Legislative Updates 2009

Summary of Legislative Changes Affecting Retired School Personnel

The “long session” of the General Assembly convened January 28, 2009 and adjourned August 11, 2009. The Assembly will reconvene for the “short session”
on May 12, 2010

Appropriations:
Senate Bill 202: (Session Law 2009-451) Appropriations Act

Appropriates $29 million for 2009-2010 and $160 million for 2010-2011 to the State Retirement Trust Fund. The $29 million moves the State contribution rate from 3.36% to 3.57%, and the $160 million appropriation moves the contribution rate from 3.57% to 4.93%.
No Cost of Living Adjustment (COLA) for retirees or state employees.
Appropriates $132 million for 2009-2010 and $276 million for 2010-2011 to the State Health Plan. The state will continue to pay premiums for active and retired employees: $287.20/mth for Medicare eligible retirees, up from $272; $377.22/mth for non-Medicare eligible retirees, up from $346.38.


State Health Plan
Senate Bill 287: (Session Law 2009-16) State Health Plan (SHP)
Ratified April 23, 2009, this law appropriated $250 million to cover the shortfall for 2008-2009 and outlined a comprehensive plan to fund the SHP for 2009-2011 and set new initiatives. The law:

Eliminates the PPO Plus Option (90/10 Plan) effective July 1, 2009.
Adds a Comprehensive Wellness Initiative for all non- Medicare eligible members: Smoking cessation plan effective July 1, 2010 and weight management plan effective July 1, 2011.
Increases cost for certain branded prescription drugs by $5. For branded prescriptions with generic equivalents, members will pay the generic co-pay plus the difference between the cost for the generic and the branded drug. (Generics stay the same---$10)
Requires that coverage of non-acute specialty medications, excluding cancer medications, be provided by a specialty pharmacy vendor and may impose a co-payment of 25% of the cost of the drug (not to exceed $100) per prescription per 30 day supply. Description of specialty drugs is included in the bill but must be a drug that exceeds $400 per prescription.
Requires prescriptions to be dispensed on a 30 day supply, instead of 34 day supply.
Eliminates (January 1, 2010) the routine eye examinations.
In the Standard Plan (80/20) PPO: Increases the in-network annual deductible to $600 (from $300) and the annual coinsurance maximum to $2750 (from $1750). Increases the in-network primary care co-pay from $20 to $25 and the in-network urgent care co-pay from $50 to $75. Increases the in-network specialist co-pay to $60, except for mental health/substance abuse services, chiropractic services, physical, occupational and speech therapy services which will be $45. Different amounts apply to the PPO Basic Plan (70/30).
Clarifies ‘eligibility’ definitions/coverage
Includes contract provisions and calls for independent audit.
Creates a Blue Ribbon Task Force to review the governance of the SHP “and to make recommendations for changes that will ensure the ongoing financial stability of the Plan….”
Sets the premium rate increases at 8.9% for 2009 and 8.9% in 2010 for those who pay for dependent coverage such as spouse/child or family.
Maintains fiscal year plan instead of moving to a calendar year.


House Bill 1274: SHP Blue Ribbon Task Force and SHP Changes

Makes technical changes to the Blue Ribbon Task Force (created in SB 287) and other changes to the SHP, including a provision regarding prescription drugs which states that SHP members shall pay the lesser of the copayment price or the pharmacy’s cash price to the general public for a particular prescription. Pharmacies may be removed from the pharmacy network for violation of this provision.


State Treasurer/ Retirement

Senate 691 (Session Law 2009-283) includes the Treasurer’s Governance and Transparency Act of 2009. The Transparency Act increases the Investment Advisory Committee from five to seven members by adding two additional public members with experience in large investment programs. It also outlines how the State Treasurer must discharge her duties regarding the retirement systems and if the Treasurer’s investment authority is ever broadened by the General Assembly, the treasurer must provide an annual report on the use and results of this new authority.
Senate Bill 703 (Session Law 2009-98) State Treasurer Investments

This law expands the set of assets in which the pension funds can invest.

Senate Bill 658 (Session Law 2009-378) Modifies the membership of the Supplemental Retirement Board by requiring that one of the Governor’s appointments be a state or local government retiree. The law also covers retirement provisions for furloughed local governmental employees.


Retire/Rehire (Return to Work)

The General Assembly did not extend the Return to Work provision for teachers, thus the current law allowing reemployed retirees to work exempt from the earnings cap in the NC Public Schools or ‘double-dipping’ will no longer be allowed, starting October 1, 2009. For more information visit: www.ncae.org
House Bill 94 (Session Law 2009-11) changes the definition of retirement to clarify that unpaid volunteer service (answering phones, monitoring halls and cafeteria, etc.) in a local school administrative unit is allowable during the six months after retirement.
Senate Bill 204 (Session Law 2009-137) allows retirees in the Teachers’ and State Employees’ Retirement System to return to full time employment as Nursing Instructors with a State-supported community college or a State-supported university and continue to receive their pension, for a maximum of three years. The law requires these retirees to have a six month break in service before being rehired. Additionally, the employing entity must certify that it has a shortage of qualified nursing instructors and has made a good faith effort to fill positions with qualified instructors who are not retirees. The law expires June 30, 2013.


(Prepared by NC Retired School Personnel—August 11, 2009)

NC State Health Plan

Annual Enrollment Chart 2009

"Find a Doctor" Instructions

NCRSP represents retirees everyday in the legislature to improve retirement benefits for its members.

NCRSP advocates for issues related to the NC Retirement System funding and the State Health Plan programs.

NCRSP has fulltime lobbying efforts. NCRSP is also supported in many issues by NCAE, the National Retired Teachers Association, the NC State Employees Association, the Retired Government Employees of America, and AARP.

NCRSP membership dues fund two lobbyists in Raleigh. Dr. Lacy Presnell and Mrs. Pam Deardorff who work with state legislators and meet with the governor and committees on retiree issues during the legislative sessions and throughout the year.

NCRSP Talking Points – 2010 Legislative Session

Retiree COLAs Lag Behind Inflation

The dramatic rise in the cost of food, fuel, and other necessities during this year has hit retirees very hard. Nonetheless, because the CPI was negative for most of 2009, and the state’s economic uncertainties remain, the recommendation has been to ask the General Assembly to consider the options for retired educators within this scenario listed below. Our primary objective is to keep the cost of living adjustments even with inflation.

Fiscal Year Annual CPI* Cumulative CPI Annual COLA Cumulative COLA COLA Shortfall

2004-05 1.9% 1.9% 1.7% 1.7% -.02%

2005-06 3.3% 5.2% 2.0% 3.7% -1.5%

2006-07 3.4% 8.6% 3.0% 6.7% -1.9%

2007-08 2.5% 11.1% 2.2% 8.9% -2.2%

2008-09 4.1% 15.2% 2.2% 11.1% -4.1%

2009-10 0.1% 15.3% 0.0% 11.1% -4.2%

*Annual CPI is the Consumer Price Index for the preceding calendar year as determined by the U.S. Bureau of Labor Statistics. Thus, the CPI applied to 2009-10 is for 2008 calendar year. (Chart above prepared by NCRSP Exec. Dir. Pam Deardorff and NCRGEA Exec. Director Ed Regan.)

The Contribution Rate to the Retirement System Must be Raised

The state’s employer contribution rate to the Teachers and State Employees Retirement System (TSERS) currently stands at 3.57% for 2009-10 and at 4.98% proposed for 2010-11. While we understand the fiscal challenges that the General Assembly faces, we also understand that the financial condition of the State Retirement System is an important factor in maintaining the State’s excellent credit rating. A joint letter including the endorsement of NCRSP, NCAE, NCRGEA, SEANC, and NCASA was submitted to the Retirements Systems Board of Trustees (January 2010) recommending the employer contribution to the TSERs be raised to 6.71% of payroll. This recommendation supports a commitment that will sustain TSERS in the future and is also the recommended level by the State actuary.

State Health Plan

We also support changing the operation of the State Health Plan from its current fiscal year basis to a calendar year, a change which would bring the Plan into alignment with Medicare. It would also give members more time to study their options regarding dependent coverage, thus attracting younger, healthier dependents.

Retirees Continue to Serve

NC retirees are vital members of society and provide thousands of volunteer hours each year in schools and other public services, thus essentially saving the state millions of dollars that may have otherwise been spent from the state budget on salaries. North Carolina Retired School Personnel members alone continue to contribute over 603,000 hours of community service, representing a value of over $11.4 million.

2010 Developed by District I Legislative Committee Chair, and others as mentioned

Legislator Contact Information

District #114 Representative Susan Fisher

420 Legislative Office Bldg.
Raleigh, NC 27603-5925
919-715-2013
Email: Susan.Fisher@ncleg.net
7 Maple Ridge Lane, Asheville, NC 28806
828-258-5355

District #115 D. Representative Bruce Goforth

1220 Legislative Bldg.
Raleigh, NC 27601-1096
919-733-5746
Email: Bruce.Goforth@ncleg.net
137 Stonecrest Drive, Asheville, NC 28803
828-298-6237

District #116 Representative Jane Whilden

1305 Legislative Bldg.
Raleigh, NC 27601-1096
919-715-3012
Email: Jane.Whilden @ncleg.net
P. O. 5593, Asheville, NC 28813
828-277-0059

District # 49 Senator Martin Nesbitt

300 B Legislative Bldg.
Raleigh, NC 27603-5925
919-715-3001
Email: Martin.Nesbitt@ncleg.net
Robinhood Road #3, Asheville, NC 28804
828-252-0490

District #48 Senator Tom Apodaca

1127 Legislative Bldg.
Raleigh, NC 27601-2808
919-733-5745
Email: Tom.Apodaca@ncleg.net
214 North King Street, Hendersonville, NC 28792
828-696-0574