One of the most important legislative sessions for state employees will convene February 7 at the state capitol. With a projected shortfall of up to $600 million, state agencies are once again facing budget cuts. In addition, 60 bills have been filed to change public employee pension funds.
OPEA has reviewed over 2,200 bills and will be tracking 270 bills for potential impact on state employees. In addition, OPEA is working with legislators to introduce bills from the 2011 Platform passed at the Delegate Assembly in August.
States across the nation are looking for solutions to the public pension funding crisis. Last year, several states cut retiree cost-of-living-adjustment assumptions, raised the retirement age, and increased contributions for participants. In most states, the changes applied to new hires only, with current employees and retirees still maintaining their benefits.
In Oklahoma, the fight will be about COLAs for retirees. Last year, for the first time in almost twenty years, the legislature failed to provide a COLA to public pension retirees in an election year. Several bills have been filed to eliminate or seriously hamper the legislature’s ability to grant COLAs for retirees.
“OPERS retirees have an average annual benefit of less than $15,000 per year, which is the lowest of any other pension system in the state,” said OPEA Policy and Research Director Trish Frazier. “With benefits based on salaries that are 16 percent below market, retirees must have COLAs to keep up with increasing costs of medication, food and fuel.”
The last two weeks before session, appropriations subcommittees met for a preliminary discussion of agency budgets. OPEA has been present at the meetings to get a sense of proposed cuts and how it would affect state employees. Agency directors have been asked to present how five and ten percent budget cuts would impact services.
The most critical budget concern is to eliminate the furloughs for Department of Corrections employees. Director Justin Jones has asked for $9 million to end the furloughs, which are projected to go from one day in February to three or four days in March through June. There seems to be a consensus in leadership to address this issue early in session.
In their budget reviews, agency directors have emphasized their resources have been cut to the bone in the last round of budget cuts and any further cuts would jeopardize the core missions of their agencies.
While there doesn’t seem to be agreement on any changes for state employee health care, several shell bills have been introduced. In addition, the bill from the end of last session and a bill to freeze the state employee benefit allowance for three years have also been introduced.
At the Employee Benefits Council planning meeting on January 27, administrators from Indiana made a presentation about their high deductible/health savings account plans. The premium for these plans are paid by the state, along with a deposit (approximately $3,000) into employee health savings account. Employees use the funds from their account to pay 100 percent of their health care until they reach the deductible (typically $2500); then the plan pays 80 percent until the employee reaches the out-of-pocket maxiumum. Preventative care is paid 100 percent by the plan and is not subject to the deductible. The accounts may accumulate from year to year. Healthy employees that rarely visit the doctor and have few medications and expenses can keep the money in their account for approved expenses (eye exams, glasses, braces, etc.). Some legislators have voiced support for this proposal; however, a lot of detail must be worked out before the program can be implemented. This would not replace HealthChoice, but would be an alternative.
Agency Consolidation and Privatization
Several shell bills have been filed for “agency reform or consolidation” with no details in them yet. In addition, some have been introduced that combine smaller agencies into larger ones with similar missions. There is also discussion of having a large “Office of Administration to combine the Office of State Finance, the Office of Personnel Management, and the Department of Central Services. Agency consolidation may rearrange functions of government, but few employees will be affected because the jobs will still be needed in the new agency.
Dedicated state employees will once more have their jobs threatened by privatization. Bills have been filed to privatize CompSource, the Grand River Dam Authority, state parks, and child welfare.
“CompSource, GRDA and parks are issues that have been studied by past legislatures,” said Frazier. “The communities that these agencies serve are concerned about losing these quality services and have opposed the change. They all have excellent track records of efficiency and low rates. Selling them off to private providers only increases the costs by adding a profit margin.”
“OPEA has been fighting the privatization of child welfare since last session,” continued Frazier. “This has been proposed by corporations who have hired high-priced lobbyists to move this issue forward.”
Legislation to Watch
Below are some of the bills OPEA will be watching this session. Shell bills, which are only titles with no language, are not included in this list. Watch the OPEA website for updates to the list of bills.
HB 2057 (Rep. Lewis Moore): Prohibits cost-of-living adjustments (COLAs) for retirees in the state’s pension systems until the funding level of the system is at least 85 percent.
HB 2132 (Speaker Kris Steele) and SB 891 (Sen. Mike Mazzei): These bills remove COLAs from the definition of “non-fiscal retirement bill,” which requires that the legislature to provide funding for COLAs. With the serious budget situation facing the state, this legislation would eliminate COLAs for the foreseeable future.
SB 787 (Sen. Mike Mazzei) and SB 806 (Sen,. Josh Brecheen): These bills lower the retirement benefits of elected officials, bringing them more in line with the benefits state employees receive.
SB 810 (Sen. Clark Jolley): Transfers the assets of CompSource to the Teachers Retirement System to help pay for the unfunded liability of the system.
SB 811 (Sen. Clark Jolley): Transfers the assets of GRDA to the Oklahoma Public Retirement System to help pay for the unfunded liability of the system.
HB 1566 (Rep. Fred Jordan): Allows retirees to opt out of state insurance if they have alternate coverage. They may return to state insurance at a later date, provided they have had continuing coverage.
HB 1738 (Rep. Lewis Moore): Freezes the state employee benefit allowance for three years.
SB 777 (Sen. Cliff Aldridge): Reintroduces the insurance reform bill that was vetoed at the end of legislative session. The bill consolidates the two insurance agencies and requires HMOs to competitively bid. This is a work in progress and will probably not be the final version of the bill.
HB 1046 (Rep. George Faught): Provides for the mutualization of CompSource. This bill allows classified employees to remain with the state, however they would become unclassified.
HB 1349 (Rep. Gus Blackwell): Directs the Department of Human Services to develop a plan to privatize foster care and related services by July 1, 2012.
HB 1359 (Rep. Ron Peters): Creates a 23-member Foster Care System Improvement Task Force. According to the current language, OPEA may appoint a member who works in child welfare to the committee.
SB 177: (Sen. Brian Crain) Allows the Department of Human Services to issue a waiver allowing for community services providers to hire workers convicted of an offense related to drugs or alcohol provided the individual has completed a treatment program.
SB 483: (Sen. Brian Crain) States legislative intent that agencies use private providers whenever feasible. Directs DHS to submit a written plan how they intend to use private service providers by January 1, 2012.
SB 642 (Sen. Cliff Branan): Requires an analysis to determine the value of GRDA’s property and facilities.
SB 656 (Sen. Cliff Branan): Requires state-owned and operated parks to be sold, leased or transferred to private ownership within five years.
SB 702 (Sen. Cliff Aldridge): Requires the insurance commissioner to adopt a plan for the sale of CompSource no later than December 31, 2011.
SB 927 (Sen Cliff Branan): Creates a task force to study the sale, lease or private operation of all state-operated golf courses in five years.
HB 1067 (Rep. Dustin Roberts): Requires a person receiving TANF to be tested for illegal drugs.
HB 1083 (Rep. John R Bennet): Requires applicants for state assistance and members of their households to be tested for illegal drugs.
HB 1445 (Rep. George Faught): Prohibits recipients of electronic benefit transfer (EBT) cards from using the cards at ATM machines in casinos.
HB 1820 (Rep. Gus Blackwell): Requires a fiscal impact statement for any legislation or mandate which is deemed to negatively affect the corrections budget. The bill requires the statement to identify potential funding for the legislation.
SB 212 (Sen. Bryce Marlatt): Allows the Department of Mental Health and Substance Abuse Services to contract for professional services including registered nurses, registered pharmacists, or licensed mental health professionals.
SB 374 (Sen. Josh Brecheen): Requires DHS to implement a program with an undercover fraud investigator to make random visits to local offices to apply for benefits.
SB 388 (Sen. Josh Brecheen): Requires every county DHS office to post a sign requesting information and offering a possible bounty for information pertaining to clients who have received public assistance by fraudulent means.
Below is a list of bills requested by OPEA. The list does not include shell bills.
HB 1213 (Rep. Dan Kirby) and SB 781 (Sen. Sean Burrage): Requires agencies to allow employees who are demoted in a reduction-in-force to maintain their pay as long as their compensation is within the pay band of their new classifications.
HB 1214 (Rep. Dan Kirby) and HB 1385 (Rep. Donnie Condit): Allows state employees and their dependents reduced tuition at state colleges and universities.
HB 1497 (Rep. Mike Shelton): Creates a task force to study a merit system for higher education.
HB 1602 (Rep. Aaron Stiles): Allows direct care staff who cannot take leave because of staffing shortages to accumulate above the leave cap or receive compensation for lost annual leave.
HB 1907 and HB 1950 (Rep. Mike Jackson): Provides a four percent COLA to OPERS retirees.
SB 66 (Sen. Don Barrington): Reverses the legislation passed at the end of session last year allowing DMHSAS to close facilities without legislative approval.
SB 176 (Sen. Susan Paddack): Requires DHS to expend funds in the Southern Oklahoma Resource Center oil royalty account to construct two new facilities.
SB 190 (Sen. Cliff Aldridge): Removes the Payment Rate Review Task Force from the OSEEGIB (HealthChoice) statutes. Although this group has never met, providers could use the task force to increase costs of services and subsequently health insurance rates.
SB 551 (Sen. Anthony Sykes): Prohibits state funds to be used to employ lobbyists.
SB 812 (Sen. Clark Jolley): Doubles longevity for state employees.
SCR 1 (Sen. Susan Paddack): Encourages DHS to address maintenance issues at the Southern Oklahoma Resource Center.