Utah Public Employees' Association

State Parks Audit 1/18/2011

2011-01-19T08:15:00.000-08:00

UPEA attended a performance audit by the Legislative Auditor General on the Utah State Parks. The audit focused on measures to cut funding to state parks or eliminate some state parks altogether. Legislators are looking to make state parks more self sustaining and less dependent on the General Fund.

The Department of Natural Resources responded by saying they are taking a pro active approach to the audit and will try and find ways in which they can be more self sufficient. The department also state that state parks rough generate $67 million to the economy.

The audit will be sent to the Natural Resources, Agriculture, and Environmental Quality Appropriation Subcommittee for further review. UPEA will be tracking this issue during the legislative session.

Paid Time Off May Replace Leave Programs

2010-11-17T13:09:00.000-08:00

The Executive Appropriations Committee met on November 16th to discuss sick and annual leave benefits versus paid time off or (PTO). The committee heard a presentation on the differences between the two options and the fiscal impact of going to a PTO system. As of this moment, a bill has not been presented to the legislature for consideration. However, it is being discussed as a potential cost-saving measure. UPEA will continue to track this issue throughout the upcoming legislative session. For further information, including a copy of the report, please visit http://le.utah.gov/asp/interim/Commit.asp?Year=2010&Com=APPEXE.

Over the course of the past decade, several private entities have changed how their annual and sick leave systems work in an effort to streamline their leave programs. Many companies moved to a Paid Time Off (PTO) System that does not differentiate between sick and vacation leave. Employees are given a set number of hours a year that they may use in whatever manner they wish. If they do not get sick, they can use it all as vacation time. However, if they are sick frequently, PTO may end up being used for that purpose.

Such a system differs somewhat from the current system that state employees enjoy. Currently each employee receives a certain number of annual leave hours and sick leave hours, based on their years of service. Annual leave must be scheduled ahead of time and can be used for vacations, personal matters, etc. Sick leave can be used when an individual is ill or needs to go to a doctor’s appointment.

State employees also have a great benefit that they may use upon retirement. An employee may save their pre-2006 sick leave hours to purchase health insurance. Sick leave hours earned after 2006 can be cashed in upon retirement to be placed into a health savings account to use toward medical purchases. This benefit has been instrumental in helping productivity in the state of Utah, and ensuring that employees use their sick leave wisely.

Would a PTO program take away from this benefit? At this time, it is not known. However, UPEA is currently concerned about such a program because of the effect it might have on the current Sick Leave Benefit upon retirement. Also, if it does not impact current employees, will it be just for new employees? While UPEA is still seeking answers to this question, it is still cause for anxiety.

Many studies have indicated that when a company has moved to a PTO-based system, the leave hours given to employees has dropped, or cannot be carried over from year-to-year. UPEA’s concern is that employees will be negatively impacted by such a move. The report presented to the committee suggested lowering the amount of PTO hours that employees could earn to 130 hours per year. A current employee with less than five years of service earns 208 hours per year in both sick and annual leave.

UPEA is continually keeping in contact with legislators and other policy-makers that may potentially be close to this issue to ensure employees are protected and maintain the best benefits possible. As more information develops, UPEA will send emails or additional communications to its members.

High Deductible Health Plan in Works?

2010-10-22T10:29:00.001-07:00

The Legislative Health and Human Services Interim Committee gathered together on 20 October, 2010 to discuss the State Employee Health Insurance plans. Senator Chris Buttars brought in Don Ruzicka, an independent insurance broker, to explain a proposed health insurance option for state employees.

Ruzicka discussed the costs associated with the current insurance plans that include co-pays, deductibles, co-insurance payments, premiums, and out of pocket maximums, stating that it is very complicated and continues to get more and more expensive year after year. The 3rd party pay system that is currently in place is not cost effective and incentivizes overutilization.

In his statement about what he sees as a marketable plan for the state, Ruzicka discussed a Qualified High Deductible Health Plan (HDHP) that would simplify insurance and create positive incentives for health lifestyles and be more cost effective. In the HDHP, Ruzicka stated that the deductible would be somewhere around $2500 for an individual and $5000 for a family. After the deductible is met the co-insurance payment would be 100%, meaning that any additional costs exceeding the deductible would be covered.

In addition, a Medical Reimbursement Fund (MRF) would be set up by the employer of $1000 for an individual and $2000 for a family to be used to cover some of the deductible costs. For employees to reach their deductible with this contribution, the most they would spend would be either $1500 or $2500. Also, if an individual did not use their full amount allotted in the Medical Reimbursement Fund, the employer could elect to provide a taxable bonus to the employee with the excess funds.

Ruzicka stated that the plan could save the state as much as a third of what is currently being spent on the traditional plan.

When asked if a bill was going to be run to implement such a plan, Senator Buttars mentioned that he may run a bill or try to implement some type of pilot program.

Representative Brad Daw asked what the difference was between this and a HDHP with a Health Savings Account (HSA). Ruzicka answered that the money is locked up into the HSA, where the MRF could provide positive incentives through a bonus program.

PEHP was listed on the agenda to provide comment on this plan, but was not given an opportunity to share their views in the committee.

UPEA has a seat on the Health System Reform cost Containment Workgroup that meets monthly. HDHP/HSA plans have been discussed extensively in the workgroup. UPEA is currently looking into different plan designs that would benefit state employees with multiple insurance options. If there are any questions, please contact Christy Cushing at ccushing@upea.net or (801) 264-8732 ext. 216.

UPEA Acts on ORS GAP Report Concerns

2010-10-22T10:28:00.001-07:00

Over the course of the past few months, UPEA staff has been working with the Office of Recovery Services (ORS) employees and management regarding a new productivity measurement. ORS began tracking activity within certain computer programs in July, to measure activity and productivity. The measurement, termed GAP time, was applied to each employee’s job plan to maximize the use of resources to accomplish ORS objectives. As a result of not meeting the GAP measurements, several telecommuting employees were moved back to the office, while others lost their exercise privileges.

Despite 6 months of the ORS administration educating employees of the upcoming changes, with the implementation of the GAP report in July, many ORS employees became very concerned with their performance objectives. Several individuals expressed a lack of knowledge about the changes and altered their work habits in a manner that was not conducive to a comfortable work environment, which created low morale within the agency.

UPEA took the concerns of ORS employees to Department of Human Services Executive Director, Palmer Depaulis. In addition, Association staff member, Kory Cox, spoke to the Director of ORS and held a meeting to bring employee concerns to the table.

On 10/12/10, the GAP report was removed as a component of an employee job plan. While the GAP report will no longer be a performance objective on the annual performance plan, it will still be measured as a monitoring tool to ensure employees remain effective and productive. This news came as a welcome gesture, as it will ease many employee concerns and will allow individuals to concentrate on productive behaviors in the workplace, while not needing to manipulate their jobs in an unhealthy matter.

UPEA advises that ORS employees continue to document time away from their desks, and report mid-day personal leave time to their supervisors. The Association supports creating a positive work environment and believes that the change in measuring GAP time will improve employee morale.

UPEA encourages employees to work toward attaining a positive attitude toward future GAP measurements and other changes that may come as a result of the tough economic times. It is important, especially in this difficult economy and budget year, that state employees create value in their employment, perform their jobs, and become indispensible in their public employment.

Recommendation: Don't Privatize

2010-08-17T15:00:00.000-07:00

The Utah Public Employees Association attended the Executive Appropriations today at 1:00 p.m. at the Utah State Capitol. The Public Consulting Group presented data on the feasibility of privatizing the Forensic Unit at the State Hospital; the privatization of the Woodland building; and privatization of the Transitional Living Center at the Utah State Developmental Center. The study focused on three areas of feasibility: Financial savings, organization and service consequences.

The study results for the USH Forensic Unit found $1.7 million in savings due to reductions in employee total compensation. However, an increase in staff turnover could negativity impact continuity and quality care for patients.

The USDC TLC & Woodland units would save $117,000 in gross savings through privatization. Savings from reductions to employee total compensation would increase staff turnover. However, it would also negatively impact continuity and quality care for patients.

The recommendation from the study is that it may be financially possible to privatize the units for a cost savings, but reductions in employee total compensation can adversely affect continuity and quality care for patients. The recommendation made by Public Consulting Group is that the privatization of the USH Forensic Unit and USDC Semi – secure Units should not be pursued.

Todd Losser
UPEA Representative

UPEA Endorses Herbert for Governor

2010-08-04T10:49:00.000-07:00

Salt Lake City - The Utah Public Employees’ Association has announced their endorsement for Governor Gary Herbert and Lieutenant Governor, Greg Bell, during a press conference on Wednesday, August 4, 2010 at 10:00 a.m.

The Utah Public Employees Association (UPEA) is Utah’s largest representative of public employees. Founded in 1959, UPEA has a history of selecting and endorsing political candidates based upon their willingness to work with public employees. Governor Herbert demonstrated this willingness and dedication to public employees during the 2010 Legislative session.

The association typically avoids endorsements based on political affiliation.

Jeff Horrocks, Chairman of the UPEA CAPE Committee, said, “Political affiliation often plays a role in labor politics, but UPEA carefully analyzes candidates’ willingness to meet with employees and address their concerns before offering an endorsement.”

The association’s Citizen Action by Public Employees, or CAPE, Committee voted to endorse Governor Herbert after interviewing both candidates. In addition, CAPE also reviewed the candidates’ running mates for Lieutenant Governor, which made a significant impact on the association’s endorsement.

Horrocks said, “State employees have already benefited from Governor Herbert and Lieutenant Governor Bell’s approach to managing the State’s workforce.”

Horrocks added, “Governor Herbert has given employees fair consideration during the 2010 Legislative Session. The Utah Public Employees’ Association values his experience and his fairness in managing Utah’s workforce.”

Click Here to Read Herbert's CAPE Interview

Click Here to Read Corroon's CAPE Interview

Career Service Audit, Unexpected Conclusions

2010-07-20T13:31:00.001-07:00

The Legislative Auditor General conducted an audit of the State's Career Service System to address legislators' concerns that poor-performing employees are difficult to dismiss. The audit highlighted Florida, Georgia and Texas as states that have limited merit systems, but failed to conclude whether or not Utah would benefit from a change.

The audit did conclude that managers have used poor judgement while conducting performance evaluations and while implementing discipline for employees. One glaring example from the presenter's PowerPoint showed an employee who was disciplined for downloading 52 pornographic images on a state computer, in violation of the IT Acceptable Use Policy. The employee was rated "successful" in an evaluation, despite the blatant violation.

Committee members commented that the audit highlights poor training of managers and the failure of management to use built-in discipline measures. Representative Dave Clark, R-Santa Clara, went so far to say that the merit system was not on the chopping block, but that he would personally take action if DHRM cannot address the management issues raised by the audit.

UPEA believes that the years of hard work and relationship building with legislators regarding this specific issue, contributed to the positive comments regarding state employees and the merit system. While no action was taken specifically with the audit, the Committee sent the review to the Government Operations and Political Subdivisions interim committee for their input. UPEA will continue to monitor the Career Service Status issue as further information arises.

The recommendations of the audit included:
The Legislature consider the following options regarding the state’s career service system:
Maintain the current system with improvements.
***Adopt a procedure similar to that in the judicial branch, in which an employee could be dismissed after being formally disciplined twice.
***Implement changes that have been made in other states, including the following:
***Phasing out career service status for supervisors and higher positions.
***Phasing out career service status for employees who change positions within the state system.
***Requiring all new employees to be hired at will.
***State agencies require all new managers to attend the DHRM training course on how to be effective managers.
***DHRM place greater emphasis on encouraging all managers in the state to attend their training course “The Art and Science of Supervision.”
***DHRM consider whether management training should be required for all managers in the state.
***DHRM ensure all agency managers use Utah Performance Management.

Committee Still Favors 4-Tens Despite Audit

2010-07-20T13:14:00.000-07:00

UPEA Officers and Employee Representatives are currently attending the Audit Subcommittee Meeting. Committee members are currently discussing the 4-Tens Work Week audit.

Representative Dave Clark, R-Santa Clara, stood up for employees after auditors lambasted flexible schedule benefits found in the 4-Tens work week. He said, "I don't want to connote that well intentioned benefits encourage the proverbial UDOT worker leaning on a shovel. I would want [the Executive Branch] to take a conscientious look at policy."

Clark agreed that productivity needs to be measured and decisions made on metrics.

Lietentant Governor, Greg Bell, highlighted increasing workloads and decreasing budgets to emphasize how employees have increased productivty through "doing more with less."

Overall, the audit called for better measurements and flexibility within government to address customers' needs. The audit did not recommend eliminating 4-Tens and the committee complimented the Executive Branch for addressing the program.

More to come as it happens.

Legislative Audit of Merit System

2010-07-19T14:55:00.001-07:00

UPEA was recently apprised of an audit that was conducted regarding the Career Service System, or Merit System. The report will be presented in the Legislative Audit Subcommittee tomorrow afternoon. According to our sources the Legislative Auditor’s Office may make recommendations to change the merit status of state employees. The report includes several options regarding implementation of a new career service system.

If you are able to attend the meeting, we would encourage you to do so on your own time.

Date: Tuesday, July 20, 2010
Time: 1:30 PM
Place: 250 State Capitol Bldg.

This will be an educational opportunity since the Audit Subcommittee has not accounted for public comment on the agenda. UPEA will also provide an update after the meeting.

This is a serious matter that affects all public employees and will be taken into account with any future political endorsements.

UPEA Changes in Utah State Bulletin

2010-07-01T11:41:00.000-07:00

The changes that UPEA requested in the DHRM rules as noted in the blog posting dated June 17th, 2010 can be found in the Utah State Bulletin linked here. If you have any questions, please don't hesitate to contact UPEA.

UPEA met with PEHP to discuss Federal Health Care Reform

2010-06-21T07:37:00.000-07:00

Last week UPEA met with PEHP to learn how federal health care reform will potentially affect PEHP. Through reading the two federal health care bills, PEHP has speculated how the mandates will probably affect them and if there will be additional costs. PEHP does not yet know what those additional costs will be, as that is still being determined. UPEA will continue to stay updated regarding this issue.

The two federal health care reform bills are: the Senate Bill - Patient Protection Affordable Care Act - signed 3/23/2010 and the House Bill - Health Care and Education Reconciliation Act of 2010 - signed 3/30/2010.

The purpose of these two health care bills are to improve access to health care. There are several mandates within the bills, and some of these mandates apply to only grandfathered plans, new plans or both. A grandfathered health insurance plan is a plan that existed before 3/23/2010 and does not make significant changes to their plan to lose grandfathered status. PEHP currently believes they are a grandfathered plan; however they have not yet been informed of their status.

Grandfathered Plan Mandates:

After 9/23/2010

1. No pre-existing condition exclusion for children under the age of 19.

Currently PEHP requires a 9 month waiting period.
This will be an additional cost for PEHP.

2. Two types of limits on benefits:

No lifetime limits on dollar value benefits or type of care
Only allowed "reasonable" lifetime or annual limits on nonessential benefits.
PEHP plans to change to annual limits for both types of changes to keep this as cost neutral as possible.

3. Dependent children will be allowed to stay covered on employee health insurance plan until age 26, regardless of whether or no they are a dependent. This does not apply to the child if they have their own group coverage.

Spouses or dependents of the dependent are not covered, only the dependent child.
Only allowed to be added to insurance plan at the insurance carrier's open enrollment date.
This will be an additional cost to PEHP.

4. No recession or termination of coverage without prior notice, with the exception for intentional misrepresentation or fraud.

Does not apply to PEHP.

After 1/1/2011

1. Underwriting conditions - 85% threshold required for large employers (employers of 50 or more employees).

If a plan falls below the threshold in a year, the plan shall refund premiums to employees on a pro-rated basis.
This should not affect PEHP, as PEHP is a self-funded plan, always within 90% threshold.

After 3/23/2012

1. PEHP will be required to provide uniform summary plan description.

Content and format required by statue.
Must provide notice no later than 60 days notice to a change in plan.
PEHP is not affected.

After 1/1/2014

1. No waiting period larger than 90 days, for every one of all ages.

This will be an additional cost to PEHP.

2. No pre-existing exclusion may be applied to all, at any age.

This will be an additional cost to PEHP.

3. Essential benefits can no longer have lifetime limits, only reasonable annul limits.

PEHP is trying to keep costs neutral.

4. Dependent coverage required up to age 26, even if they are eligible for another insurance plan.

This will be an additional cost to PEHP.

Government Plan Issue - Effective Immediately

Health Insurance plans for government employees can choose to be exempt from four federal health care regulations, including the Mental Health Parity Act, Women's Cancer Right's Act, the Newborn Act and Michelle's Law. Currently PEHP complies with all of these federal laws with the exception of the Mental Health Parity Act. Amendments made to this part of the federal health care reform bills do not clarify if government plans will have to comply with all four of these specific health care regulations. PEHP is waiting for an answer as they are currently unsure whether or not they will have to comply with the Mental Health Parity Act. If so, this would be an additional cost to PEHP.

UPEA's Work Brings Results

2010-06-17T15:35:00.000-07:00

Changes have recently been announced by the Department of Human Resource Management this week. The changes will be reflected in the next Utah State Bulletin (7/1/2010) and will go into effect in August. Many of the modifications were made as a result of the hearing that UPEA requested.

The substantive rule amendments that UPEA influenced include:
R477-1-1
(50) Highly Sensitive Position: A position approved by DHRM that includes the performance of:
(a) safety sensitive functions:
(i) requiring an employee to operate a commercial motor vehicle under 49 CFR 383 (January 18, 2006);
(ii) directly related to law enforcement;
(iii) involving direct access or having control over direct access to controlled substances;
(iv) directly impacting the safety or welfare of the general public;
(v) requiring an employee to carry or have access to firearms; or
(b) data sensitive functions permitting or requiring an employee to access an individual's highly sensitive, personally identifiable, private information, including:
(i) financial assets, liabilities, and account information;
(ii) social security numbers;
(iii) wage information;
(iv) medical history;
(v) public assistance benefits; or
(vi) [~~household composition; or~~
~~(vii)~~ ]driver license

UPEA requested that “household composition” be removed or defined as the term is very vague and could be interpreted in a number of ways.

R477-4-4
(a) All recruitment announcements shall include the following:
(i) Information about the DHRM approved recruitment and selection system; and
(ii) opening and closing dates.
(b) Recruitments for career service positions shall be posted for a minimum of seven calendar days.

UPEA requested that this information be added back into the rule so as to ensure that the hiring process is outlined in rule.

R477-15
It is the State of Utah's policy to provide all employees a working environment that is free from discrimination and harassment based on race, religion, national origin, color, gender, age, disability, or protected activity or class under state and federal law.

UPEA requested that discrimination be added back into the rule as discrimination can occur without harassment. It is important that this is verbalized in the rule.

UPEA was very instrumental in making these positive changes. UPEA is grateful to DHRM for listening to the concerns of our organization and for their ongoing communication with the Association.

Paid Time Off May Replace Leave Programs

2010-06-11T07:38:00.000-07:00

Since the legislative session ended in March, UPEA has been hard at work trying to make sure we stay ahead of the curve when it comes to possible legislation affecting public employees. Through UPEA’s contacts and legislators UPEA staff hears of budget, health insurance, and many issues prior to any action being taken up on Capitol Hill. Some discussions come to fruition and others don’t. This year we have heard rumor of another piece of legislation that may affect public employees – PTO.

Over the course of the past decade, several private entities have changed how their annual and sick leave systems work in an effort to streamline their leave programs. Many companies moved to a Paid Time Off (PTO) System that does not differentiate between sick and vacation leave. Employees are given a set number of hours a year that they may use in whatever manner they wish. If they do not get sick, they can use it all as vacation time. However, if they are sick frequently, vacation may not be an option.

Currently, each employee receives a certain number of annual leave hours and sick leave hours, based on their years of service. Annual leave must be scheduled ahead of time and can be used for vacations, personal matters, etc. Sick leave can be used when an individual is ill, needs to go to a doctor’s appointment, or just needs a “mental health” day.

State employees also have a great benefit that they may use upon retirement. An employee may save their pre-2006 sick leave hours to purchase health insurance. Sick leave hours earned after 2006 can be cashed in upon retirement to be placed into a health savings account to use toward medical purchases.

This benefit has been instrumental in helping productivity in the state of Utah, and ensuring that employees use their sick leave wisely.

Would a PTO program take away from this benefit?

At this time, it is not known. However, UPEA is currently concerned about such a program because it may affect current Sick Leave Benefit upon retirement.

Also, if it does not impact current employees, will it be just for new employees? While UPEA is still seeking answers to this question, it is cause for anxiety.

Many studies have indicated that when a company has moved to a PTO-based system, that the leave hours given to employees has dropped, or cannot be carried over from year-to-year. UPEA’s concern is that employees will be negatively impacted by such a move.

UPEA is continually keeping in contact with legislators and other policy-makers that may potentially be close to this issue to ensure employees are protected and maintain the best benefits possible. As more information develops, UPEA will send emails or additional communications to its members.

UPEA is Hard at Work – Protecting your Rights

2010-06-10T11:49:00.001-07:00

On June 8th, 2010, UPEA staff and representatives presented at a DHRM Hearing that UPEA requested regarding proposed rule changes that are to go into effect on July 1st.

UPEA shared concerns regarding rule changes including modifications to the recruitment, highly sensitive position, employee development, and discrimination and harassment policies.

UPEA staff insisted that employees are concerned that job positions continue to be recruited through a "competitive" and transparent process as this is a core merit principle.

UPEA and DHRM staff held a healthy discussion on the highly sensitive positions and information regarding "household composition" being added. UPEA requested that this term either be removed or defined as it is vague in nature.

While no changes were made immediately, DHRM staff expressed a willingness to look at and change a few items that were discussed. It will remain to be seen what actually gets some attention.

As an additional note, because of the efforts of UPEA - with regard to the DHRM rule changes, a section was added into the rule that allowed RIF’d employees that were rehired within a year to reinstate their Program I Sick Leave hours rather than having them all go back to Program II Sick Leave. This benefits employees as they will be able to use earned Program I hours upon retirement.

Federal Health Care Reform & Public Employees

2010-05-26T08:46:00.000-07:00

Federal Health Care Reform & Public Employees
Friday, May 21, 2010
12:00 – 1:00
Presentation by the Utah Health Policy Project

The Utah Public Employees’ Association hosted an open forum regarding Federal Health Care Reform and invited the Utah Health Policy Project (UHPP) to present.

UPEA invited all members to participate in the May 19th meeting at the UPEA headquarters. Members were particularly interested in how the reform would affect public employees and whether or not the reforms would solve ballooning premiums within PEHP.

HSAs Not the Solution

The UHPP Board of Trustees Chair, and former PEHP Executive Director, Linn Baker, opened his presentation with a discussion about Health Savings Accounts (HSA). He said that state legislators are endorsing the public employee HSA, which is tied to a High Deductible Health Plan, as a primary benefit for state employees.

Baker predicts that healthy people would opt for the HSA over the traditional PEHP plans because healthy people wouldn’t anticipate ever getting sick. However, a mass migration of healthy members to HSAs would leave high risk individuals in traditional plans. The premiums and deductibles for HSAs and traditional plans are both tied to utilization. Therefore, people in the High Deductible Health Plans would be subject to the same increases in medical costs as people in the traditional plans. Overall, HSAs would not solve the problem of rising medical costs.

Reform Should Give Insured Peace of Mind

Federal reform attempts to solve the problem of rising medical costs by placing restrictions on insurance companies, by requiring everyone to be insured, and by providing incentives to businesses that carry insurance for employees. Jessica Kendrick, UHPP Community Engagement Director, introduced attendees to two families that exemplify problems within the current health insurance system. Her examples addressed issues of pre-existing conditions, gaps in coverage and families who are priced out of the health insurance market. Baker linked these problems to the health insurance industry and brokers who serve as go-betweens.

While private plans are paying go-betweens and lobbyists huge sums, the Public Employee Health Plan costs are driven by the larger market—not profits. Public employees should have an interest in the health care reform because current policy decisions will influence future health care costs to public employees.

Also, Baker said the reform should give some peace of mind because insurance companies can no longer set limits on coverage and requires those companies to cover individuals faced with job loss. Lastly, the legislation should result in more transparency for consumers.

Controversial Mandate

Public employees will probably feel the after affects of health reform as a response to changes in the private sector. Baker said that expanding health insurance coverage may cause premiums to increase, but the federal reform addresses this through the controversial mandate that requires everyone to participate in a health insurance plan.

Theoretically, rising premiums would be mitigated by a healthier risk pool that will result from universal coverage. Currently, some people who can afford to insure themselves choose not to pay premiums—and then use emergency care services to the detriment of those who pay premiums.

Those individuals who choose not to insure themselves would be penalized through the tax code.
Utah is one of 18 states prepared to sue the federal government for requiring all individuals to carry health insurance. Baker suggested that the state could use its resources to apply for federal grants that would lower premiums by addressing malpractice claims and fraud.

Cost Critics

Vocal opponents to the federal reform cite costs as an overall point of opposition. Baker suggested that health care costs have increased more than 10% per year with no ceiling. He said the reform’s initial costs fall well below the cost of doing nothing. The Utah Health Policy Projects gives an unequivocal answer to reform critics:

“The economy remains fragile, and getting health care to millions will have a price tag. But we pay a price for doing nothing as well. The question is: which price is higher? We currently spend more than $2 trillion dollars a year on health care. The Patient Protection and Affordable Care Act will make a short-term investment of roughly $100 billion a year to lower costs and provide coverage to almost all the uninsured. This is absolutely necessary in order to get control of the real cost drivers like "fee for service" payment systems that encourage more "treatments" but discourage prevention. Only with reform will small businesses and families begin to see stability in their premium costs. The new legislation will create true competition to get better prices out of insurance companies. It will provide safer care so we don't spend billions extra to treat preventable mistakes like hospital acquired infections.”

The Utah Health Policy Project has resources to help users understand the reform. Baker also recommended the Reform Implementation Station to understand specific scenarios:

http://www.healthpolicyproject.org/NationalReform.html
http://www.healthpolicyproject.org/

The Utah Public Employees’ Association is tracking the issue very closely and will be directly involved with any decisions that affect public employees. We will update members periodically on issues regarding health care.

HB 140 Goes for Guv's Signature

2010-03-11T08:19:00.000-08:00

HB 140, Human Resource Management Amendments (Rep. Brad Dee), passed the House for the final vote on Wednesday morning (3/10), was signed by the Senate President and House Speaker Wednesday afternoon, and will be enrolled for the Governor’s signature.

UPEA is appreciative for Rep. Brad Dee’s willingness to work with us in ensuring merit principles were kept intact within the State Personnel Management Act.

HB 140 Substituted in Senate - Sent Back to House

2010-03-09T15:52:00.000-08:00

This morning, at approximately 11:15 AM, the Senate debated 1HB 140 (sponsor Rep. Brad Dee). Senator Dan Liljenquist, the senate sponsor of the bill, began the discussion by substituting the bill amending some provisions that UPEA had requested. UPEA lobbied very hard on the bill to ensure that merit principles within the Personnel Management Act were kept in place, including appealable items. Liljenquist stated that "the bill has been worked on very aggressively by the Utah Public Employees' Association."

The bill passed both the Senate 2nd and 3rd reading calendars with a 20-5 vote. Because the bill was amended, it was sent back to the House for a final vote. It was placed on the House concurrence calendar, and should pass prior to the end of the legislative session.

Budget: Retirement and Health Insurance Update

2010-03-05T10:58:00.000-08:00

Last night, Executive Appropriations met and recommended covering the entire 2.1% retirement contribution rate increase.

In addition they recommended covering half of the 12% or $23 million health insurance increase. UPEA is currently meeting with PEHP, the Governor's Office of Planning and Budget and DHRM to work out the final details for the remaining health insurance increase.

HB 140 Advances to Senate

2010-03-02T14:54:00.000-08:00

At approximately 11:30 this morning, HB 140 was uncircled, substituted, and amended. The sponsor, Representative Brad Dee pointed out that the substitute “included language that UPEA had requested.” Rep. Dee highlighted several of the things that the bill would do, including UPEA’s own draft legislation that streamlines the grievance process making it less costly and less time consuming for the employees and the state.

UPEA acknowledges there are issues with the current pay plan, as no step increases have been given since 2001. As a result, UPEA fought hard to deal with the compression issue and has long advocated a fair and equitable system which rewards all employees though performance increases. This bill will allow the legislature to provide merit increases in any incremental amount, and not limiting it to the current 2.75%. UPEA also added language to the bill that ensures employees are treated fairly, uniformly, and consistently.

UPEA has been carefully studying this bill to continually watch for any inclination to remove pieces from the merit system. The majority of our concerns were heard and acknowledged through this bill.

Rep. Dee mentioned that this bill is employee friendly. Through working with Rep. Dee, UPEA has been able to negotiate several items to improve this bill, enhancing its friendliness to employees. UPEA is very appreciative to Rep. Dee for working closely with us in resolving our concerns.

1st Substitute HB 140 passed the House 56 – 14, and will be sent to the Senate for further consideration.

SB 94 - Dead in Rules

2010-03-02T07:50:00.000-08:00

Yesterday Sen. Liljenquist asked for SB 94 - Supplemental Benefit Amendments for Noncontributory Public Employees - to be removed from the Senate 3rd Reading Calendar and sent to the Senate Rules Committee for defeated bills.

This bill would have suspended the 1.5%, the state contributes in employees' 401k. Now the bill is dead.

Senate Retirement and Independent Entities Committee

2010-03-01T13:16:00.000-08:00

The Senate Retirement and Independent Entities Standing Committee met today (March 1, 2010) to discuss HB 233 - Retirement Office Amendments, SB 171 - Higher Education Retirement Amendments, SB 240 - Retirement Participation Amendments. Dan Anderson presented on all three.

HB 233 - This bill modifies the Utah State Retirement and Insurance Benefit Act by amending provisions related to appointment of board members, purchase of service credit, disability benefits, and termination of employment on the retirement date.

SB 171 - This bill gives a 1 time opportunity to chose URS as their retirement system if the employee has prior service credits with URS. This legislation will only affect a small group of individuals.

SB 240 - This bill allows for USTAR employees to opt out of the benefit retirement system and into a defined contribution retirement system.

All three bills passed out of the Senate Retirement and Independent Entities Committee with favorable recommendation unopposed.

Retirement Bills in Retrospect

2010-02-26T12:09:00.000-08:00

The Utah Public Employees' Association is proud that its members and supporters have fought hard for the retirement system. UPEA members have had the courage and conviction to stand up for a system that has served them well. Our members have stood up for employees who will guide UPEA and public service for generations.

Although UPEA does not support 2nd Sub SB 43 and 3rd Sub SB 63, we support the amendments and truly appreciate the hard work that has gone into the bills. UPEA would like to thank Senator Daniel Liljenquist and Representative Brad Dee for facilitating negotiations.

In our gratitude, UPEA would especially like to thank Representatives Jim Dunnigan, Wayne Harper, Ronda Menlove, Stephen Sandstrom and Mel Brown for their exceptional commitment to protecting the retirement system. The Senate and House Democrats have also been strong supporters for public employees.

3rd Sub SB 63 Vote

2010-02-26T11:29:00.000-08:00

Yes 46

No 26

Abs 3

Third Substitute SB 63

2010-02-26T11:03:00.000-08:00

The House voted to substitute Second Substitute SB 63 with a 3rd substitute. Third substitute SB 63 includes all of the amendments mentioned in the previous post.

Prior to the final vote several legislators commented on this bill.

Rep. Dee said 3rd Sub. SB 63 may not be a perfect vehicle for fixing the retirement system. However, Utah can't delay a year because it will result in waiting two or more years at a severe cost to the state. He added that the new bill would be studied very closely; however, the state needs to stop the bleeding, and then run the actuarial study this year.

Dee said, "If changes need to be made, let's man up. 18% of private industry have retirement. They are all moving to a 401(K) SYSTEM. Everyone of these plans is in trouble. Fewer than 1/2 are actually receiving the benefits that they were promised. Utah is in the cutting edge. We fix it now, because we know that we've made a promise to the employees in the system. Protect my retirement system. That is what I am doing. We are keeping the promises to those that we have hired. "

House Democrats continued to support employees' concerns that the state is moving too fast on this decision. Rep. Phil Riesen, D-Salt Lake City added that the crisis behind these bills may contain rhetoric.

Rep. Litvak said that, although the process has been open and fair, perhaps the body is not able to address the full compensation package before making changes to the retirement system. Litvak said he couldn't support the bill because the legislature needs to address the entire compensation package at one time.

Representative Brown admitted that the state is in serious economic times. He said that the bill is written for both good times and bad times. In bad times, the risk is shifted to the employee. However, in good times, the bill adds compensation. He said the bill will be a really good benefit for employees.

Representative John Dougall, R-Highland, said that retirement is sacred, but the world is changing. The commitments that are being made, he said, need to change going forward.

Ben Ferry, R-Corrine, called previous question, which ended debate.

Dee extended his appreciation to employee groups who have made the legislative body think about the changes they are making. Dee added that the state has much more work to do regarding employee compensation.

"Let's make this whole and start to work on the other issues," Dee said.

Second Substitute SB 63

2010-02-26T10:09:00.000-08:00

House sponsor, Representative Brad Dee, testified that pension systems must be funded at 100%. He said that Utah's pension was doing fine until 2008. If the pension continues on this path, he said Utah's pension will become completely unfunded.

"Is that the message that you want to send employees today?" Dee asked.

Representative Jim Dunnigan, R-Taylorsville moved Amendment 10. The amendment allows a public safety employee to buy out up to 5 years early. Public safety does not have this option in the current retirement system.

Dee accepted the amendment as friendly and added that legislators worked late into last night to design these compromises. The motion passed.

Dunnigan added Amendment 9, which address concerns that employees won't have enough retirement benefits to survive upon retiring. Dunnigan moved to provide an additional 25% in retirement benefits.

Dee said that this was a good compromise for employees, understanding that the state will, "Increase payment on our house just a few more years."

Representative Eric Hutchings, R-Kearns lauded Dunnigan for his work on the bill.

Dunnigan's motion to amend passed.

Representative Harper moved Amendment 6, which takes the multiplier for each year of service from 1% to 1.5%. Dee accepted this amendment. Harper clarified that this multiplier only applies to new-hires hired after July 1, 2011. The amendment passed.

Representative Stephen Sandstrom, R-Orem, moved Amendment 8, which allows employee who didn't vest with the retirement system to come back within 10 years (instead of 5) to vest with the state. The amendment also allows plan members to contribute to another 401(k) plan of the member's choice.

Dee said, "I have more friends than I ever realized. This is a friendly amendment too."

The motion to amend passed.

Representative Carl Wimmer, R-Herriman, moved Amendment 11. The amendment extended the election of the spousal death benefit. UPEA will update members when we learn more about this amendment. The amendment passed.

Representative Ronda Menlove, R-Garland, moved Amendment 12. This amendment requires yearly reports and a study of the retirement system after the system is 100% restored. This amendment allows an ongoing dialog about the retirement system. Dee supported the motion to amend.

The motion passed.

As of this writing, the bill has been circled to clean up the bill and add the amendments.

3rd Sub SB 43 Vote

2010-02-26T10:04:00.000-08:00

YES 55
NO 20
ABS 0

Passing in the House and will be sent to the Senate.

3rd Sub SB 43

2010-02-26T09:33:00.001-08:00

House sponsor, Brad Dee, presented the 3rd Sub SB43 amended as follows:

Employees may collect pension while re-hired with a public entity AFTER a 1 year "hard separation." Employees must elect, at the time of rehire, whether they would like additional service credit OR to collect their pension while employed.

Representative David Litvak, D-Salt Lake City, asked about the 1 year cooling off period for employees who change careers after retiring and rehiring for a public entity. Dee clarified that employees must have a year-long separation.

Litvak added that SB 43 in its original form raised considerable concerns. However, the substituted bill, Litvak said, is an improvement to the current system. The amended bill still creates two classes of retired-rehired employees, but Litvak felt the legislation could be tweaked over the next year.

Representative, Sheryl Allen, a long-time employee advocate, proposed an amendment to allow employees who rehire on a half-time basis to collect their retirement within that one-year period. The motion to amend was opposed by the sponsor, Dee, who said it would maintain the status quo. Dougall and Ipson also opposed the bill. The amendment failed.

As of this writing, no votes have been cast.

10:30 Time Certain for Retirement Bills

2010-02-26T08:47:00.000-08:00

Third Substitute Senate Bill 43 (Post-Retirement Employment Amendments), and Second Substitute Senate Bill 63 (New Public Employee Tier II Contributory Retirement Act) will be debated by the House today at 10:30 a.m. UPEA is bracing for the debate and anticipating amendments to the bill. We will update the Blog as things happen.

House Retirement and Independent Entities Committee

2010-02-24T14:30:00.000-08:00

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.

HB140 Human Resource Management Amendments

2010-02-22T08:39:00.000-08:00

The House Government Operations and Political Subdivisions Subcommittee convened to discuss bills, including House Bill 140, Human Resource Management Amendments.

UPEA has been negotiating with the bill’s sponsor, Rep. Brad Dee, R-Ogden, and DHRM to find an equitable middle ground between management and employees.

During testimony, Dee said, “Out of all the labor groups, UPEA has been very helpful. They’ve negotiated very hard.” Dee promised to continue negotiations with UPEA.

Initially, the bill struck a number of employer actions that employees could grieve. UPEA has made headway to include issues of personnel rules and equitable administration of benefits. We are working on issues concerning written reprimands, salary and wages.

HB 140 passed the committee 6 – 3. UPEA will update members as the bill progresses.

Retirement Update

2010-02-22T07:10:00.001-08:00

Friday February 19, 2010 – the Senate Floor heard SB Substitute 43 and SB Second Substitute 63. These two retirement bills passed through the Senate Floor and were sent to the House Floor for future debate.

SB Substitute 43 passed with a vote of 20 Yes, 8 No and 1 absent. A link to the latest version of the bill is http://le.utah.gov/~2010/bills/sbillamd/sb0043s01.htm. This bill would affect reemployed retirees.

SB Second Substitute SB 63 passed with a vote of 19 yes, 9 no and 1 absent. The second substitute created two separate new retirement systems for new hires, hired after 7/1/2011. Originally there would have been only one retirement system for all public employees throughout the state. Now the bill would create a public safety / firefighter retirement system and a public employee retirement system. A link to the latest version of the bill is http://le.utah.gov/~2010/bills/sbillint/sb0063s02.htm. This bill would affect all new employees hired after 7/1/2011.

SB 94 was circled and remains on the Senate 3rd Reading Calendar behind 4 other bills. A link to the latest version of the bill is http://le.utah.gov/~2010/bills/sbillamd/sb0094.htm. This bill would affect all current employees hired after 7/1/1986, by eliminating the 1.5% state contribution in employees’ 401k.

Senate Bill 94 Passes

2010-02-18T16:40:00.000-08:00

This bill would suspend the 1.5% defined contribution benefit for state employees hired after 1986. Senator Gene Davis cast a notable no-vote and added, "I am voting no for this because it shows how easy it is to cut a defined contribution benefit."

This bill, along with SB43 and 63 will move on to the House after a final vote in the Senate.

Landmark Pension Reform Moves to House After Final Senate Vote

2010-02-18T16:36:00.000-08:00

Y 20

N 8

A 1

The Gamble

2010-02-18T15:58:00.000-08:00

Senator Brent Goodfellow, speaking in opposition to SB63(New Employee Tier II contributory Retirement Act), raised concerns about passing a bill and then making changes in the future. He noted that future changes would undoubtedly contain fiscal notes that, based on state revenues, may prevent beneficial changes to the new retirement plan.

Senators Lyle Hillyard and Howard Stephenson, who spoke in favor of SB 63, noted that the pension system is a gamble for taxpayers. Senators grappled with the degree to which the pension is a risk. On one hand, Senator Liljenquist said that the current pension system is the one thing that can bankrupt this state.

Senator Jon Greiner pointed out that the state has returned a 9% on its pension investment up until 2008. SB 63 assumes a worse-case-scenario that is unlikely based on past trends.

As of this writing, no votes have been cast. Update pending.

SB 43 Vote

2010-02-18T15:08:00.000-08:00

Passed on party lines plus one nay vote from Republic Senator, Jon Greiner.

Ant vs. Grasshopper and SB 43

2010-02-18T14:50:00.000-08:00

A Republican public employee, Senator Jon Greiner, has testified on SB43 (Post Retirement Employment Amendments) during today's Senate Floor time. Greiner invoked the fable of the ants and the grasshopper. He labeled the employees the ants and the nation's financial institutions the locust. His allegory suggested that public employees are shouldering the burden of irresponsible institutions.

Additionally, Greiner asked the bill's sponsor, Dan Liljenquist, whether or not the bill would favor non-state employees who hire with the state after retirement.

Liljenquist conceded that out of state new-hires and new-hires entering public employment from the private sector would not be impacted by current legislation. It would follow, then, that public employees who retire would have a disadvantage in pay over non-public employees who become re-employed with the state.

Greiner asked, "Why would we send this through without putting it to a task force?"

As of this writing, no votes have been cast on SB43. Update coming soon.

Keep the Message Alive!

2010-02-18T07:40:00.000-08:00

I know that the rally is over and that the three bills we rallied against passed committee on a partisan line vote, but the fight is not over. Today, the three bills (SB43, SB63, SB 94) are going to be heard on the Senate Floor at around 3:00 p.m. If you would like to listen to the debate, go to: http://www.le.state.ut.us/ and find the Live Audio link under "What's Happening."

If the bills pass the Senate, they will move into the House. If you haven't talked with your State Representative, now would be a good time. Visit http://www.upea.net/ to find your legislator.

If you would like to see a complete list of the bills that UPEA is tracking, log in to www.upea.net. If you have questions about any of the bills UPEA tracks, please call 801-264-8732.

If you would like to schedule an Employee Representative to visit your worksite, we would really like that. Call 801-264-8732. We'll update soon!

Retirement Update

2010-02-17T11:10:00.000-08:00

Last Friday 2/12/2010, the Retirement and Independent Entities Committee met again. From 12-3pm committee members listened to public comments not heard last Wednesday, and voted on each of the bills: SB 43 (reduces benefits for rehired retirees), SB 63 (reduces retirement benefits in half for new hires as of 7/1/2011), and SB 94 (eliminates the 1.5% contribution to current employees’ 401k). Each bill passed through the committee with a 3-2 vote, with Sen. Liljenquist, Sen. Bramble, and Sen. Butters voting for each bill, and Sen. Goodfellow and Sen. Mayne voting against each bill. Now SB 43, SB 63, and SB 94 go to the Senate floor for discussion. The bills are currently on the Senate Time Certain – 2nd Reading Calendar. It is expected that the Senate floor will hear the bills tomorrow – Thursday 2/18/2010.

To clarify, Sen. Liljenquist’s SB 42 – Retirement Eligibility Modifications – is being held in Rules. Sen. Liljenquist has committed he is not pushing SB 42 and it will remain in Rules and die there. SB 42 would have increased the Public Employees Retirement System from a 30 year system to a 35 year system, and the Public Safety Retirement System from a 20 year system to a 25 year system over the next five years. This would have affected both current and future employees.

However, Sen. Liljenquist has pulled this bill because of UPEA’s efforts and members contacting him and their individual legislators.

Retirement and Independent Entities Committee

2010-02-10T13:33:00.001-08:00

Opposing sides gave little ground during today's Senate Retirement and Independent Entities Committee meeting at the capitol. Utah Public Employees' Association has made their arguments clear through Saturday's rally and a year's worth of work leading up to today.

There wasn't much left for Liljenquist's presentation except to rehash his proposals and the dire circumstances behind his proposals. UPEAadded voices to the economic impacts families face in light of retirement changes. Sheri Watters testified that her family has a long history of public service and that the retirement system has served their family fairly.

Senator Brent Goodfellow raised questions about Utah's current retirement system. He addressed the scope of SB 63 in light of an improving economy and improving stock market.

Goodfellow said, "Yes we have problems, but they're not the same problems we had when the DOW was at 6500."

SB 63 assumes the worst case scenario for our retirement system over the long run.

Liljenquist added that employees will defer compensation increases well into the future because of the retirement downturn. However, he did not say how any savings in the retirement system will go toward compensation.

Under the pro temp chairmanship of Senator Bramble, the committee opted to continue hearing testimony on Friday, at noon, before taking action on the three senate bills.

UPEA will update you soon!

Retirement Press Conference

2010-02-10T13:32:00.001-08:00

Sen. Liljenquist held a press conference Tuesday 2/9/2010 “designed to shed light on the retirement system” and his three retirement bills. He explained how the losses URS experienced in 2008 has “created a massive problem for URS.” He continued to note how “there is not an option to do nothing. Doing nothing just exacerbates the problem.”

UPEA has never supported not doing anything. UPEA supports the Governor’s budget which funds the 2.1 contribution rate increase. UPEA has met with numerous individuals who have repeatedly noted that if the contribution rate increase is funded, URS will not go bankrupt, but remain fiscally sound. UPEA continues to push for an independent taskforce to study the retirement issue over the next year before legislation to change the system for both current and new employees goes into effect.

Update on HB 140

2010-02-10T07:28:00.000-08:00

UPEA staff met with DHRM about HB 140 yesterday (2/9/10). In the meeting, DHRM explained that the intent for changing the pay system was to try to encourage more merit pay increases by removing the steps from the pay plan. If only 1% is available, the legislature could grant a 1% merit step increase rather than being limited to 2.75%. UPEA is in the process of researching the plan, and will be meeting with DHRM again next week to discuss UPEA’s viewpoint on this plan.

The changes to the grievance process as explained were due to conflicts that have been found with the Attorney General’s Office and costs associated with the grievances handled at the Career Service Review Board.

UPEA has scheduled a meeting for Thursday (2/11/10) with the sponsor of the bill, Representative Brad Dee.

HB 140

2010-02-09T07:21:00.000-08:00

Late Friday evening a new bill became publicly available that deals with State Employees. HB 140, Human Resource Management Amendments, was introduced to the House on 2/8/10. It has been sent to the Rules Committee for assignment.

HB 140 is something high on UPEA’s radar, because it deals with several public employee issues, including:

· Taking the merit steps out of the pay scale

· Changing the language related to the post-retirement sick leave benefit

· Changing the grievance process

· Changing the grievable actions that may be taken to the Career Service Review Office

On 2/8/10, UPEA met with legal counsel to ensure that staff understood what was being presented. UPEA staff also has a meeting scheduled with the Department of Human Resource Management on 2/9/10 to discuss the intent behind the proposed changes.

UPEA will continue to update members as to what is happening with HB 140 as more information becomes available.

Executive Offices & Criminal Justice

2010-02-04T09:44:00.000-08:00

Executive Offices & Criminal Justice 2/3/10

The committee heard from County Sheriffs, the Board of Pardons, and Department of Corrections. The fiscal analyst went over the budget brief on each department.

Tom Patterson, the Executive Director of the Department of Corrections, presented on the budget of DOC. Some of the items that were discussed to address the 5% total budget reduction were to close the Parole Violator Center which would save $7.6 Million, eliminate meals for Correctional Officers which would save $400,000, and close two prison housing units which would save $3.8 Million.

Corrections discussed the risks involved with closing Special Services Dorm and OQuirrh 5 housing unit. If these two pods were to close the Utah Prison would be over maximum capacity by 215 beds. This would mean releasing 215 inmates early, and the prison would still be at maximum capacity. Tom discussed the risks involved to staff and also to the public with releasing inmates early and also operating a prison that is over crowded.

Retirement and Independent Entities Committee

2010-02-04T09:14:00.000-08:00

The House Retirement and Independent Entities Committee met today and passed three bills through the committee with a favorable recommendation. The bills are H.B. 215 Amendments to the Public Employees’ Benefit and Insurance Program Act – Risk Pools, H.B.233 Retirement Office Amendments, and H.B.83 Sub 1 Public Employees Retirement – Spousal Election.

H.B. 215 Amends the Public Employee’s Benefit and Insurance Program Act risk pools for full-time enrollees at an institution of higher education from full time equivalent enrollment of less than 18,000. Currently it is less than 12,000 full time equivalent students.

H.B. 233 modifies the Utah State Retirement and Insurance Benefit Act by amending provisions related to appointment of board members, purchase of service credit, disability benefits, and termination of employment on retirement date. This is URS annual “clean up” bill, which intends on clarifying the statue in Title 49 – or the Utah State Retirement and Insurance Benefit Act. UPEA was originally concerned with the original bill and talked to Dan Anderson, URS’ attorney about amending the bill. The bill was amended in committee today.

H.B. 83 Sub 1 requires the Utah State Retirement Office to provide written notice (within 30 days of a change and at least 60 days prior to retirement) to a retiree’s spouse of the retirement allowance option made by the retiree under the Public Employees’ Contributory or Noncontributory Act.

Health and Human Services Appropriations Committee

2010-02-04T09:13:00.000-08:00

House Democratic Caucus 2/2/10

UPEA staff attended the House Democratic Caucus on 2/2/10, where the House Democratic Caucus discussed various items, including HB 1- Education funding, the Ethics legislation, and various housekeeping items.

Much conversation surrounded the ethics bills that have been presented thus far, including increased financial disclosure, lowering gift limits, and limiting on uses of campaign funds.

Health and Human Services Appropriations Subcommittee 2/1/10

In the Health and Human Services Appropriations Subcommittee held on 2/1/10, the committee discussed several issue and budget briefs that had to do with the Departments of Health and Human Services. These issue and budget briefs are linked below.

Department of Health
Epidemiology and Laboratory Services
Health - Federal funds
Health - Intent Language follow up from prior year.
Health - Executive Director Operations
Health Systems Improvement
Workforce Financial Assistance
Community and Family Health Services
Local Health Departments
Health Nonlapsing Balances
Social Services Related Revenue Options
Substance Abuse and Mental Health
Division of Aging

The Utah Association of Counties also spoke to the impacts of potential cuts to the Health and Human Services line items described above. They are very concerned about the trickle down effect that this may have on local health departments and governments.

Overview of Utah's Retirement System

2010-02-03T10:14:00.000-08:00

On Tuesday 2/2/2010 UPEA staff attended the Office of Legislative Research and General Counsel’s (OLRGC) “Bagels and Briefings – Overview of Utah’s Retirement System.”

Policy Analyst Ben Christensen went over the history and membership of the retirement system. Currently there are 155,667 employees in the Public Employee Noncontributory Retirement System (or the Big System), of which 52% include public and higher education employees, 20% include state employees, 27% include counties and local districts. Christensen also discussed the retirement allowance formula of years of service multiplied by 2% and the average of an employee’s 3 highest salaries. Lastly Christensen noted how the financial losses of 2008 affected the retirement system as a whole.

Next fiscal analyst Danny Schofield noted how the URS Retirement Board asked for a 2.1% contribution rate increase for the public employees contributory and noncontributory systems. According to the URS Retirement Board, if the contribution rate increase is funded, the retirement system will remain actuarially sound. In addition, URS annually expects at least a 7.75% investment return. In 2009, URS received a 13% return on investments. Schofield also spoke about the $23 million PEHP increase for FY 2011.

Lastly Darin Underwood from the Auditor General’s Office discussed the Reemployed Retiree Audit, presented to the Audit Subcommittee and Retirement and Independent Entities Committee November 2009.

UPEA is at the forefront of the retirement discussion and will continue to present arguments and information on how URS is still the best funded retirement system in the country.

House Republican Caucus Lunch

2010-02-03T09:33:00.000-08:00

House Republican Caucus 2/2/2010

Speaker Dave Clark spoke on his Health System Reform Amendments Bill (which is still being written). He noted that the bill intends to:

“Increase Transparency” –
· Instructs the Utah Insurance commissioner to develop a method so that health insurer’s claims can be compared.

“Equalizes the market” –
· Bill is going to optimize health insurance choice for Utah businesses and their employees.
· Equalizing the defined benefit and defined contribution, so each market does not skew the other market unfairly.

“Allows employers coverage flexibility” –
· Employers will be able to choose either defined benefit or defined contribution plans inside the Exchange.
· Within the Exchange there will be a premium aggregator with expanded employee choice.
· The defined benefit plans in the Exchange, will not be able outside the Exchange in the regular insurance market.

“Makes health care costs controllable and predictable for Utah businesses and gives employees expanded coverage option and more control over their health care dollars” –
Expands the defined contribution market and how both employers and employees can pay for their health insurance within the Exchange.

UPEA is tracking how Health Systems Reform is being brought about in the small employer market, as Speaker Clark’s vision includes expanding the Utah Health Exchange to the large employer market in 1-2 years.

Appropriation Reviews

2010-02-01T09:33:00.000-08:00

Commerce and Workforce Services Appropriations Subcommittee 1/27/2010

Budget Presentation Utah State Office of Rehabilitation
· The agency is not requesting any money. Executive Appropriations has asked for a 4% ongoing reduction. USOR is funded by the Uniform School Fund and Federal Funds.
· The Center for Public Policy presented information on the economic impact of services provided by USOR. Every $1.00 USOR spends on providing services its citizen clients the state receives back $5.64 through income taxes.
· Those who acquire services through USOR get higher wages. Since September 30, 2009 USOR has helped 3,116 people find employment and stay employed for at least 90 days.
· The public commented and asked that the subcommittee not eliminate night and weekend services provided at the Sorenson Center.

Budget Presentation Department of Financial Institutions
· This department currently regulates 109 financial institutions throughout the state – including credit unions, banks, trusts, payday lenders, etc.
· In 2009, the department eliminated 4 vacant positions.
· The agency runs on $5.9 million and is totally funded through the fees that go into the general restricted account. They do not rely on any money from the General Fund.
· 2009 was the first year that the department’s unused funds were not placed back into the general restricted account, but into the general fund, which resulted in the department to eliminate 4 vacant positions. Every year prior, the unused money always has returned to the general restricted account. If money continues to be taken out of the restricted account, the fees would have to be increased to cover their budget and that would require legislative action as the fees are in statue.

Budget Presentation Public Service Commission
This agency regulates the utility companies ensuring that they are charging reasonably priced utilities.
This agency does not receive any money from the General Fund. Their budget is entirely covered from a public utility fee of 1% of their revenues.
The Commission is not asking for any increases in their budget for the rest of FY 2010 or FY 2011, as their budget and number of employees has been the same since 1994.

Commerce and Workforce Services Appropriations Subcommittee 1/28/2010 – CANCELLED – Next Meeting will be held on Monday February 1, 2010.

The Department of Natural Resources Appropriations Committee reprioritized the budget list for FY 2010. Below is the updated budget list. The employee furloughs have already taken place.
Natural Resources Appropriations Subcommittee
Proposed 4% One‐Time Budget Reductions, FY 2010
Final
Jan. 20, 2010
Rank Agency Division Item Reduction
Running
Total
1 DNR DNR Admin One Day Furlough (8,100) (8,100) 0.0%
2 DNR Forestry One Day Furlough (8,700) (16,800) 0.0%
3 DNR Oil & Gas One Day Furlough (5,600) (22,400) 0.0%
4 DNR Wildlife One Day Furlough (32,900) (55,300) -0.1%
5 DNR Parks One Day Furlough (26,500) (81,800) -0.2%
6 DNR Geological Survey One Day Furlough (10,600) (92,400) -0.2%
7 DNR Water Resources One Day Furlough (8,900) (101,300) -0.2%
8 DNR Water Rights One Day Furlough (20,500) (121,800) -0.2%
9 PLPCO Public Lands Reductions (13,300) (135,100) -0.3%
10 Ag General Admin. Replacement with Dedicated Credits (135,000) (270,100) -0.5%
11 DNR Forestry Replacement with Restricted Funds (1,456,800) (1,726,900) -3.3%
12 Ag General Admin. Retirements (196,500) (1,923,400) -3.6%
13 Ag General Admin. Current Expense (114,600) (2,038,000) -3.9%
Office of the Legislative Fiscal Analyst 1/20/2010
14 Ag General Admin. Travel (in‐state) (50,000) (2,088,000) -3.9%
15 Ag State Fair Reductions (27,000) (2,115,000) -4.0%
(2,115,000)
Subcommittee Total General Fund Budget 52,874,800

House Democratic Caucus
On 1/28/10 the Public Employee Retirement Coalition (UPEA, UEA, USEA, and FOP) had the opportunity to present their views on the proposed retirement changes to the House Democratic Caucus. Each group highlighted the bills that are currently being presented, the effects of such bills, and that the coalition would like to see the issue reviewed in an interim study prior to taking any action.

UPEA provided talking points, historical information regarding contribution rates, and a recent Forbes article showing that Utah is in good shape to avoid financial failure due to pension funding.

Several of the legislators in the caucus expressed concern, stating that this issue will negatively impact the workforce. Many indicated that there is a need for public employees to be actively involved in the legislative process by contacting their legislators and educating the public.

UPEA indicated that they will update the legislators on the progress of the campaign, and again encourages all public employees to contact their legislators.

Capital Facilities and Governmental Operations Appropriations Subcommittee

On 1/28/10, UPEA attended the Capital Facilities and Governmental Operations Appropriations Subcommittee. The Legislative Auditor General’s Office presented “A Performance Audit of the Department of Technology Services” to the committee. The auditor stated that they are suggesting several efficiencies that can be found in the department and highlighted some recommendations that would help DTS better manage IT resources, develop a better strategic plan, and enhance the oversight and accountability of the department.

The DTS Executive Director, Stephen Fletcher, seemed sincerely grateful for the audit, as it helps to have another set of eyes to help them find a better way to move forward. He indicated that they have begun to implement several of the recommendations and have plans in place to continue working toward a more efficient service oriented model.

Fletcher gave a few examples of how they have been able to reach those efficiencies, including: eliminating 134 jobs through managed attrition, consolidating servers, and improving measurement of service levels. Through the positive recommendations given, DTS has been able to strengthen its processes and continues to look for new initiatives to find efficiencies.

Health and Human Services Appropriations Subcommittee
UPEA attended the Health and Human Services Appropriations Subcommittee on 1/28/10. In the meeting the Department of Health presented the changes that they have implemented through a reorganization of structure. The reorganization that took place last year consolidated 4 divisions into 3, and also looks to save the department close to $400,000 in ongoing funds, by consolidating high level positions.

The committee also discussed ways that the state could save money on Medicaid expenses. Michael Hales, Deputy Director of the Department of Health, indicated that they have implemented several changes based on an audit report that was completed last year.

Representative Dougall asked if the department could outsource some of the Medicaid administration to private companies. Hales indicated that some outsourcing has already been done through Healthy U and Molina Health. However, they are willing to look at alternatives depending on the scale of the

Appropriation Subcommittee

2010-01-28T08:11:00.000-08:00

HHS Appropriation Subcommittee 1/27/10

The Health and Human Services Appropriation Subcommittee met on 1/27/10. In the meeting they briefly discussed the Base Budget bills that will be submitted in both the House and Senate. There were a couple of changes that were recognized and added to the Base Budget priority list for the subcommittee. The committee added 3 items to the list for the Department of Health. The 3 items are related to the FY2011 budget recommendations listed last on the following link.
FY 2011 Base Budget Recommendations

The committee was also presented with the following reports that were specific to the Department of Health.

Health Care Financing
SB 87 Follow Up
Federal Disallowance
Children’s Health Insurance Program
Medicaid Mandatory Services
Medicaid Optional Services
Medicaid Providers: A Snapshot
UPEA is committed to tracking the State Budget and will continue to provide critical updates as they are received.

Health and Human Services Appropriations Subcommittee
1/20/10

The Health and Human Services Appropriations Subcommittee met to discuss the FY10 budget on 20 January, 2010. The Legislative Analysts Office put forward their proposals, using the 3% cut that the Departments of Health and Human Services have already implemented in accordance with Governor Herbert’s Executive Order. The recommendations that Legislative staff put forward can be found online, including the “Reductions Already Made”, “Base Budget Recommendations – Staff Proposal”, and “Optional Reductions”.

Legislative staff is proposing that DHS extend the hiring freeze to save more money, target all programs to take a 0.75% budget reduction – so as to spread the cuts equally across the board, and tap into the Disabilities Trust Fund to make up the $10 million reduction that is needed to amount to the required 4%. Representative Powell, suggested using more money from the Disability Trust Fund to remove DSPD services from the 0.75% cut – keeping their funding in tact. The committee agreed to those changes and removed DSPD from the backfill prioritization list.

The Analysts Office is recommending cuts that the Department of Health agrees with. However, prioritization was the difference in the recommendations given. Dr. Sundwall indicated that the reorganization is a large contributor to the savings found in DOH. He also stated that the Medicaid Restricted Fund account may be a reasonable option to plug the gaps that are found in the FY2010 budget, as the committee is requesting cutting one-time funds. Despite the recommendations made by Dr. Sundwall, the HHS Appropriations Committee decided to implement the recommendations made by the Legislative Analysts office.

The overwhelming hope of the committee was that the Executive Appropriations Committee would backfill many of the recommended reductions to the departments, rather than having to rely on such drastic cuts to critical programs and services.

Very Important Links

2010-01-26T07:09:00.001-08:00

Here are links to the retirement bills and links to the committees that should be hearing the bills:

Retirement Eligibility Modifications
http://le.utah.gov/~2010/htmdoc/sbillhtm/sb0042.htm

Post-Retirement Employment Amendments
http://le.utah.gov/~2010/htmdoc/sbillhtm/sb0043.htm

Supplemental Benefit Amendments for Non-Contributory Public Employees
http://le.utah.gov/~2010/htmdoc/sbillhtm/sb0094.htm

Senate Retirement and Independent Entities Committee
http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2010&Com=SSTRIE

House Retirement and Independent Entities Committee
http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2010&Com=HSTRIE

Executive Appropriations Subcommittee Reports

2010-01-16T10:06:00.000-08:00

The Department of Natural Resources and the Department of Agriculture introduced their budget proposal to the legislature to meet the 4% cut. Agriculture will use attrition and current expense reductions to meet the 4%. Natural Resources is having employees do a one day furlough and will use restricted funds for the rest of the cuts. The information below has a detailed outline of what the two departments are doing to meet the 4%.

Natural Resources ($2,115,000)
Ag ‐ Current Expense Reductions ($114,600)
Ag ‐ Replacement with Dedicated Credits ($135,000)
Ag ‐ Retirements ($196,500)
Ag ‐ State Fair Reductions ($27,000)
Ag ‐ Travel Reductions ($50,000)
DNR ‐ Admin One Day Furlough ($8,100)
DNR ‐ DWR One Day Furlough ($32,900)
DNR ‐ FFSL One Day Furlough ($8,700)
DNR ‐ FFSL Replacement with Restricted Funds ($1,456,800)
DNR ‐ OGM One Day Furlough ($5,600)
DNR ‐ Parks One Day Furlough ($26,500)
DNR ‐ UGS One Day Furlough ($10,600)
DNR ‐ Water Resources One Day Furlough ($8,900)
DNR ‐ Water Rights One Day Furlough ($20,500)
PLPCO ‐ Public Lands Current Expense ($13,300)

Health and Human Services Sub Appropriations Committee
Department of Health

Executive Director, Dr. David Sundwall updated the Health and Human Services Sub Appropriations Committee regarding the cuts that the Department of Health has made in light of Governor Herbert’s executive order to reduce each agency’s personal budget by 3%. Dr. Sundwall reported that they were able to find efficiencies and approximately $100,000 savings through a reorganization that recently occurred – resulting in ongoing savings of $400,000. In addition, the mandatory day of furlough will save $120,000. The department has offered an early retirement incentive that is projected to save $300,000. Also, they will now begin charging for UTA passes, only buying computers when they break down, and implementing a hiring freeze.

The legislature has asked for a 4% cut that is problematic for the Department of Health. Although, the department has been able to identify $2.6 million, Dr. Sundwall cautioned the committee to try to avoid digging deeper into the budget coffers, due to reductions in services resulting in the potential for AARA fund pay back of $160 million. Sundwall indicated that he was willing to make accommodations where possible and work with the legislature in finding the means to effectively serve the state of Utah.

Department of Human Services

Department of Human Services Executive Director, Lisa Michelle Church, provided the committee with the changes that she intends to make with the Governor’s requested budget cuts through the remainder of FY2010. DHS will need to cut $2.9 million to cover the 3% budget gap. Church stated that she intends to do this through 4 means:
1. Fund Balances: DHS estimates that it can use $56,300 from the DCFS fund balance and $50,000 from the Division of Substance Abuse and Mental Health fund balance.
2. Personnel Expenses: DHS has cut more than 300 positions over the past year. Church stated that, “DHS has analyzed the potential for employee furloughs but finds that they would more deeply reduce services to the public and potentially pose health and safety risks for Utahns.” As a result of the analysis, it was determined that DHS would not implement furloughs at this juncture. The department has also implemented a hiring freeze that is estimated to save $570,000 for the remainder of FY2010.
3. Restricted Accounts: DHS is planning on using $1.6 million in restricted accounts- $1.1 million will be coming from the Domestic Violence Services Account, and another $500,000 will be coming from the Children’s Trust Account.
4. Operating Expenses: Church indicated that the department will delay purchasing computers and use other small sources to help with the control of operating costs. DHS estimates that $570,000 can be saved in this category.
Based on the legislature’s request to reduce the total budget by 4%, the department would need to cut $10.5 million. This would come at a great cost, including disturbances in service, eliminating positions, and furloughing employees. In addition, Church stated that deep program cuts would result.

Church was very concerned with each of these issues as she shared a day-in-the-life of an average employee. She discussed how workload is increasing, citizens are becoming more impatient, benefits are decreasing, co-workers are leaving without a replacement, training has been cut down substantially, and problems are continually increasing with the rise in population.
The committee members kept referring back to the fact that they have been given a directive to recommend 4% adjustments, while identifying the impacts on the cuts.

Retirement Update

2010-01-07T06:29:00.000-08:00

The UPEA State Board arranged a meeting with Senator Liljenquist and retirement system stakeholders, including the Utah School Employees Association, Utah Education Association, and Cops United for Retirement Equity. Liljenquist discussed potential legislation at the January 4th meeting and answered questions about changes to the retirement system. His proposed legislation should amount to four bills.

His first bill would allow employees hired after July 1st, 2011 to select either a) a defined contribution plan administered by URS wherein 8% will be deposited into a 401(a) plan; or b) a hybrid defined benefit/defined contribution plan. The hybrid option would include a 5% DB plan and 3% DC contribution. As rates fluctuate, the 3% would either increase or decrease to compensate for the changes in rates. Various components of the new system would include: retirement withdrawals to begin at age 59, 1% service credit per year, and a 5 year final average salary calculation. Both programs would require a 4-year vesting. This also combines all retirement systems into one system.

His second bill would eliminate the 1.5% salary contribution into current employees 401(k) and put that money into the pension system to help address the current 2.1% contribution rate increase.

His third bill would increase the years of service for retirement for current employees using the following schedule:
Employees in the big retirement system
24-30 years of service would see no change
20-24 years of service would be eligible for retirement after 31 years
16-20 years of service would be eligible for retirement after 32 years
10-16 years of service would be eligible for retirement after 33 years
4-10 years of service would be eligible for retirement after 34 years
Less than 4 years of service would be eligible to retire after 35 years

For Public Safety/Firefighters/Judges would also increase the retirement service.
18-20 years would see no changes
15-18 years of service would be eligible to retire after 21 years
12-15 years of service would be eligible to retire after 22 years
9-12 years of service would be eligible to retire after 23 years
6-9 years of service would be eligible to retire after 24 years
Less than 6 years would be eligible to retire after 25 years

His fourth bill would change the benefits for retired/rehired employees. For rehires after July 1, 2010, this bill would require suspension of the pension payments upon rehire, but allow rehired employees to earn additional service credit and also require the employer to pay the full URS contribution rate into the retirement system. This would also remove the service cap for public safety, which is currently 30 years. For rehires prior to July 1, 2010, the bill suspends the 401K contribution to the employee and requires agencies to pay the contribution rate to URS.

As soon as the bills are made available for viewing, we will inform our members. This is just an overview of what is expected to be contained in the bills and may change prior to finalization.

UPEA is working toward a better solution that will keep retirement whole for all employees.
UPEA has also called for an independent actuarial analysis and more time to educate stakeholders on the issue.

Gov's Budget Recommendation Notes

2009-12-14T11:30:00.000-08:00

The Governor said there is a budget gap of slightly less than $700 million; not the $850 million that was anticipated. Since the legislative session however, there has been a revenue decrease of $157 million for the FY2010 budget year, necessitating the 3% cuts discussed above.

FY2010 Budget Reductions
Agency Reductions - $39 million
Public Education - $72 million
Bonding for Roads - $25 million
Medicaid Settlement - $20 million
OPED/Termination Pool - $6 million
Reduce USTAR - $5 million
Restricted fund balance - $16 million

However, the Governor's Office of Planning and Budget anticipates that the FY2011 budget will increase or flatten, due to additional revenues from the recovering economy. The Governor’s office estimates $191 million in revenue by the end of FY2011, which is a $34 million net growth for FY2011. However, the state will continue to weather shortfalls until then:

FY2010 Shortfall
Revenue Shortfall - $157 million
Additional Shortfall – $6 million
Supplemental Shortfall - $20 million
Total Shortfall - $187 million

FY2011 Shortfall
Public Education - $293 million
Higher Education - $66 million
Other State Agencies - $151 million
Total Shortfall - $510 million

Total Shortfall for remainder of FY2010 and FY2011 = $693 million

The Governor’s FY2011 Budget Recommendations:
· Fully funds the budget
· Protects public and higher education
· Avoids exacerbating the budget and its structural imbalance
· Covers needs in state agencies
· Preserves $253 million in the Rainy Day Fund
· No tax increases.

The Governor's FY2011 budget priorities would cost an estimated $510 in his $11 billion budget.
1. Public Education - $293 million.
2. Higher Education – $66 million.
3. Other State Agencies - $151 million.
a. Corrections - $21 million.
b. Human Services - $18 million.
c. Workforce Services - $2 million.
d. Health - $38 million.

The FY2011 recommendations also included a list of additional revenue streams to enhance revenue growth within the State:

Stop the Sales tax vendor discount (1.31%) that was implemented several years ago. This will provide the state with $20 million in on-going funds.

Begin a quarterly estimated tax filing for self-employed persons. This would provide an additional $125 million in one-time funds.

Bonding for Roads, freeing up cash in transportation. This would provide $25 million in FY2010 and $75 million in FY2011.

Tap into the Rainy Day Fund, providing $166 million in one-time funds.

Enhanced Federal Medicaid Assistance Program funding of $56 million in one-time funds.

Using the student population account for $31 million in one-time funds.

The additional revenues amount to $510 million.

When asked the question what will happen with the retirement account, Governor Herbert said his budget accounts for the contribution rate increase (2%) that URS requested this year.

Governor Herbert stated that it was important for him to live within his means, retain some money in the Rainy Day Fund, not increase taxes, and keep Public and Higher Education at the 2010 funding level, while still maintaining service in each of the state agencies.

UPEA Statement to Retirement and Independent Entities Committee

2009-11-12T11:17:00.001-08:00

Click Here for Full Audio

RETIREMENT POSITION STATEMENT

Mr. Chairman, members of the Committee – thank you for allowing me an opportunity to address you on this vital and sensitive topic. My name is Sheri Watters. I have been a public employee for 24 years. I currently hold several positions with the Utah Public Employee’s Association and serve as the Vice-Chair of the Retirement Membership Council. Today I am representing the view points of UPEA.

As most of you are aware, the genesis of today’s retirement system had root in 1915 when the Public Teacher’s system was authorized by this body. In the 1940’s state employees and others were authorized to be part of an expanded system. On March 8, 1967, over 40 years ago, the Legislature passed SB 205, “Public Employees Retirement System” thus consolidating various pension systems and allowing all state and local government employees and educators to be eligible for retirement coverage. Currently there are over 181,000 members of the retirement system, this encompasses active, retired, and terminated vested employees…including teachers, janitors, cops, firefighters, truck drivers, computer techs, legislators, therapists, and the list goes on and on.

Public pension systems across the country are experiencing stress. Utah is not alone in this dilemma. In an article about the plight of public employee pension systems, officials in Ohio stated it would take until “infinity” to get the investments back on track. Other systems such as California and West Virginia are merely a train wreck waiting to happen. Luckily, Utah has continued to be well managed by level-headed investors and by legislators being mindful of this important benefit. Our system is currently 86% funded. This number has fluctuated over the years. In 2000 the fund was at 103% funded but yet in 1990 it was as low as 74.6%. I believe that economic stability will return and the fund will recover based on historical data. Will there be another downturn? Will there be a catastrophic event in the Salt Lake area? Not even the actuaries can predict these types of unknowns.

Surveys and task forces across the country continue to show that a defined benefit program is the retirement option of choice. There are numerous reasons why. One reason is for attracting and retaining qualified and dedicated employees. We know that high turnover rates mean higher training costs. A DB plan allows the state to have a degree of control on who leaves employment and when. It is also important to note that the vast majority of Utah citizen retirees remain in the state and contribute an important sum to the state economy as well as continue to pay taxes in Utah.

State DHRM in its latest survey noted that “both health insurance and the retirement plan were rated as very important for retention – on a scale of 1 to 3 the state retirement plan was rated with an importance of 2.75 and the health plan as 2.83.” In addition, the survey showed the importance of the retirement plan for retention is high across all ages and years of service groups, which may indicate that even the younger groups do have an appreciation for the current plan.

The Utah Public Employee’s Association is cognizant of the difficult issues facing the legislature during this upcoming session…the budget, education, transportation, taxes, just to name a few. UPEA also recognizes that there are thousands of public employees across the state who have devoted their lives and careers to public service. We will continue to oppose any legislation that may negatively impact the current retirement system or reduce an employee’s take home pay to maintain these benefits. We are also highly concerned about changes which could cause an erosion of the merit system. This is our primary goal. We believe that a comprehensive study should be conducted to evaluate the cost-effectiveness of adjustments to the system to include changes for those who have retired and rehired and those who are not yet vested or not yet hired. Making structural changes to the current pension system without extensive research and cost analysis is not, in my opinion, in the best interests of all stakeholders.

As conscientious taxpayers/citizens of the State of Utah we know that the Utah Retirement System is a well-managed program designed and refined over many years to retain and attract quality individuals to aid in workforce stability and promote orderly turnover.

We believe that when the Utah Retirement System was established, legislators were concerned with looking at the long-range picture. We owe it to those individuals who have gone before us, those currently in the workforce and those who will replace us in the future to maintain a pension system founded on sound business principles, fiscal responsibility and fair market value that will continue to help Utah maintain its reputation for being a well-managed state, to protect our AAA bond rating and to continue to educate our children and grandchildren with qualified and competent teachers. We hope that you will see fit to choose a wise course of action as changes to the system today will ultimately affect individuals through the next decade and beyond. Time is not our enemy.

Thank you.

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Perspective on Retirement and Independent Entities Committee

2009-09-15T08:29:00.000-07:00

The Retirement and Independent Entities Committee convened a special meeting to discuss the public employee retirement system. Utah Public Employees’ Association monitored the meeting and testified on behalf of public employees. The committee also listened to testimony from Utah Retirement Systems, the URS actuary, Department of Human Resource Management, The Utah League of City and Towns, CURE, Utah Association of Counties, and various municipal law enforcement groups.

UPEA has taken the position that no one group has enough information to know the affects of changing the retirement system this year. Therefore, it would be prudent to maintain the system until actuarial metrics can provide information to justify a change. Senator Liljenquist concluded that the current $4 billion drop in the retirement fund over the past year will cause the state to lose an additional $300 million per year in investment returns. Chris Conradi, Senior Consultant for the URS actuary, Gabriel, Roeder, Smith & Co., said that Liljenquist’s assumption was correct despite potential economic recovery and higher rates of return on investments.

In a worse-case-scenario, URS will not recoup its $4 billion plus $300 million/year loss in time to keep up with demands placed on the retirement system by upcoming retirees.

The Utah League of Cities and Towns presented a package of benefit changes that would preempt a solution to this economy’s worse-case scenario. However, UPEA has spoken with economists and the Governor’s Office of Planning and Budget, who all confirm that the economy is showing signs of recovery. The worse-case-scenario may not play out, but a loss in benefits will harm public employees for years to come. UPEA does not endorse the ULCT’s position on changing the retirement system. For more information, see the list of available documents below.

Please stand behind UPEA in protecting your retirement benefits. Tell your coworkers about UPEA’s position and what’s at stake if employees aren’t unified. Encourage non-members to join.

Audio Recording of Committee Meeting
http://www.le.state.ut.us/asp/interim/Minutes.asp?Meeting=7690#Audio
League of Cities and Towns Proposal
http://www.ulct.org/ulct/docs/LPC_retirement_handout.pdf

Utah State Retirement Systems Overview
http://www.le.state.ut.us/interim/2009/pdf/00001059.pdf

Actuarial Perspective of the Utah State Retirement Systems
http://www.le.state.ut.us/interim/2009/pdf/00001115.pdf

Link to the Retirement and Independent Entities Committee Website
http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2009&Com=INTRIE

August Interim Report

2009-08-21T13:45:00.000-07:00

Tuesday, August 18, 2009
Legislative Audit Subcommittee
Listen to Audio

UPEA monitored discussions during the Legislative Audit Subcommittee to prepare for the 2010 Legislative Session. This subcommittee reviews audits requested by legislators to help them make policy decisions. The media widely reported that audits revealed a major liability in the Medicaid Bureau of Program Integrity. However, the subcommittee also reviewed audits dealing with the courts, the Department of Technology Services, and DSPD. Overall, the audits revealed concerns with upper management and organizational communication.

However, the DSPD audit, A Review of Allegations Made Concerning The Division of Services for People with Disabilities, could not substantiate allegations submitted anonymously. Specifically, the letter alleges that the division’s forecasting process is inaccurate and that the current situation for privatizing Support Coordinators was not vetted properly.

The Legislative Auditor General suggested that further review of the allegations was unnecessary because the forecasting model the division used did not play a role in the legislators’ decision to cut the division’s budget. Furthermore, the auditors suggested that the division’s strategy for privatizing support coordinators was judicious in light of further budget cuts.

The letter also alleged conflicts of interest within the division. The auditors reviews all allegations and found that the Department of Human Services had examined each claim and determined how each claim could be managed. Given the department’s awareness and action, the auditors saw no reason to pursue the matter further.

Wednesday, August 19th, 2009

The Government Operations and Political Subdivisions Interim Committee met to discuss the newly restructured Privatization Policy Board. The board is made up of legislators, private employers, appointees from the Governor, and UPEA. The intent of the board is to make an inventory of state services and determine if those services compete with the private sector. Recommendations from the board will be sent to the governor.

Senator Goodfellow, who chairs the policy board, said the board will send a survey to state agencies with questions about services that could be privatized. Goodfellow said the board is not yet complete as they are waiting for the governor to appoint two more people.

Representative Craig Frank, R-Cedar Hills, who sponsored legislation to reorganize the Privatization Policy Board, stated that privatization is critical and wants to know the role government has in the private sector. Frank also wants to see the board move quickly and that he is anxious to see the proposals that will be sent to the Governor.

UPEA is tracking this issue very closely and will be attending all Privatization Policy Board meetings. Privatization is a big issue and we want all public employees to be informed about what is happening. We will continually post updates on http://www.utahpublicemployeesassociation.blogspot.com/ if new information becomes available.

Retirement Taskforce

2009-08-19T11:38:00.000-07:00

UPEA would like to take this opportunity to bring you up-to-date on the Association’s efforts concerning the critical issues of retirement and health care. Over the past four months, a taskforce of UPEA members appointed by the UPEA State Board of Directors, have been meeting to interview legislative leaders, state retirement officials, health insurance experts, and others in order to prepare for the upcoming Legislative Session. The time has been well spent.

As you know, the state retirement fund has experienced significant losses due to the recession. For the system to remain solvent it must be at least 80% funded. Currently the retirement system is about 87% funded.

In order to address the losses, some organizations, like the League of Cities and Towns have proposed a myriad of solutions such as suspending the 401(k) contribution, extending the vesting period, and transitioning the public safety / firefighter years of service from 20 years to 25 years. We believe that such proposals are premature.

UPEA will join the Utah Education Association (UEA) and the Utah School Employees’ Association (USEA) in issuing a joint statement which opposes any long term changes to the retirement system based on a temporary drop in the investment fund.

The UPEA taskforce is also closely monitoring health care reform on the state and national level and will be producing a series of position papers.

UPEA is adamant about preserving your retirement benefits. The Utah Retirement building is named after UPEA’s founder and first President Leonard W. McDonald, the architect of the Utah State Retirement System. We the leadership of UPEA intends to uphold this legacy.

Pension System Options

2009-07-10T14:12:00.000-07:00

The national financial crisis has caused pension systems and 401(k)s to lose money. The Utah Retirement System (URS) lost about $4 Billion last year. During the upcoming 2010 Legislative Session, URS may ask the legislature to increase Utah public employee contribution rates by 3 to 4 percent ($80-$100 million). However, lawmakers will decide between various options that affect public employee retirement benefits.

UPEA has been monitoring potential changes to the retirement system. URS presented several options for consideration during a February 5, 2009 Legislative Independent Entities Appropriations Subcommittee Meeting (click here to hear audio).

URS’s legal council, Dan Anderson said, “URS isn't making any recommendations regarding changes, they are only bringing forth information as a place to begin discussions for making adjustments to the system, if desired by the committee.”

Some of the adjustments that could be considered are listed and explained below. Please keep in mind that none of these proposals are final. However, as public employees, we need to be educated on each of the alternatives so we can make a difference in the process.

Suspend/Lower Post Retired (“Double Dippers”) contribution to 401(k).
o Utah currently has a very generous post-retirement (“double dipping”) benefit policy. There is political momentum to change the benefit for the employees that “double dip” to save money. The concern is whether or not any changes can be legally made to the current employees using the post-retirement benefits.

Extend final Average Salary Period (for example from 3 years to 5 years).
o This proposal would allow the salary averages of the highest 5 years to be used in calculating your retirement benefit.

Make COLAs Discretionary/ Delay COLA.
o COLA’s on retirement disbursements could potentially be deferred until a specific anniversary date of retirement (for example 3 years after retiring) or until a retiree reaches a certain age (for example 65).

Increase the vesting period.
o Vesting periods for new employees could potentially increase (from 4 years to 6 years).

Put a minimum age condition on the 30 year benefit.
o One of the suggestions is to change the minimum age that an employee can retire without a penalty (55, 57, 60,etc…). The question is how would this apply to current employees? Would they be grandfathered?

Partial benefit payments until a certain age.
o This proposal would allow for an employee to receive partial retirement benefits until they reach a certain age (phased retirement).

Reduce the multiplier.
o Reducing the retirement multiplier (number of years x 2% x 3 highest average salaries) from 2% to 1.9%. The question is whether current employees would be grandfathered?

Increase 20 year public safety and firefighter requirement to 25 years.
o Would current employees be grandfathered?

Put a minimum age condition on the 20 year public safety and firefighter benefit (48, 50, 52, etc…).
o One of the suggestions is to change the minimum age that an employee can retire without penalty (48, 50, 52,etc…). Would current employees be grandfathered?

Change to the contributory system. Employees are currently on the non-contributory system.
o Such a move would allow employees to participate in funding their retirement benefit. Such a move would shift some of the risk to the individual.

Create a hybrid contributory/non-contributory system.
o This would allow the system to potentially have the employee participate in funding their retirement benefit, while still having part of their benefit be made up of the non-contributory system. (for example, employees might contribute 1% - 3% of their own salary to the pension).

Make the retirement benefit optional – employees can choose how they would like to participate at the time of hire.

Turn the defined benefit system (pension) into a defined contribution (401 (k)) system.

Basing your retirement eligibility by age + years of service.
o This proposal would say that you would need to follow the rule of 85 (or 90, 95, etc…). This would mean that you would need to have 30 years of service if you were to retire at the age of 55 (age + years of service = 85).

UPEA has been very busy this summer working on the retirement issues. The UPEA State Board recently created a taskforce that is discussing potential legislative action that may affect employee pensions and 401(k)s.

In addition, UPEA is spearheading a political training program this summer. This program will help public employees understand the political process, and empower public employees to institute positive change. The training will be conducted in a 3-part series that includes “Politics 101”, “Grassroots: How You Can Make A Difference”, and “How to Become A Delegate”. We will begin scheduling classes throughout the agencies this summer. If you would like to have UPEA come to a staff meeting, or come present at your worksite, please call 1-800-224-8732.

June Interim Committees Examine Public Employee Affairs

2009-06-17T18:28:00.000-07:00

UPEA field staff member Christy Cushing attended the Government Operations and Political Subdivisions Interim Committee Meeting on Wednesday June 17, 2009. The following is an update of the discussion:

State Employee Compensation – Briefing

Policy Analyst Benjamin Christensen reviewed slides describing the three parts within state employee compensation, which include employees, salary and compensation spending. Most notable, Christensen said that over the past ten years, the number of state employees has decreased from .896% to .764% in 2009. Currently the average state employee makes $44,903 and the average costs of benefits (i.e. health insurance and leave) are $23,908.

Over the last ten years, state employee compensation has barely risen above inflation; whereas, county employees’ compensation has risen 15-24% above inflation. Jeff Herring and Debbie Cragun from DHRM discussed some of the issues with state employee compensation.

Herring noted that “employees are typically viewed as a cost,” and asked “how do we maximize a return on our investment.” Herring continued to explain the need to balance compensation and benefits to employees. State employees’ compensation is benefit driven, not pay, and in order to compete and draw applicants, we need to design a compensation package that will attract and retain employees.

Cragun noted that DHRM is mandated by statute to complete an annual survey and compile data, researching state employee compensation and benefits packages. To complete this annual research, DHRM uses both local and regional comparative data. The 2008 salary survey showed that “state employees’ salary ranges are -9.9% below market” and “actual average salaries are 13.9% below market.” Below-market compensation perpetuates the issues of compression.

Cragun said, “compression occurs when you have a large percentage of your workforce at the lower end of the salary range.” She added, “Employees are not moved through salary ranges as intended. In the private sector, within three to five years of employment, employees should be at midpoint in pay; yet 72% of the State’s workforce are below midpoint” with an average of 10.6 years of service.”

Utah’s highly educated, highly skilled, and highly certified workforce continue to be significantly underpaid and undervalued.

Cragun asked, “With the worker shortage looming on the horizon and non-competitive wages, who will fill these jobs?”

Herring said, “In this economy, there is not an issue of high turnover, however when the economy turns around, our older workforce will retire and it will be more challenging to recruit and retain state employees, resulting in a substandard workforce, solutions should include balancing compensation for the workforce as a whole…we must be concerned with both salary ranges and actual pay.”

Co-Chair Rep. Frank noted that the Committee would carefully look at the data, as the legislature values its employees and knows they could be working elsewhere.

Four-day Work Week for State Employees Program – Update

Jeff Herring, Executive Director of DHRM gave an overview for a survey about the 4/10 work week. Herring explained that “government is in existence to serve the taxpayer” and there are certain “factors that will be involved as to whether or not [the 4-10 Initiative] will be continued and/or modified.”

The employee surveys from July 2008, November 2008, and May 2009 show that the majority of state employees preferred the 4/10 work week. In addition, since the 4-10 work weeks’ inception, overall leave usage decreased 5.3%, overtime pay decreased 18.2%, and comp time decreased 19.7%. The overall estimated approximate cost savings averages out to $1,108,598.

Nevertheless, Herring said that there needs to be more “focus on customer service and partners (League of Counties and Towns, and individual Counties) and get data from them to see about keeping or modifying” the four day work week.

Consolidation of State Agency Functions

Rep. Wayne Harper discussed the ways to consolidate the Department of Health, Human Services, Environmental Quality, and Workforce Services into either three or one agency(s). Rep. Harper said that there are duplicate services being offered at these four state agencies.

Rep. Harper presented the example of an average citizen trying to claim and acquire unemployment benefits and how he/she must go from agency to agency to acquire those benefits.

Rep. Bigelow, who is a member of the Govt. Ops Committee asked Rep. Harper how he proposed addressing the extensive effort required to research consolidating theses four large state agencies, which, he said, “demands attention from the Executive Branch.”

Rep. Harper said he hoped to get some small working groups together from the Executive Directors of DOH, DHS, DWS, and DEQ with the Governor’s Office and legislative staff to discuss consolidation in detail.

Co-Chair Rep. Hunsaker asked Rep. Harper if he proposed “to identify specific or general savings” with consolidating the four agencies. Rep. Harper said the intent is to realize specific savings based on the elimination of appointed positions.

In addition, Rep. Harper said that the Committee Members should look into consolidating the administrative services within the Department of Community and Culture. He believes this task would be easier than consolidating DOH, DHS, DWS, and DEQ.

Rep. Janice Fisher, a member of the Govt Ops. Committee noted that she does not believe that “bigger is better by combining” and that the idea of consolidating agencies makes her nervous, especially if the sole purpose is for efficiency. Rep. Fisher continued to say that she would “hate to combine departments and lose skilled people. We should look at the efficiencies, but need to be very, very careful.”

UPEA will continue to monitor Rep. Harper’s proposal to consolidate the DOH, DHS, DWS, and DEQ.

Workforce Services and Community and Economic Development Interim Committee

UPEA staff member Todd Losser attended the Workforce Services and Community and Economic Development Interim Committee today at 2:00 p.m. A presentation by Executive Director Kristen Cox, Jon Pierpont, and Steve Cuthbert was given to the Committee for an update on the new Eligibility Services Division and eREP computer system update.
The goals of the division are to have a centralized division, standardized workload, reduced cost, and to meet customer needs. The division was created through a new design and business model and will be operating June 22nd. Employees will have timely feedback on their performance and will be monitored more closely. Skills testing will take place every year to ensure employees are meeting the required skills to do their job. UPEA will continue to monitor the new Eligibility Division.

UPEA's Involvement with DSPD

2009-06-15T15:41:00.000-07:00

UPEA has had numerous conversations with DSPD employees who are members, legislators and DSPD administrators. Those who are receiving UPEA communiqués should know that UPEA has been involved since March 26th when DSPD Executive Director, Alan Ormsby, met with supervisors to address budget cuts. A day after that meeting, Ormsby issued a memo that detailed options for fixing the DSPD budget while maintaining services to DSPD clients. One of the key issues to emerge from that memo was a so-called last minute budget cut:

“Then the last day they decided to replace 2.5 million dollars in funding for the State Hospital. And the way they did that is they took that money out of the rest of the Department. So the Department got cuts--the Executive Director’s office got cut $650,000; ORS got cut about a million; Aging Services got cut about $265,000, and DSPD got cut $607,000. Legislators may not have recognized exactly what that meant. The way they made us take the cuts were pretty drastic. They took $106,000 out of administration (State Office), and then they took $501,000 out of support coordination, and they targeted it that way, and that is probably the hardest thing. If we could have balanced the $607,000 cut across USDC and across services, we could have handled that fairly easily. Cut was pointed. Some speculate it may have been a slap to Lisa Michelle Church, and others have speculated it may have been due to simple ideology. Rep. Dougal has always been for smaller government & may have thought he needed to do more to shrink Human Services.” (Excerpt from DSPD March 26th Memo).

Subsequently, UPEA began contacting allies in the Health and Human Services Joint Appropriations subcommittee. This committee is responsible for HHS budgets. We did not contact Rep. Christine Johnson because she does not belong to this subcommittee. We contacted Rep. Paul Ray, who said the committee would examine the issue. On Wednesday, May 20th, UPEA issued an email stating that funding had been restored, thanks to legislative allies. However, Ormsby contacted UPEA the next day stating that the funding restoration was to fix a math error. DSPD employees were in the same predicament of losing their jobs.

UPEA has played a direct role in representing DSPD employees to the legislature, news media and policy-makers. Members and non-members alike may meet with UPEA any time to discuss our measures and future options. If employees would like to meet with a UPEA representative, please call me directly to schedule a time: 801-264-8732 ext. 209.

Also, UPEA will be monitoring, among other issues, item 3 on the HHS interim meeting agenda for Wednesday, June 17th. Lisa Michelle Church is requesting policy guidance in light of budget reductions for DSPD. Here is the agenda: http://www.le.state.ut.us/asp/interim/Commit.asp?Year=2009&Com=INTHHS
I’ll issue a report to all members when I know more.

Thanks!

ORS Admin. Says Agency is Hopeful for 2010

2009-05-21T07:22:00.000-07:00

Despite recent cuts during the 2009 1st Special Session of the State Legislature, the Office of Recovery Services is hopeful that they can manage cuts without significant layoffs. ORS administration said that the legislature has increased the amount of money it is willing to draw from federal stimulus money without using General Fund money. However, the agency will still implement changes to accomodate mounting budget cuts.

DSPD Funding Restored, ORS Stunted by Cuts

2009-05-20T15:17:00.000-07:00

The UPEA staff have been monitoring today's Interim and 1st Special Session of the 2009 Legislature. Prior to today, UPEA met with policymakers to discuss the loss of funding in DSPD that resulted in a loss of Federal Match funds. UPEA is happy to report that the funding cut during the session has been restored by House Bill 1003. UPEA would like to thank Rep. Paul Ray, the Governor's Office, and other members of the committee who helped with this issue.

UPEA is concerned that the Office of Recovery Services will lose a significant portion of their funding with Senate Bill 1004 (see lines 214-219). UPEA has been putting in calls with legislators and ORS. We will update members when we know more.

Question of Privatization

2009-04-01T07:02:00.000-07:00

In the last hours of the 2009 Legislative session, the legislature passed an amendment to reduce DSPD’s budget by $600,000. Last week, DSPD supervisors and directors met to discuss their options. Many employees were aware of the deliberations. Subsequently, the supervisors decided to release minutes from the meeting outlining options that included converting line staff at DSPD to private coordinators.

Members immediately notified UPEA about the issue and media called to find out what was going on. As of now, the privatization issue is a proposal in its early stages. UPEA does not believe DSPD can be privatized without legislative action. However, UPEA is scheduling meetings with DHS and the governor’s office to assess the situation. Here is what we know, directly from Lisa-Michelle Church’s office:

During the past few years, an increasing number of Disabilities caseworkers (support coordinators) have opted to leave the agency and work as private caseworker providers. Medicaid regulations and Division of Services for People with Disabilities’ rule authorize this option. Since September 2008, 25 Division employed support coordinators quit to become private support coordinators. The Division is in the process of determining whether accelerating the trend toward private support coordination makes sense in light of the budget cuts.
No decisions have been made in terms of level or a time line for privatizing the support coordination services. The Division’s focus is on preservation of services within the fiscal constraints and mainlining quality of service.
The Division is looking at the possibility of privatizing support coordination services due to a 2.8 million dollar general fund budget. Medicaid requirements allow any willing provider to participate. The state would be following national trends toward privatizing these services.
In the planning process, the Division will be engaging various stakeholders. We recognize employees are anxious as we move forward with the discussions but this should not be interpreted as privatization so much as balancing the “any willing provider” portion of Medicaid against fiscal limits presented by budget cuts.

UPEA opposes privatization because it would reduce or eliminate employee benefits and decrease services to the public it serves. We will update employees as we find out more.

Last days on the hill

2009-03-11T16:57:00.000-07:00

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.

Surprise! HB 451 & Updates

2009-03-10T13:42:00.000-07:00

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.

Legislative Update

2009-03-05T14:47:00.000-08:00

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.

Letter to your legislator

2009-03-04T14:48:00.000-08:00

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

S.B. 195 Update

2009-03-04T07:13:00.000-08:00

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

2009-03-04T07:09:00.000-08:00

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

2009-03-04T06:04:00.000-08:00

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.

Senate Bill 195

2009-03-02T09:37:00.000-08:00

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:

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

2009-03-02T09:32:00.000-08:00

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

2009-03-02T09:30:00.000-08:00

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.

Senate Bill 195

2009-02-27T12:54:00.000-08:00

The Senate Retirement and Independent Entities Committee presented Senate Bill 195 today. This bill eliminates the 1.5% employer contribution to public employees' 401(k) for one year. Employees who were incentivized to leave the contributory system for the non-contributory system are excepted from the cut.

The bill's sponsor, Senator Dan Liljenquist, R-Davis, offered the bill for public comment, as required, but he then suspended committee debate by motioning to adjourn. The bill was not voted out of committee; however, it may be brought to the Senate floor by a majority vote. Liljenquist has made SB 195 an option for solving the state's budget problems.

Senate Bill 145

2009-02-23T07:18:00.000-08:00

Sen. Greiner’s “Public Safety Retirees’ Death Benefit Revisions” passed the Senate last week, and passed the House today. This bill allows a public safety retiree to choose a death benefit of 75% instead of 65% of the retiree's allowance to be paid to the surviving spouse in exchange for an actuarial reduced retirement allowance. UPEA feels that this is just the beginning of creating parity for public safety retirees. This bill will now be sent to the Governor for his signature.

1st Substitute Senate Bill 126

2009-02-23T07:17:00.001-08:00

As noted a few days ago, UPEA was able to work with Sen. Liljenquist to come up with a compromise solution and a substitute bill. Yesterday, it passed the full house and will be sent to the Governor for his signature.

Divestment of Retirement Retired for a Year

2009-02-20T14:28:00.000-08:00

House Bill 211, sponsored by Representative Julie Fisher, R-Davis, sought to divest retirement fund investments that do business in Iran. Fisher ran a similar bill last year, HB 39, but it was tabled by a senate committee.

House Bill 211 came up today on the House Retirement and Independent Entities Committee's agenda. While the social cause is admirable, UPEA was prepared to oppose the bill on the grounds that it would increase portfolio volatility, increase administrative costs, conflict with URS's fiduciary responsibility and have potentially unintended consequences.

Fisher substituted the bill with language that creates a year-long study of the issue. The committee passed 1st Substitute HB 211 , even though it had a $10,000 fiscal note. Fisher will work with URS to decrease the fiscal note and make the bill debateable on the House floor. UPEA will track the issue next year to ensure that it does not put employees' retirement funds at any additional risk.

Advisory Council and Board of Directors

2009-02-09T12:56:00.000-08:00

The Utah Public Employees’ Association State Board of Directors and Advisory Council met on Saturday, February 7, 2009, to discuss the state’s ongoing budget crisis. Board members discussed how important it is for public employees to be proactive in helping the state resolve the crisis while preserving and limiting the impact on jobs. Pending the outcome of final state revenue numbers State Board and Advisory Council members believe their input and suggestions could assist in reducing the number of RIF’s in state government. The State Board and Advisory Council discussed certain options such as furloughs and benefit considerations. As stated – saving jobs is the ultimate goal!

SB 126 Update

2009-02-09T11:40:00.000-08:00

Senate Bill 126 first substitute sponsored by Senator Dan Liljenquist, was heard in the Senate Government Operations Committee today. UPEA opposed the original draft of the bill and met with Senator Liljenquist to discuss our concerns. The meeting resulted in changes to the proposed language with UPEA supporting the substituted bill.

The substituted bill contains the following:

-Allows an individual who has been RIF’d to be given preferential consideration when applying for a new position with the state.
-Preferential consideration is the equivalent of Veteran’s points.
-Preferential consideration is maintained as long as an individual has not accepted a career service position with the state.

Historically, preferential consideration stayed in affect for only one year.

SB 126

2009-02-05T13:14:00.000-08:00

UPEA is tracking SB 126. UPEA had met with the Senate Government Operations Committee. The sponsor of the bill delayed the bill and will speak to it on Monday. The Salt Lake Tribune wrote an article on SB 126, click here to read.

Health Systems Reform

2009-02-05T13:03:00.000-08:00

On Tuesday UPEA met with Cathy Dupont, the General Council for the Health Systems Reform Task Force, who is currently drafting the bills relating to heath care reform. Dupont noted that the Health Systems Reform Insurance Market bill (not yet numbered) currently creates health care reform specifically for the small employer. The bill would give the ability for the large employer to participate in 2012. Dupont explained, the bill would allow small employers to offer group plans through a HSA or 125 cafeteria plan. Then employees would use an internet portal similar to Einsurance or Travelocity to shop for health insurance. This would continue to be a group plan with group rating, not individual plans. UPEA will continue to track this bill because it could potentially affect the public employee health plan; as this bill lays the groundwork for statewide health care reform.

Health and Human Services

2009-01-29T16:51:00.000-08:00

The Health and Human Services Appropriations Subcommittee met Wednesday January 21st to discuss 7.5-15% budget cuts for FY2009 and FY2010 for both the Department of Health and the Department of Human Services. After much disagreement, the committee made a motion to accept the revised proposal from the Legislative Fiscal Analysts Office. The motion failed in the House and passed in the Senate.
First the committee listened to public comment then each agency spoke on the updated proposed budget cuts from the Legislative Fiscal Analyst Office. Dr. David Sundwall, Executive Director of the Department of Health expressed concern for the proposal to dissolve the Utah Health Department into other state agencies. Sundwall noted how during the Special Session he felt more included in the discussion, however now he feels like the cuts of 68% to the DOH are disproportionate. Rep. David Litvack had many issues with the “assumptions” that money could be saved by consolidating agencies to fill the void of the Department of Health. In addition, if the Utah Health Department is dissolved, Utah would be the only state in the country without a health department.
Similarly, Lisa-Michele Church, Executive Director of the Department of Human Services noted to the committee that a 7.5-15% budget cut, would result in large “paradigm shifts” regarding no longer receiving federal matching dollars and in how to run these programs with less employees.
Lastly, according the committees’ motion to accept the Legislative Fiscal Analysts’ proposed budget based cuts, funding for the Health Care Reform internet portal episodes of care analysis will be reduced in FY2009 and eliminated in FY2010. This could be detrimental to health care reform and individual’s ability to compare and shop for health insurance online.

Senate Bill 126

2009-01-29T08:05:00.000-08:00

Senator Daniel Liljenquist is running Senate Bill 126 - “State Personnel Management Act Amendments” that would change the current reduction in force (RIF) statute to state “The department head of a reappointing department may disapprove the reappointment of a career service employee from the reappointment roster.” UPEA is strongly opposed to this bill. When an agency performs a RIF, it is does so because of budget constraints, change in workload, or lack of work. By statute they cannot RIF an employee due to differences in character or performance issues that would require dismissal for just cause. What purpose does it serve to deny a proven and qualified former employee a reappointment, for which the former employee is qualified? The potential of this change in statute could result in favoritism and/or discrimination. UPEA supports the current reappointment process because it allows for fair and unbiased decision making.

Issues

2009-01-27T17:28:00.000-08:00

As the legislative session begins, The Utah Public Employees’ Association is busy protecting state jobs and benefits. This upcoming year looks to be challenging for public employees as economic woes have beset the state of Utah. The following issues are going to be of significant interest to UPEA due to the large impact that each could have on employee jobs, benefits, compensation, and rights. It is anticipated that the listed items will be discussed at some point during the legislative session.

The State Budget

There is discussion of laying off state employees and cutting employee benefits and salaries to help balance the budget this year. UPEA is currently supportive of the Governor’s budget proposal, which would cover the health insurance increase this year, limit the amount of cuts to state agencies, and protect benefits, compensation, and jobs. In a letter to Governor Huntsman signed by UPEA’s officers acknowledged the state’s current economic condition and the need to enact substantial budgetary reductions. The letter further stated that:

“Recent legislative announcements will require additional state personnel cuts. A reduction-in-force would further deepen the state’s economic crisis by adding to the unemployment rate and further reducing state revenues. The association believes it is in the best interest of taxpayers to consider alternatives. The UPEA State Board offered suggestions such as: eliminate positions through attrition; capture and redirect savings from reduced fuel costs; extend the life of fleet vehicles; review and reduce consulting contracts; enact a hard hiring freeze; suspend capital projects; draw from the “Rainy Day Fund”; and offer and early retirement incentive.”

Health System Reform

This year many legislators are trying to make changes to the health system, specifically regarding health insurance. The impetus for this is to create more accessibility and make health care more affordable for the citizens of Utah. There are currently over 300,000 individuals in the state of Utah without health insurance. Several legislators are looking at different possibilities to improve the current health care system; including changing the way health insurance is purchased and managed. This is something that UPEA will be watching very closely, due to the possible impact such changes could have on public employees’ health care and PEHP.

Changes to the Personnel Management Act

Due to the necessary recodification of the Personnel Management Act, UPEA will be watching for potential changes to the Utah Code affecting state employees. UPEA is anticipating potential changes to the pay scale system, market comparability studies, random drug testing, and the grievance process. UPEA will be closely monitoring any potential changes and making sure that employees are treated fairly.

Retirement

Until recently, law enforcement in Utah has received up to a 2.5% retirement COLA. Last year, the COLA was changed to 4% for state public safety employees. Local governments would need to opt into the 4% retirement COLA by the end of 2009. UPEA is supportive of HB 212 sponsored by Representative Carl Wimmer that would allow local governments the opportunity to opt into the 4% retirement COLA until December 1, 2012.

Another law enforcement issue is to change the spousal death benefit from 65% to 75%. Senator Jon Greiner will be running Senate Bill 89 to change the retirement benefit upon the death of an officer. UPEA is supportive of such a plan.

UPEA believes a bill may surface that would change the state employee defined benefit pension plan to a defined contribution 401(k) plan. A defined benefit plan requires the employee to contribute money into a retirement plan such as a 401(k) or a 457 account. A defined benefit plan is a pension program that is paid for and maintained by the state, and offered to employees who retire from the state. UPEA is supportive of studying the issue further, before any policy is created to change the retirement system.

Study these issues on our web page. State employees should make an effort to contact their legislators regarding these issues. UPEA will continue to provide updates regarding the issues, bills, and budget as we receive them.

If you have any questions, please visit our web site at www.upea.net or contact your UPEA representative at (801) 264-8732.

Monday's Legislative Committee Meetings

2009-01-13T10:41:00.000-08:00

All UPEA Employee Representatives attended legislative joint appropriations subcommittees on Monday. The Legislative Fiscal Analysts presented recommendations for cutting the state budget by 15%. Agency directors testified to the impacts of these cuts and legislators asked questions to clarify certain points. Overall, Monday’s session was informative. The committees will meet again on Wednesday, January 21st, beginning at 9:00 a.m. to debate and vote on recommendations to include in an appropriations bill.

UPEA is gathering information from ALL PUBLIC EMPLOYEES to share with legislators about how the cuts will affect them and to suggest alternatives to losing FTEs. Please take the survey and encourage all public employees to take the survey. Visit www.upea.net to enter the survey.

UPEA’s President, Mark Murray, along with Todd Sutton and Audry Wood, met with Governor Jon Huntsman Jr. on Monday to show support for the governor’s budget proposal. The governor’s proposed 7% in state budget cuts underscores the necessity for reductions while serving the best interests of employees and the public they serve. The governor also supports funding a 10% health insurance increase and maintaining current wages.