April 28, 2016
Threat to TRS Funding Just Won’t Go Away
In previous legislative updates this year and last, we have devoted much time to warning OREA members about the danger of a possible diversion of Teachers’ Retirement System revenues derived from the state’s income, sales and use taxes. Each year, TRS receives a 5% share of these taxes, accounting for approximately 30% of the annual operating budget of the retirement system. Last budget year, TRS received about $300 million from dedicated revenues.
Throughout the current legislative session, OREA professional lobbyists and member activists have been on guard to spot any signs of a possible diversion of TRS funds away from the retirement system to other purposes of state government. So far, in all our conversations with leaders of the House and Senate, we have received repeated assurances that a diversion of TRS dedicated revenues will not happen.
While it is good news to hear from key lawmakers that TRS money is safe, there remains the nagging worry that late session pressures to reach a deal to close a $1.3 billion budget deficit for the fiscal year beginning July 1 could undermine all the well-intentioned assurances we have received. The lure of available revenue from TRS could be too hard to resist for those lawmakers who don’t have TRS’ fiscal wellbeing among their top priorities. At that point, all of the previous promises to protect TRS funding will be worthless.
Therefore, at the risk of beating a dead horse, we again appeal to OREA members to make contact with their home district state senator and representative in opposition to a diversion of TRS dedicated revenues. Tell them a raid in any amount on TRS dedicated funding is absolutely unacceptable. Make telephone calls, send emails, letters and postcards, or meet face-to-face with your senator and representative. Let’s put this threat to TRS funding to rest – one more time.
Governor Fallin Signs COLA Fund Bill into Law
In a reversal of her veto action on a similar bill two years ago, Governor Mary Fallin this week signed into law SB 1128, by Sen. Patrick Anderson (R, Enid) and Rep. Todd Thomsen (R, Ada), which provides for the establishment of a special purpose fund in the office of the state Treasury to receive monies set aside for a retirement benefits improvement for retired educators and other state employees. Due to current state budget difficulties, it is highly unlikely that any money will be deposited to the fund this year, but we’re hoping that a future return to a more favorable revenue picture will make deposits possible. OREA was the sponsor of SB 1128.
Governor Also Signs Bill to Allow for Alternative Insurance Plans
Governor Fallin this week also signed into law HB 1711, by Rep. Glen Mulready (R, Tulsa) and Sen. Marty Quinn (R, Claremore), to allow the development of alternative insurance products for retired educators in the under-age-65 market. OREA supported the concept of alternative products, but originally opposed the bill in 2015 and 2016 because it would have eliminated the blended insurance premium protection preventing non-Medicare retirees from drastic increases in health insurance. Upon agreement with the House author, OREA developed bill language protecting the blended premium protection, and thereafter became a supporter of the bill.
No Change in Post-Retirement Earnings Limits
After much talk in the legislative interim regarding the need to attack the teacher shortage by allowing retired educators to be paid more money when returning to the classroom, the whole idea fizzled out in recent weeks. HB 2247, by Rep. Randy McDaniel (R, Edmond) and Jason Smalley (R, Stroud) would have raised the $15,000 annual earnings limit for under-age-62 retirees to $18,000, while allowing the retirees to continue receiving full retirement benefits. In return for the increased earnings limit, school districts would have paid a slightly higher payroll contribution rate on the retired educator’s extra earnings. When revenue failures during the current budget year and the prospect of huge revenue shortfalls for the next budget year became the overriding concern, school districts switched their focus from trying to hire additional teachers to the task of laying off many of those already employed.
Legislative Session Will End May 27th
At the close of business Thursday, four weeks remain in the 2016 legislative session. While House and Senate leaders and the governor’s office hold frequent budget meetings, both houses continue to debate a variety of bills, many of them controversial. If and when a budget deal is announced, however, all the bills necessary for its implementation will take center stage during the last two weeks.