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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.

senatebudget

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.

Uncategorized

TeachersWhen politicians talk about “running government like a business,” for many of us (even skeptics) it conjures up vague images  of hard-nosed accountants demanding results and issuing edicts to do away with no bid contracts and wasteful outlays for  travel and fancy meals. A new report from the top-flight journalists at Pro Publica, however, paints a much clearer portrait of what the future actually holds in the regard: temp workers — lots and lots of temp workers.

This is from the report, “A Modern Day ‘Harvest of Shame‘”:

“Half a century ago, the legendary journalist Edward R. Murrow came to this pancake-flat town in central New Jersey to document the plight of migrant farmworkers for a television special called “Harvest of Shame.”

Today, many of Cranbury’s potato fields have been built up with giant warehouses that form a distribution hub off Exit 8A of the Jersey Turnpike.

But amid this 21st century system of commerce, an old way of labor persists. Temporary workers make a daily migration on buses to this area, just as farmworkers did for every harvest in the 1960s. Temp workers today face many similar conditions in how they get hired, how they live and what they can afford to eat. Adjusted for inflation, many of today’s temp workers earn roughly the same amount as those farmworkers did 50 years ago.

Across the country, farms full of migrant workers have been replaced with warehouses full of temp workers, as American consumers depend more on foreign products, online shopping and just-in-time delivery. It is a story that begins at the ports of Los Angeles and Newark, N.J., follows the railroads to Chicago and ends at your neighborhood box store, or your doorstep.

The temp industry now employs 2.8 million workers – the highest number and highest proportion of the American workforce in history. As the economy continues to recover from the Great Recession, temp work has grown nine times faster than private-sector employment as a whole. Overall, nearly one-sixth of the total job growth since the recession ended has been in the temp sector.”

And, of course, if  a phenomenon like this is good enough for the “free market,” it’s gotta’ be a “must” for the brave new world of conservative-run government like the one North Carolinians are currently enduring. Any more questions about why state leaders are so anxious to, effectively, turn thousands upon thousands of public school teachers into temps?  That’s right: they want to “run government like a business.”