The legislature has done little since being called into a special session by Governor Locke. Putting together a transportation package continued to be the major stumbling block followed closely by funding for education and redoing the primary election rules. The rifts this session have been magnified by the public's apparent willingness to pass initiatives that cost millions but offer no new revenues.
Initiative 695 ($30 car tabs) passed in 1999 and was followed by two education spending initiatives in 2000 (I–728 and I-732). In an attempt to fund these measures the Governor’s budget "de-linked" school district employees and state employees pay packages. As far back as anyone can remember, pay raises have always been given equally, across-the-board regardless of which state agency you worked for. Additionally, the budgets only funded those school district employees who were traditionally funded and excluded "extra" employees that were funded by local levies.
The result – the State employees were angered enough to begin rolling strikes and the Teachers followed suit. Bottom line – no one’s happy and they’re still a long ways from passing a budget. The first extra session is scheduled to end this month.
This background is provided to offer a backdrop on our bills of interest. This is a budget year and getting lawmakers interest on anything else is difficult. The gridlock in the House rivals I-5 at rush hour. Although our bills such as SB 5873 (increasing bid limits) and SB 5777 (retiree health care) received hearings they were pushed off the table by budget related issues. Other bills such as HB 2185 (retirement governance) and HB 1714 (LEOFF coverage for correctional officers) never even received a hearing.
PERS Plan III option set to begin in September 2002
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Although it’s a long way off, we need to start educating ourselves about the Plan III option available to all PERS II members beginning September 1, 2002. This optional plan was passed last session. As you may remember, we previously opposed this plan because it originally was non-voluntary but we were successful in making it optional.
Plan III splits the current Plan II in half by guaranteeing only half of your benefit. The other half would be your money that is put into the stock market and subject to the market’s loss or gain. Generally speaking, longer term or career employees are better off under the current Plan II. Short-term employees may benefit from Plan III because it is more portable. This is your decision and there are pros and cons under each plan.
Beware of the transfer payment
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The proponents of Plan III will make much ado about the transfer payment given to those Plan II employees who choose to switch to Plan III. Please be aware that this is simply your money they are giving back to you. In order to switch to Plan III you are required to cut your guaranteed benefit in half. Currently Plan II members receive 2% of their salary times (Xs) years of service. Plan III cuts that in half to 1%.
We are working with the Department of Retirement Systems in preparing educational material and hope that they will give a more balanced view of the new plan than they have previously.
No on I-747 campaign officially kicked off
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Our efforts to defeat the latest tax tantrum by professional initiative guru Tim Eyman were officially launched at a press conference on May 14th. The Council 2-sponsored event featured several prominent local government officials as well as rank and file workers whose jobs would be jeopardized by this measure. Two of our very own executive board members spoke out against the cuts in services that would follow if I-747 is enacted.
Patti Cox (Pierce County Librarian) and Roger Moller (Snohomish County Road Crew) joined Snohomish County Executive Bob Drewel, Seattle Mayor Paul Schell, Pierce County Councilman Wendell Brown, Spokane Mayor John Powers and other elected officials and public employees in “putting a face” on the people who would be harmed under I-747.
The best way to beat this is at the signature gathering stage. Please let us know if you see those paid signature hunters in your area and let them know in no uncertain terms what their job will do to your job! Every signature we stop is one more Eyman has to pay for.
The rates we pay for our pension plans are set by making economic assumptions about the rate of return expected from the stock market and the expected benefit paid out to retirees. Simply put, the Department of Retirement System (DRS) takes in both the employee and employer contributions and sends it over to the State Investment Board (SIB). The SIB invests this money in a wide variety of stocks and DRS withdraws the necessary funds to pay retirees their monthly benefit. The excess is held in reserve. The folks who make the economic assumptions are the members of Pension Funding Council (PFC). This Council is made up of legislators and someone from the Governor’s office.
The current assumption is for a 7.5% return in investments. This is considered to be conservative and there is a move afoot to increase it to 8%. This should have the affect of lowering rates for PERS II. If the rates are lowered, we’re encouraging everyone to invest this money into a deferred comp program.
