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Week of Feb22

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 February 26, 2010

Improved Retirement Bills Pass House
Changes Do Not Impact Current Employees

After several amendments and a bill substitution, SB43 (third substitute): Post-retirement Employment Amendments and SB63 (third substitute): New Public Employees’ Tier II Contributory Retirement Act passed the House. The bills now go back to the Senate, which previously passed the bills, to approve House changes before heading to the Governor for signature. While the UEA still believes the state would have been better served by allowing a year to study these issues and develop alternative solutions, these bills are much improved from their original form.

The bills were improved, in large part, because of the hundreds of letters, e-mails and personal contacts with legislators. Thanks to everyone who helped the UEA Legislative Team in sharing concerns with legislators. We also thank all those current employees who took the time to help protect benefits for future educators.

Your contacts with legislators have also helped stop two additional bills (SB42 and SB94) that would negatively impact retirement benefits for current employees. These bills are not moving forward at this time—although we will continue to watch.

For those working in education, here’s what SB43 and SB63 will do:

Current Employees: No impact. Neither bill affects the retirement benefits of current employees. All retirement benefits, including years-of-service requirements, three-year final salary averaging and the 2 percent multiplier for each year of service, remain just as they are now for all employees hired prior to July 1, 2011.

Current Retirees: No impact. Neither bill affects pension payout, COLA increases or any other aspect of current retiree benefits. If you have retired from the URS and returned to work in an entity participation in the URS, there is no change in your benefits.

Retirees Who Return to Employment: SB43 applies to anyone who retires from the Utah Retirement Systems after July 1, 2010, and returns to work with any entity participating in the URS. It requires a retired employee to wait one full year before returning to employment with a state agency. A teacher who retired would have two options upon being rehired:

  1. Stop receiving a pension payment and earn another 2 percent towards retirement per year upon ultimate retirement.
  2. Receive a monthly pension payment after sitting out a full year before returning to work. There would be no replacement contribution to the employee’s 401(k) as is currently the practice.

New Employees: SB63 applies to public employees hired after July 1, 2011. Upon hiring, new employees will elect one of two retirement benefit options:

  1. Defined Contribution: 10 percent of the employee’s salary will be placed in a 401(k)-type defined contribution plan for the employee.
  2. Hybrid Defined Contribution/Defined Benefit: About 7.75 percent of the employee’s salary will fund a defined benefit plan paying 1.5 percent of salary for each year of service based on a 5-year final average salary. Employees would be required to have 35 years in the system or reach age 65 to qualify. An additional 2.25 percent of salary (for a maximum total of 10 percent) would be contributed to a 401(k) plan. Under the hybrid option, if the required defined benefit funding rate exceeds 7.75, additional funding first comes off the 2.25 percent 401(k) contribution. If the amount exceeds 10 percent of salary, the employee pays the difference.

Both plans would have a four-year vesting period, meaning the employee must work four years to get any benefit at all.

February 25, 2010

Retirement Bills Moving Forward Behind the Scenes
By Susan Kuziak, UEA Legislative Team Member

The major focus of the day was activity with Representatives related to retirement bills SB43 and SB63. Sen. Liljenquist (sponsor of the bills) joined several members of House leadership in private ‘chats’ with Representatives who were not inclined to support these bills. The purpose of the little chats? PERSUASION, PERSUASION, PERSUASION. These personal discussions often have the desired effect (a history lesson the voucher bill taught us so very well). Several Representatives who opposed the bills began talking with leadership to explore what improvements in the proposed new retirement system might be made. UEA, UPEA and Fraternal Order of Police (FOP) also spent the day exploring the possibilities.

The good news: Thanks in large part to the hundreds of letters legislators have received and the work of UEA and other employee groups, the bill’s sponsor has made many concessions in the form of substitutions and amendments that have much improved these bills from their original form. We anticipate additional amendments to the bills during debate in the House. The bad news: We still have serious concerns about these bills and believe that, with time, much ‘better’ solutions can be found.

The coalition of public employee groups still DO NOT support SB63 (second substitute): New Public Employees’ Tier II Contributory Retirement Act…however, should the bill find enough support to pass; a ‘better’ amended bill may be a ‘better’ place from which to keep working on the ‘best’ solution.

SB43 (third substitute): Post-retirement Employment Amendments, which was amended in Committee yesterday, is a very much improved bill. The amendment added another option to retires and rehires. It would allow state employees to retire from state employment, be rehired, and still receive their pension while they worked. But the retired employee would have to wait one full year before returning to employment with a state agency. A teacher who retired would have two options upon being rehired:
1.   Stop receiving their pension payment and earn another 2 percent towards retirement per year when they ultimately retired, or,
2.   Receive their monthly pension payment after sitting out a full year before returning to work. There would be no replacement contribution to the employee’s 401(k) as is currently the practice.

Debate on the retirement bills in the House is scheduled for 10:15 a.m. Friday (Feb. 26). You can watch the meeting live online or listen live online. After the meeting concludes, recordings of the debates are available online by clicking here.

Other happenings:
The Senate Revenue and Taxation Committee considered SB40: Cigarette Tax. This is one of only two or three bills that would increase ongoing revenue. The projected revenue is $40 million in FY2011 and $53.8 million in FY2012. These are small numbers in relation to the total state budget, but very big numbers when considering the huge holes in program funding that need to be filled. UEA Director of Policy and Research Jay Blain attended the meeting and reported that, after hearing several health professionals testify to the negative effects of smoking and their very addictive nature, the Committee voted to not pass out the bill to raise the tax on cigarettes in Utah. Senators Bramble, Valentine and Romero were the only votes in favor. Senators Goodfellow, Adams, H. Stephenson, and Niederhauser voted against.

The House Judiciary Committee heard Rep. Sandstrom’s HB355 (first substitute): Legal Guardianship Amendments. UEA opposed the bill because it would have greatly increased the burden of proof on a school district in challenging guardianship of a student if it suspected the primary purpose of the guardianship was to avoid payment of tuition. If not successful in challenging the guardianship, school districts would have been required to pay attorney’s fees. Rep. Sandstrom made significant changes in the bill that addressed most concerns. Thanks to Rep. Sheryl Allen for understanding the issues so well and providing information her fellow Committee members about how many guardianships place students in our schools.

Both bodies adjourned at 5 p.m. to allow Appropriation Subcommittee Chairs to meet with Executive Appropriations majority leadership. This is part of the ongoing process to reach final budget decisions. Groups of advocates, agencies and others have prepared their lists of “hot spots”…those areas they prioritize as most critical for funding. YOU TOO CAN WEIGH IN: Contact the Governor, Speaker Dave Clark and Senate President Michael Waddoups. Let them know the importance of education funding to your schools, to your students and to the quality of instruction you want to deliver. Encourage others (family, neighbors, friends) to visit to learn about public education issues and to contact their legislators and advocate for public education funding.

Stay with us, check in each day, call us with questions, be well informed, let us know what you are thinking AND MOST IMPORTANT: be the voice of your students with our elected representatives.

February 24, 2010

Retirement Bills Pass House Committee
By Jay Blain, UEA Director of Policy and Research

The much anticipated House Retirement Committee hearing was held today (Feb. 24) at noon.

Sen. Liljenquist presented two bills, SB43 and SB63, to the House committee. Rep. Sandstrom moved a third substitute SB43: Post-retirement Employment Amendments. His substitute allows an employee to keep receiving a pension after rehiring, makes a payment into the Utah Retirement System (URS) instead of the rehired employee’s 401(k), and requires the employee to wait one year before rehiring into the system. The vote to substitute the bill was unanimous. Sen. Liljenquist stated that this returns us to a retirement system rather than a supplemental income system.

A question was asked, will these bills remedy the “gap” in the system. Liljenquist responded, no, they won’t. SB63 lowers the cost for prospective employees.

SB63 (second substitute): New Public Employees’ Tier II Contributory Retirement Act creates two new classes of employees: big system (including teachers and most state/local employees) and public safety (police and fire). Basically a new employee will have two choices: 1) Have 8 percent of salary contributed to a 401(k) plan or 2) a “hybrid” plan with a defined benefit as described below and a 401(k). Both plans would have four-year cliff vesting, which means that you must work at least four years to get any benefit at all. There would be no borrowing allowed from the first 401(k) option.

Here are the details for the defined benefit “hybrid” plan. About 5 percent of the employee’s salary will fund a 1 percent multiplier per year (1 percent of salary for each year of service) based on a 5-year final average salary. Employees would be required to have 35 years in the system or reach age 65 to qualify. The remaining 3 percent of salary (for a maximum total of 8 percent) would be contributed to a 401(k) plan. Under the hybrid option, the contribution rate starts at 5 percent, but if the needed rate to fund the plan exceeds that amount, it first comes off the 3 percent 401(k) contribution. If the amount exceeds 8 percent of salary, then the employee pays the difference.

Rep. Watkins asked a question about future service credit purchase. You can still purchase 5 years under the new plans but you would have to reach 30 years of service first (rather than 25 as allowed under the current plan).

Sen. Liljenquist compared the public sector to the private sector in Utah. He said that when you add in wage, benefits and pension, Utah public employees get about equal to the private sector. He did acknowledge that our wages are below market but he said that is because the costs of benefits are crushing wages.

We then moved to the public comment section of the hearing. First up was Tom Hardy of the Utah League of Cities of Towns. He said these bills are necessary medicine in the right dose at the right time.

Next was Kory Holdaway, UEA director of Government Relations. He posed the question, “What attracts people to teaching?” Not salary, we are 20-30 percent below the market. Historically, it has been because of benefits outweighing the lack of salary. A policy decision has been made to back load retirement instead of front loading salary. He pointed out that this is the most dramatic change offered to the retirement system in decades. “We’re not saying to ignore it,” said Kory, “we’re not saying changes aren’t necessary, but we need to slow down and be sure of what we are doing.”

The next speaker was Dave O’very, a student teacher from the Alpine School District. Dave expressed his concern about the underlying message that this sends. The message that whenever there is a budget shortfall, it will fall upon the backs of public servants. It also says that teachers are not valued and makes him reconsider his decision to teach in Utah.

Ryan Miller, a firefighter, pointed out that too many things are happening with serious consequences. He said that in Salt Lake City their pool of 2,500 applicants dropped to 300 after last year’s salary cut of 1.5 percent. What would a retirement benefit cut do, he asked.

Another educator, Nathan Spofford, a 31-year veteran English teacher spoke against the one-year waiting period in the retire/rehire bill. He said he would prefer to retire and stay in Utah but this provision would have him looking out of state.

Sherri Waters from Utah Public Employees’ Association spoke and said we should hold back for a year and let the independent actuaries make their report. She said it was like digging a foundation for a house without doing a Blue Stakes study.

Geoff Leonard from Utah School Employees Association testified that the URS is designed to take crashes and booms into account. This is not a crisis. These bills represent one possible solution and not necessarily all of the solutions.

Susan Firmage, Davis Education Association president, spoke and pointed out that there are only two weeks left in this session. This complex issue does not need to move forward so quickly, but it is a place to begin a study. She said evidence was given in the fact that the bills were amended today in this Committee meeting.

A representative from the Sutherland Institute spoke and said that other states have been crippled in their ability to govern their states by delay and inaction.

Dr. Robert Book was the final speaker. He is a retiree who was rehired and he accurately noted that he would not have been rehired if his skills were not needed. There are already controls in place based on need.

The Third Substitute SB43 was moved and passed out with a favorable recommendation. Reps. Hansen, Watkins and Duckworth voted ‘no.’

Rep. Hansen moved to table SB63. The motion failed, Hansen was the only ‘aye’ vote. The Second Substitute SB63 was then moved and passed out with a favorable recommendation. Reps. Hansen, Watkins, and Duckworth voted ‘no.’

Now, these two critical bills move to the House for debate and action. It is critical that members contact their representatives to urge them to vote no, especially on Senate Bill 63. This bill will totally revamp the retirement system for new employees. Ask them to slow it down. We are not asking them to ignore the problem…only to wait until all of the good data is in to make well-informed decisions. E-mail and call your Representatives today.

February 24, 2010

National Board Teachers Honored
By Susan Kuziak, UEA Legislative Team Member

A terrific group of teachers joined the UEA legislative team for Educator Day on the Hill at the Capitol this morning (Feb. 24). Educators from several school districts as well as a group of educators who most recently achieved National Board Certification had a briefing on current activity and the status of bills. They then took the opportunity to meet with their own Representatives and Senators on bills of interest. The National Board teachers were honored on the floor of both the House and Senate.

The Senate Education Committee met. SB66: Public School Extracurricular Activities for Home School and Private School Students was amended and passed out favorably. This bill deals with access to participation in extracurricular activities for home school children. It is the fourth year Sen. Madsen has carried the bill. The presentation and testimony consumed more than an hour. There was much negative reflection about public schools. Those who care deeply about our public schools can only wish that the same advocacy shown for home schools was shown for the work and effort public schools and educators make on behalf of students.

SB188: Charter School Amendments was considered briefly and passed out of committee. SB276: Promoting Healthy Lifestyles in Public Schools (Sen. Pat Jones) was not presented. This is a different version of the Senator’s bill regarding vending machines. In place of the bill the Committee will send a letter to the State Office of Education requesting that the data gathering outlined in the bill be done without having to enact it into statute.

February 23, 2010

Budget Situation Remains Tenuous
By Susan Kuziak, UEA Legislative Team Member

The Legislative team met early in the morning (Feb. 23) to review the status of bills we are tracking. Our list is getting VERY LONG. You would think in a budget year like this that we would see fewer bills…not so. There are new bills every day. Jay Blain, a new member of the UEA Legislative Team and former president of Granite Education Assoc., attended the Natural Resources Committee (see article below).

Morning and afternoon periods of floor debate allow many bills to be debated and they are moving many along in the process. SB77 (First Substitute): District Association Leave Policies remains circled on Third Reading in the Senate. SB119 (Second Substitute): Special Elections Modifications was passed. This bill restricts the dates on which local entities, including school districts, may hold elections. Senator Stephenson made amendments that allow school districts with budget difficulties to hold a voted leeway election only in June as well as on the November election date. This improves the bill, but there is still concern about the inflexibility this imposes.

The Executive Appropriations Committee meeting scheduled for afternoon was cancelled. At this time, the meeting scheduled for Thursday is also cancelled.

Sen. Lyle Hillyard presented the majority party budget proposal in the Senate Democratic Caucus. Other caucuses also reviewed the proposal. Here’s where things stand...Utah has a ‘structural deficit’ (more expenditures on programs, agencies, debt obligations than there are revenues to fund) in the range of several hundred million dollars. Since there is no movement to raise taxes or other revenues (the cigarette tax may still be considered), expenditures must be reduced.

  1. Public education is proposed to receive $284 million in one-time money to bring the funding back to FY2010 levels (almost, see below). This funding comes from: $80 million Rainy Day Fund, $103 million Education Reserve Fund, $101 million from cuts in agencies outside of public education.
  2. Higher education will receive $20 million in one-time money but will experience a 19 percent cut from the current year. All other agencies will be cut on average 22 percent. These agencies/programs will suffer.
  3. Health and Human Services, which provides programs for the state’s most vulnerable citizens, will be severely impacted. Many students we teach and their families will be impacted.

Back to what it means for public education…grateful as we must be for the one-time allocation, schools will not be whole next year. There is no funding for enrollment growth (11,000 new students), no funding for increased costs in other programs related to growth. The classroom supply funding is not included. The allocation of the $284 million will likely be done in accordance with the recommendations of the Education Appropriations Subcommittee (see the post for Feb. 15 for details).

Sen. Hillyard indicated little or no interest in increasing ongoing revenue and, although there are sources of additional one-time money (e.g.: $253 million remaining in the Rainy Day Fund), there is a reluctance to use these dollars because they feel it would perpetuate the structural deficit.

The Legislature has multiple options for dealing with the many critical needs in education and other agencies that are not funded in the initial proposal. We will be working to make that happen.

Please express appreciation for the priority given to public education both the Legislators and to the Governor. Talk with your district administration and local association leaders to understand what failing to fund enrollment growth will mean to your school and to your work with students and share these concerns with your legislators, neighbors and friends.

February 23, 2010

Bills Aim to Protect State Land, May Help Education
By Jay Blain, UEA Director of Policy and Research

Wednesday morning the House Natural Resources, Agriculture, and Environment Standing Committee met and considered three bills that are of interest to educators because of their impact to the long term funding of education. They are HB143, HB324, and HB323. Essentially these bills give the state government, via the state legislature, the right to exercise eminent domain over parcels of land to help maximize state trust land revenues. The third bill funds legal activities by the Attorney General of Utah to begin the process.

There was much debate about this activity. Representative Mel Brown questioned whether or not the Attorney General’s office was the right place for the legal action to occur. He referred to an entity called the Constitutional Defense Council that exists for purposes such as this and wondered if that would be a better place for this type of legal action to happen to not politicize it. The first two bills passed out unanimously.

The third bill, which takes $1 million dollars a year from the state trust fund revenues to finance the legal fight, was a little bit more contentious. Representative Riesen moved to adjourn before a vote on the bill was taken and that motion failed. The bill then passed out favorably with Reps. Riesen and Draxler voting against it.

There is a possibility these bills will end up providing significant revenue to education in the long term, but there is no guarantee, as was pointed out in the discussion during the hearing. The bills now go to the House floor for debate.

February 23, 2010

Measure to Add $110 Million for Education Fails to Pass Committee
By Susan Kuziak, UEA Legislative Team Member

A bill proposed by Rep. Brian King, HB90: Income Tax Amendments, would provide an estimated $110 million per year for Utah public and higher education—money that would go a long way toward repairing Utah’s chronically underfunded education system. Instead, the House Revenue and Taxation Committee, on a motion by Rep. Greg Hughes, voted to return HB90 to the Rules Committee (which Rep. Hughes chairs) with no recommended action. The Rules Committee is fondly known as the cemetery for unwanted bills. The motion passed on a ‘straight party’ vote with Republicans voting to send the bill away and Democrats voting for further debate.

Rep. King is to be commended for the courage (in an election year no less) to acknowledge the reductions facing education in both the short and long term and the negative impacts of that underfunding.

Rep. King’s bill attempted to remedy what some see as the failings of the income tax changes made several years ago, as explained in a recent Utahn’s for Public Schools Report. The move to a single-rate income tax was promoted by its advocates as necessary to be competitive and to encourage CEOs to bring their businesses to Utah and spur economic development. However, research shows businesses place ‘quality of life issues’ and a well-educated workforce far ahead of lower taxes or other incentives when making decisions about location. An excellent education system is an economic development tool. Data shows that the single tax rate has most advantaged wealthy Utahns. HB90 would have restored taxes on those with incomes above $250,000 nearer to what they were prior to implementation of the single-rate system.

The debate was very instructive—a microcosm of the ongoing national debate that has so polarized the population Rep. John Dougall asked, if we’d not cut taxes and had more revenue wouldn’t we have just spent it and been in even more difficulty now? A citizen from Davis County testified that we shouldn’t ask those with more money to be charitable to the rest of us, especially as the poor and middle income use more government services. Progressivity in taxation (those with more paying more) is “antithetical to freedom,” he said. Rep. Greg Hughes stressed how well Utah is doing compared to other states. It’s his belief that “funding for education is dictated only by jobs which come from low and attractive tax rates.”

The Utah League of Women Voters and Voices for Utah Children testified in favor of the bill. Kory Holdaway spoke for the UEA. He noted that providing a system of public education is a Constitutional obligation of Utah government and we’ve reached a tipping point. If the current budget proposal is enacted, public school funding will be reduced 23 percent and additionally will not have funding for enrollment growth, he said. HB90 would help to mitigate those reductions.

Public debate was limited because of time constraints. With some additional questions and comments from committee members, Rep. Hughes made his motion. The debate about funding for public education remains, as ever, unresolved.

Both the House and Senate had morning and afternoon floor debate sessions. The Senate debated and passed on Second Reading SB132: Higher Education Scholarship Amendments. This bill would raise the standards to qualify for New Century Scholarships and make clear the amount of the scholarships is not guaranteed but is dependent on legislative funding. The Senate also passed three ethics-related bills. Another bill, SB119 (First Substitute): Special Elections Modifications, would restrict the dates special elections may be held. The purpose is to prevent elections being held on dates when few people vote. An amendment is expected before final passage to accommodate school districts in financial crisis. This is done with Grand County School District in mind. Sen. Hinkins, who represents Grand County, was the lone dissenting vote. He likely is waiting for the amendment to be made. Sen. Dayton’s bill to eliminate specific reference to PTA in the statutes, SB147: Education Related Parent Organizations, passed Second Reading.

The day concluded with House Education considering just one bill, SB55: Authorization of Charter Schools by Higher Education Institutions, sponsored by Sen. Adams. The bill would grant Utah’s universities authority to create charter schools. UCAT was amended into the bill as well. Committee members wondered why they couldn’t already establish charter schools through the existing Charter School Board. The State Office of Education and Utah School Boards had the same concern. The bill was passed out favorably. The UEA supports the concept of the bill.

Tuesday will find the UEA, for the first time this session, at the House Natural Resources, Agriculture and Environment Committee—who would have guessed! The Committee will consider HB143: Eminent Domain Authority, HB323: School and Institutional Trust Lands Amendments and HB324: Public Lands Litigation sponsored by Rep. Herrod and Rep. Sumsion. These are public land bills intended to generate revenue for schools and certain to spark a legal fight with the Federal government if passed. Watch for further information about these bills in the days ahead.

The Executive Appropriations Committee will meet late Tuesday afternoon. Perhaps we’ll begin to get a picture of how the budget will look…perhaps not…there’s lots of time yet before these big decisions really solidify. BUT IT’S NOT TOO SOON FOR YOU TO PLAY YOUR PART…keep those calls and e-mails coming in to legislators—and don’t forget the Governor who has been advocating for funding and greater use of the Rainy Day fund.

To send a letter to your legislator expressing concerns about the public education budget, click here.

February 21, 2010

Retirement Bills Move to House
By Susan Kuziak, UEA Legislative Team Member

It was no surprise that two of the retirement bills, SB43 (first substitute): Post-retirement Employment Amendments, and SB63 (first substitute): New Public Employees’ Tier II Contributory Retirement Act passed the Senate on third reading and now move to the House. SB63 was further amended, but the amendments affected only public safety and firefighters. A third retirement bill, SB94: Supplemental Benefit Amendments for Noncontributory Public Employees, which would eliminate the 1.5 percent 401(k) benefit for employees hired after July 1, 1986, remains on the Senate calendar. We presume the sponsor will watch the progress of the other bills before deciding how to proceed with SB94.

Our efforts to address the retirement issues will continue with House members. You can help by calling and e-mailing your representative. Ask them to form a task force to study options addressing the financial stability of the system without changing the benefit structure in a way that will leave future public employees without adequate financial means in retirement. Many representatives have been persuaded, like Chicken Little, that the sky is falling and something must be done immediately. Taking time to find the best solutions makes much more sense. We are seeing now the results, the unintended consequences, of the last time the Legislature was convinced they had to act immediately and promised any problems could be fixed later…one look at what is happening to Jordan School District as a result of the “district split” legislation is a history lesson Legislators should not ignore.

SB43 and SB63 are on the agenda for the House Retirement Committee this Wednesday, Feb. 24, at noon.

Education funding is still being deliberated. When you call or e-mail your legislator, please remember to include this critical issue.

To send a letter to your legislator expressing concerns about the public education budget, click here.

The House Education Committee heard Rep. Wiley present his seismic safety bill. UEA president, Kim Campbell, spoke to support the bill. She taught for many years in a building potentially vulnerable to damage from seismic activity. Although the bill did not mandate renovations but required districts to do a seismic survey of their buildings, it did not receive enough votes to pass out favorably. The safety of students depends on the safety of their school structures. As Utah is at risk of earthquake, we hope the bill will be back next session and acted on favorably.

The UEA Legislative Team will have to be in top form on Monday morning. The 2010 Legislature’s fifth week begins with bills on three different committees. The Senate Education Committee will consider the third version of SB54: Health Education Amendments sponsored by Sen. Urquhart. UEA supports the bill. The House Revenue and Taxation Committee will hear HB90: Income Tax Amendments sponsored by Rep. King. This bill would increase income tax on high-income individuals ($250,000 and $475,000 and above). It would increase revenue to the Education Fund by an estimated $100 million per year. The House Government Operations Committee will consider a bill, sponsored by Rep. Bigelow, that would revise the statute regarding legislative spending limitations.

You can read the above bills and any others in which you are interested by going to the Utah Legislative website…click on “bills” and you can search by bill number, by sponsor and by subject.