Wednesday, February 02, 2011

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Subject: TSEU Legislative Update, February 1, 2011
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In this issue:

  • Get text updates on your cell phone
  • Senate Bill 1: Second Verse, Same as the First
  • State Worker Pensions
  • State Worker and Retiree Health Care Continues to be discussed at the Legislature
  • Legislators zero out SKIP for CHIP
  • Senate Committees
  • Senate Finance Committee Hearings: Deficit Continues to Grow
  • Bills to Watch

TSEU Legislative Update
February 1, 2011

Get text updates on your cell phone

If you would like to receive updates from the capitol on your cell phone, email your cell phone number to Derrick Osobase (

Senate Bill 1: Second Verse, Same as the First

Last week SB 1, the Texas Senate's version of the budget, came out. While the proposed Senate budget is strikingly similar to the House version, there are a couple of key differences. Like the House budget the Senate's budget is written without using any of the Rainy Day Funds, does not replace the one-time federal stimulus money, and does not account for growth. Unlike the House bill, the Senate bill maximizes use of dedicated funds.

The bottom line is that the senate's version allocates about $2.3 billion more that the house version and lays off about 1,400 fewer FTEs. However, the shortfall to maintain services in the state and account for increased population growth is still around $25-27 billion and the consequences of the drastic program and staffing cuts are enormous.

Similar to the proposed house budget some of the senate budget proposals include:

  • 10% provider rate cut for Medicaid
  • Closure of at least onr State Supported Living Center
  • Privatization of at least 2 State Mental Health Hospitals
  • Reduction of 124 FTEs in State Mental Health Hospitals
  • Reduction of 749.5 FTEs from DFPS in foster care, adoption, and TANF childcare programs
  • Higher Education funding cut by $1.09 billion
  • Reduction of 503.3 FTEs at TYC facilities and closure of some facilities
  • Elimination of funding for Project Reintegration of Offenders (RIO)at TWC

State Worker Pensions

On Thursday, January 27th, House Chairwoman Vikki Truitt and Senate Chairmen Robert Duncan hosted a briefing on the state of Texas pension and health care plans.

Chairwoman Truitt spent about hour explaining the differences between Texas's pension plan and others states that find their pensions in trouble. She further went on to make the case for the advantages of the define benefit plan. Chairwoman Truitt citied that defined benefit plans, like our current ERS/TRS pension plans, promote longevity amongst the workforce, this helps keep turnover low in our agencies. Rep. Truitt's comments indicated that she supports our current define benefit pension plan and believes it shouldn't be changed.

Former Representative Talmadge Heflin, now the Director of the Center for Fiscal Policy at the Texas Public Policy Foundation, a right wing conservative think tank, believes the state should convert its define benefit plan over to a define contribution plan. His primary reason was that tax payers should not be responsible for paying for state employee pension plans that they no longer have. "Municipalities and cities pension plans are becoming a burden on taxpayers across the country. Texas can be a leader in this area by converting to a define contribution type plan and that's what the Center for Fiscal Policy will be proposing to the legislature this session." Mr. Heflin's presentation lacked the facts pertaining Texas's pension plan specifically. Furthermore, there was no evidence why our plan should be converted to defined contribution plans, especially since the Texas pension plan is in the top 5% compared to other states ( 83% funded ratio).

Facts about Texas Pension Plan:
1.-State employees' pension plan make up less than 2% (1.95 exactly) of Texas' budget
2. State retirees do not receive automatic costs of living adjustments (COLA)
3. Texas State employees pay more in contributions to the plan than most other state employees

State Worker and Retiree Health Care Continues to be Discussed at the Legislature

Many recommendations have been floating around the capital regarding health care for state employees and retirees, but some more than others. Some legislators and the Legislative Budget Board (LBB) are voicing concerns about exploding health care costs. Some believe that retirees should pay more out of pocket for themselves and dependents. In a study performed by LBB, they report that some of the highest health care cost to the plan can be attributed to retiree dependents.

Other proposals being floated around the capitol require employees to work for a certain length of time before being eligible for 100% premium coverage. At the January 27th briefing Chairwoman Truitt stated that she was concerned about the price of retiree health care and said, "the legislature should take a look at the issue and decide whether the legislature should continue to provide health care after employment with the state."

Furthermore, in testimony for the Senate Finance Committee on Monday, January 31st, LBB director John O'Brien recommended that current employees start paying 10% of their premiums of which the state currently pays 100%. This would amount to a pay cut for current state employees.

Legislators zeros out SKIP for CHIP

For the past thirteen years, children of state employees who are eligible for health care from the state employee health care plan have been excluded from applying for CHIP. Due to that federal provision the Texas Legislature created State Kids Insurance Plan (SKIP) for state employees to help them pay for their children's medical premiums. Now state employees are eligible to apply for CHIP because of the National Health Care Reform Act signed by President Obama last year. In order to qualify for CHIP there are two requirements.

First the state must meet "Maintenance of Effort." This means that the state must contribute to health benefits on behalf of employees, including dependent coverage, for the most recent state fiscal year. This level cannot be less than the amount it expended in Fiscal Year of 1997 increased for inflation.

Second, the individual worker must meet the requirements of a hardship waiver. This means that the total annual total amount of premiums and cost-sharing for coverage of the family of the child in the state employee plan in more than 5% of the family income.

If the state meets the first condition (maintenance of effort) any child of a state employee that meets the hardship requirement can be enrolled in CHIP. The hardship condition is applicable on a family by family basis.

Because of this change in national law, budget writers have discontinued funding for the "SKIP" program and will encourage the 6,000 state employees who are participating in this program to apply for CHIP. Income eligibility requirements are virtually the same between the two programs.


TSEU will continue to monitor this issue as the budget process goes on. If you have any questions as to how this can affect you and your family please contact Derrick Osobase, ( Legislative Director.

Senate Committees

Late last week the Senate set membership for the various committees. Below is a list of committee members for some the committees most relevant for TSEU members. For a complete listing go to:



Senate Finance Committee Hearings: Deficit continues to grow

Monday, January 31st was the first day of hearings for the Senate Finance Committee. The Committee took testimony from the Comptroller's office, the director of the Legislative Budget Board, and began hearing from Article II agencies from the Health and Human Services Commission.

In these hearings John Heleman, Comptroller's chief revenue estimator, was pressed on just how large the state's structural deficit has grown. The persistent $10 billion hole has resulted from years of underperforming business taxes that were intended to fill the hole left by the massive property tax cut in 2006. "That gap is not closing up," said Heleman. Legislators will have to deal with this hole, it's not going away and is the direct result of poor fiscal planning and policy from the legislature.

The finance committee will be taking public testimony on issues in the five human services agencies (HHSC, DADS, DARS, DFPS, DSHS) this week. All members of the public, including state employees who are only representing themselves and not the agency, may testify. Below is the proposed schedule, although it is subject to change. Please be sure to check the schedules at the link below:

Senate Finance Hearing Schedule-

  • Tuesday, February 1, 2011: 6:00PM, Committee will begin hearing testimony on all HHS agencies (HHSC, DADS, DARS, DFPS, DSHS), E1.036
  • Wednesday, February 2, 2011: 9:00AM, Committee will continue hearing public testimony on all HHS agencies (HHSC, DADS, DARS, DFPS, DSHS), E1.036
  • Thursday, February 3, 2011: 9:00AM, Committee will continue hearing public testimony on all HHS agencies (HHSC, DADS, DARS, DFPS, DSHS), E1.036

Bills to Watch:

HB 60: Support
Cost of living increase to Teacher Retirement System: Sponsored by Rep. Mando Martinez, Establishes a cost of living adjustment based on inflation, growth, and the consumer price index. However the bill also limits the payment of cost of living increases (COLA) to years when the fund is actuarially sound.

HB 471: Opposed
Election through secret ballot of a labor union as the exclusive bargaining representative: Sponsored by Rep. Doc Anderson, Amends current labor code Section 101.1035 to restrict the method in which unions can be elected and established at a work site through secret ballot or mail-in ballot only.

HB 762: Opposed
Establishing pill splitting program to reduce health plan costs for certain public employees: Sponsored by Jose Manuel Lozano, Established a program to allow doctors to proscribe more potent doses of certain medications that individuals may split pills at home to the appropriate dose. The program is voluntary but includes a copay incentive for program participants.

HB 832: Support
Cost of living increase applicable to benefits pay by the Teacher's Retirement System: Sponsored by Rep. Jose Manuel Lozano, Similar to HB 60 (described above) but excludes the section about limiting cost of living increases relative to fund soundness.

SB 218: Opposed
Relating to procedures in certain suits affecting the parent-child relationship and the operation of the child protective services and foster care system: Sponsored by Sen. Jane Nelson. Among other amendments to the family code, the bill established a redesign of the foster care system implementation. Section 9 lays out a plan for expanding foster care privatization basing payment on performance rather than on services utilized.

For more details contact:

TSEU Austin Office


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