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WSSRA End of 2019 Legislative Session Report
The 2019 Legislative Session was a mixed one for school retirees. Some important victories were achieved, but there were disappointments as well. The Medicare Eligible Healthcare Benefit was restored to its pre-recession peak of $183 per month. Additionally, Plan 2 and Plan 3 retirees who retire before the age of 65 have the ability to work part time in schools without jeopardizing their pension check. WSSRA also joined in an effort with AARP Washington and King County Assessor John Wilson to help freeze your property taxes. But frustration was a common theme throughout the session too. For retirees, the major irritation came from the exclusion of the Select Committee on Pension Policy approved Plan 1 COLA from the final budget proposal.
Legislators finished this session in the nick of time with several last-minute deals. The State constitution required legislators to finish the Regular Session at 11:59 p.m. on Sunday, April 28th. They finished at 11:58 p.m. For the state budget written by Senator Rolfes and Representative Ormsby to work, both chambers had to agree on roughly $1 billion in new taxes. Those votes happened late at night on the final weekend. In the end, legislators brought in new revenue from multiple sources. Roughly $350 million in new B&O taxes on services and technology companies, $250 million from larger real estate fees on million-dollar homes, and $130 million in new levies on financial institutions.
The bulk of the new spending went to state employee contracts, improved healthcare benefits for K-12 classified employees, and mental health spending. The Governor’s office negotiated new collective bargaining agreements for state employees which required over $500 million in new revenue to complete. The legislature also agreed to pay full time health benefits to part time school employees, costing another $500 million. Multi-million-dollar investments were also made in Western and Eastern State Hospitals, and funding was provided for a new network of community based behavioral health clinics. As important as those payments are, they crowded out funding for other vital issues.
WSSRA’s biggest disappointment was the exclusion of the Plan 1 COLA. The House budget proposal included both the COLA and the medical restoration. The Senate included neither. House members are keen on blaming the Senate. Senate members say there was not enough revenue to cover a COLA. The cost for the COLA was $38 million in a $52 billion-dollar budget that included billions in new tax revenue. The financial argument does not hold water. Please continue to press your legislators about this over the interim.
The Medicare Eligible Healthcare benefit was lowered from $183 per month to $150 per month in 2011. WSSRA is happy to report the restoration of this benefit. It will help to keep insurance prices flat next year. The restoration provides another $12 million in funding to keep insurance costs down for retirees on PEBB Medicare supplemental plans.
Import improvements for Plan 2 & 3 retirees were also passed this year. In 2008 the state lowered the retirement age for Plan 2 & 3; however, that change came with one important caveat. Individuals who accepted the improved retirement benefits were banned from working in any state or local (DRS covered) employer until the age of 65. The legislation will allow those retirees to work part time in TRS / SERS covered school positions. It only excludes administrative positions.
Current law forces a strange predicament on some new school employees. New recruits are given 90 days to pick a pension plan. If they do not choose, they are defaulted into the hybrid Plan 3 at a 5% contribution rate for the duration of their employment in that district. WSSRA believes those rules are silly and was proud to co-sponsor SB 5360 with the Federation of State Employees to change the default plan to Plan 2, the traditional pension plan. That drama is now over and starting in the year 2020, new employees who default will default into Plan 2.
There is excellent news to report in the world of senior citizen tax relief. The passage of SB 5160 will increase income thresholds for property tax freezes and exemptions. We believe that a large number of school retirees will now qualify for a freeze on future property tax increases. The exemption will be based on income and county of residence. It will be an important project for the WSSRA state office and local units to help retirees apply for their new property tax assistance.
Two WSSRA bills got zero traction this past legislative session. We pursued legislation to make VEBA, a medical savings program, better. This bill had some unexpected costs to school districts and we will rework the legislation to make it budget neutral. The other would lower the full retirement age in Plans 2 & 3. This expensive proposal will take multiple sessions to pass. We have a bill in the system, and are now pursuing a fiscal note so we can understand the full measure of the cost to the state. The WSSRA lobbying team will continue to pursue both bills in the next legislative session.
The mission for the next few months in clear. There must be continued advocacy on the Plan 1 COLA for the 2020 legislative session. The current COLA bills in the system are still alive for next year. The other imperative is to help retirees sign up for their property tax freeze. That benefit will only be offered to qualified applicants. It is on us to help WSSRA members know that their property taxes needn’t increase every year. This will take some work, but will be worth the effort.
On behalf of the WSSRA State Legislative Committee,
Larry School, Ester Wilfong, & Peter Diedrick