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*This post has been updated to reflect comments from Senate budget writer Harry Brown indicating that all state employees AND teachers will receive $750 bonuses during the 2015-16 fiscal year.

The News & Observer is reporting that House and Senate leaders have reached an agreement on how much to pay teachers and state employees for this fiscal year, nearly two months after their June 30 deadline for making these decisions.

All state employees, including teachers, will receive $750 bonuses toward the end of 2015, said Sen. Harry Brown (R-Onslow). That amounts to $62.50 per month, before taxes.

Making good on last year’s promise, beginning teachers will also see their base pay rise to $35,000 per year, up from $33,000 that was enacted last year.

Experienced teachers will also receive step increases, presumably as laid out in the state’s streamlined salary schedule, which lawmakers enacted last year—although budget documents detailing the step increases were not made available Wednesday. (See here for the 2014-15 salary schedule.)

It’s unclear whether teachers who are scheduled for step increases as well as beginning teachers will be paid retroactively beginning with the July 1 start of the fiscal year.

A spokeswoman for House Speaker Tim Moore said their priority will be to focus on “shoring up funds so we can give meaningful raises” next year, according to the N&O.

For a teacher with 15 years of experience and a bachelor’s degree, receiving a step increase will mean jumping up from a base salary of $40,000 to $43,500 (excluding local supplements). Step increases for teachers are scheduled every five years, stopping at year 25 and capping base salary at $50,000.

WRAL reports that budget negotiators are still discussing how much of a pay increase to give state retirees. And there’s no resolution yet about teacher assistants—the Senate wants to slash 8,500+ TA jobs in exchange for reducing classroom size, while the House wants to preserve those positions.

House Speaker Tim Moore announced Wednesday that the General Assembly will pass a third continuing resolution tomorrow. The measure, which will keep state government operations running as lawmakers finalize a budget, will run through September 18—although they hope to reach a final agreement sooner, at which time the above mentioned raises & bonuses will be set in law.

News

Retiree-benefotsLegislative staff pitched a policy solution to lawmakers on Monday that could reduce the state’s $25.5 billion unfunded liability associated with the Retiree Health Benefit Fund by 11.8 percent, producing a larger cost savings than the Senate’s proposal to eliminate retiree health benefits for all teachers and state employees hired after January 1, 2016.

The fix? Shift some of the costs associated with providing fully funded retiree health plans to the federal government. Going that route would require all retirees to enroll in Medicare Advantage plans—and by doing so, retirees shouldn’t be expected to bear more out-of-pocket expenses and the state would save $64 million annually, reducing the total unfunded liability by about $3 billion.

The Senate, on the other hand, wants to address the unfunded liability by eliminating retiree health benefits for new hires beginning in 2016. Some say this option will unfairly shift more costs to the worker and could hurt recruitment efforts, while producing an estimated smaller cost savings of 10 percent as opposed to the 11.8 percent that would come with enrolling retirees into Medicare Advantage plans.

For the full story, head on over to our main site. And you can read the legislative report below.

Commentary

The story broken by NC Policy Watch reporter Lindsay Wagner (i.e. one of the reporters unwelcome at Gov. Pat McCrory events) about the Senate’s secretive plan to cut health insurance benefits for future state retirees is the subject of the lead editorial in this morning’s edition of Raleigh’s News & Observer. Here’s the N&O:

“Now, the state Senate is looking, in a rather secretive way through a provision deep in its budget, to end that health care insurance benefit for those hired by the state after Jan. 1, 2016. Current employees wouldn’t be affected. But don’t think of that as some kind of generosity on the part of Republican senators pushing this idea. If benefits of those under the current plan were ended, legal challenges would ensue.

There’s a reason this idea was buried in the Republican Senate budget, and that was to avoid debate that would generate tremendous and doubtless angry response from tens of thousands of current and former state employees. Perhaps that’s why, asked by a reporter about the proposal, Senate budget writer Sen. Harry Brown just walked away. That is a most discouraging action on the part of an elected official, to decline to explain or defend an action….

As House and Senate negotiators hammer out a final budget, we must hope that cooler heads prevail and that lawmakers who have doubts about targeting an important benefit for state workers will speak up and stop this movement. It smacks of political payback by Republicans who haven’t liked the criticism they’ve occasionally gotten from SEANC and some members. The problem with such payback is that taking away this benefit will hurt state government from top to bottom – and will thus hurt the people government is supposed to serve and often serves well.”
As an aside, it would be ironic if the secret provision was somehow the result of the Senate is being mad at the State Employees Association. When SEANC was headed by its corrupt former leadership, it regularly bestowed honors on Senate GOP leaders — including making Phil Berger its “legislator of the year” at one point.
News

The News & Observer reports that when faced with questions about why the Senate included a provision in its budget proposal that would end retirement health care for future teachers and state employees, some Senate leaders wouldn’t talk.

Sen. Tom Apodaca, who chairs the Pensions, Retirement and Aging Committee, said he couldn’t comment on the proposal because it came from the Senate’s top budget writers – not his committee. And Sen. Harry Brown, one of the chamber’s lead budget writers, walked away from a reporter without speaking when asked about the change.

Calls from N.C. Policy Watch to Senators Brown and Jerry Tillman (R-Randolph) also went unanswered as we worked on a story last week highlighting the budget provision, which would eliminate state-paid health retirement benefits for teachers and state employees who are hired after January 1, 2016.

Senator Phil Berger’s office did talk to the N&O, however.

“North Carolina has a massive $26 billion unfunded liability for retiree medical coverage, and the Senate budget is a prudent way to address the long-term viability of the State Health Plan,” said Shelly Carver, a spokeswoman for Senate leader Phil Berger.

Chuck Stone, lobbyist for the State Employees Association of NC (SEANC), told the N&O (as well as Policy Watch) that the Senate’s plan isn’t the way to go.

“Once you take [the health retirement benefit] away, what incentive is there to work for the state?” said Stone. “We are in a rush to have the worst State Health Plan coverage in the United States of America.”

Check out Chris Fitzsimon’s column on the Senate’s plan to end health retirement benefits for future teachers and state employees published this morning.
News

A few short lines in the 2015-17 Senate budget would eliminate state-paid health retirement benefits for teachers and state employees hired after January 1, 2016.

“This will negatively impact the state’s ability to recruit good, qualified folks,” said Richard Rogers, executive director of the North Carolina Retired Governmental Employees’ Association. “In the future, I don’t see folks sticking with state government for the long term or for a career.

Current law provides teachers and state employees with a paid health insurance plan for the duration of retirement. It’s a graduated system, said Rogers, so employees must work a certain number of years in order to receive the maximum benefit of a fully-paid health insurance plan.

The Senate budget provision, located deep in the biennial proposal that was released and passed by Senators this week, would affect teachers and state employees who join the workforce after January 1, 2016 by eliminating the health insurance benefit altogether.

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The provision also affects those who stop out of the workforce and withdraw their retirement benefits from the state system, then re-join the workforce after January 1, 2016. Those state employees would also forfeit their retiree health insurance benefits.

The retiree state health plan provides health care coverage to more than 685,000 teachers, state employees, retirees, current and former lawmakers, state university and community college personnel, state hospital staff and their dependents, according to the plan’s website.

The General Assembly is expected to spend the rest of the summer hammering out a final 2015-17 budget for the state. Stay tuned to see if the Senate’s proposal to axe retirement health benefits for teachers and state employees makes it past the cutting room floor.