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.
Thursday, January 28, 2010
Tuesday, January 26, 2010
Very Important Links
Here are links to the retirement bills and links to the committees that should be hearing the bills:
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
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
Saturday, January 16, 2010
Executive Appropriations Subcommittee Reports
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.
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.
Thursday, January 7, 2010
Retirement Update
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.
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.
Monday, December 14, 2009
Gov's Budget Recommendation Notes
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
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.
Thursday, November 12, 2009
UPEA Statement to Retirement and Independent Entities Committee
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.
Comment on this: Click Here
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.
Comment on this: Click Here
Tuesday, September 15, 2009
Perspective on Retirement and Independent Entities Committee
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
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
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