be very few new hires that will occur this year or the next. So the costs savings of a new plan for prospective employees may not be realized for many years. There are some who are advocating that the urgency to follow through with these change right now it critical. Our plea continues to be, please hold off on overhauling the retirement system until the independent study is finalized."

Before the vote Rep. Harper noted how he's made commitments not to harm current retirees and members of the system. He continued to say, "I like parts and I dislike parts of it...something needs to be done. Is this the right way? I have serious concerns with it...There are some amendments still being drafted that may make this viable, I still have some angst with this bill...unfortunately I think it needs to go to the House floor for debate."

Senate Bills 43 Third Substitute and 63 Second Substitute passed through the House Retirement and Independent Entities committee this afternoon, with a party line vote. Due to the committee recommending both bills move forward, our last hope is with the full House of Representatives. UPEA encourages all of our members to take action and contact their legislators as soon as possible to request they delay the passage of any retirement bills until further study is completed. If you need assistance in finding out who your legislator is, please visit http://www.upea.net/ or call 801-264-8732.