The 2021 regular legislative session adjourned “sine die” - a Latin phrase meaning without a future meeting day - on Monday, May 17, 2021, and the threat from a proposed retirement review commission disappeared with it.
Senate Joint Resolution: SJR55 sponsored by Senator Arthur Orr (R-Decatur) & Senator Greg Albritton (R-Atmore) – DEFEATED passed the State Senate but died in the House, would have created the State Employee and Teacher Compensation Joint Interim Study Commission, which was tasked with reviewing, studying, and recommending changes to the “salary, retirement, health insurance, bonuses, and other benefits” provided to state agency and public education employees.
The resolution was pushed and promoted by the same legislative faction that partnered with the Pew Charitable Trust in 2016 in an attempt to transfer Alabama’s retirement system from a defined benefit plan to a privatized, 401(k)-style model.
ARSEA rallied our legislative allies in the House to have the resolution carried over on the session’s second-to-last day and blocked from consideration on the last meeting day.
We offer our thanks and appreciation to State Rep. Rex Reynolds (R - Huntsville) and State Rep. Proncey Robertson (R - Mount Hope), both of whom are dues-paying members of ARSEA; State Rep. Randall Shedd (R - Fairview), who made the motion to carry over the resolution once it reached the House floor; and House Ways and Means General Fund Chairman Steve Clouse (R - Ozark), who lent his support to our effort.
ERS Board Expansion: SB79 sponsored by Senator Garlan Gudger (R-Cullman) and carried in the House by Rep. Reed Ingram (R - Montgomery) was signed into law. This Act Expands the ERS board from 13 to 15 members and adds designated seats for cities, counties, and local public boards. Adding two elected seats tilts control of the board away from politicians and appointed members and toward the duly elected representatives of employees and retirees who are members of ERS. ACT 2021-390
This ARSEA-supported legislation resulted in the Alabama Legislature awarding final approval to giving employees and retirees more representation on the board overseeing the RSA Employees’ Retirement System (ERS).
General Fund Budget: HB309 sponsored by Representative Steve Clouse (R-Ozark) fully funds the Annual Required Contribution (ARC) of the Retirement Systems of Alabama and the requested allocation of the State Employees’ Insurance Board and including a 2% cost-of-living pay raise for state employees.
Because lawmakers have consistently funded the fiscal needs of the RSA, Alabama has avoided the problems faced by other states. This will be the fifth consecutive year that SEIB will be funded at the same level. The budget also includes language expressing the legislative intent of not increasing the health insurance premiums for state employees and retirees.
Retiree Longevity Bonus: SB229 sponsored by Senator Del Marsh (R-Anniston) failed to pass. It would have provided retirees with a longevity bonus based on years of service ($24 times years of creditable service). State retirees would have received the bonus in December and local government retirees would be eligible when, and if, funding is approved by their former local government employers.
Unfortunately, ARSEA failed to secure the longevity bonus for retirees because House and Senate budget committee chairs signaled their opposition when it was in place to receive a vote on the Senate floor. Our running vote count among senators showed that ARSEA had the votes necessary to easily pass the bonus legislation if considered on the floor, but the General Fund and Education Trust Fund budget chairs launched a filibuster to stop the bill’s progress. A similar Alabama Education Retirees Association measure to provide retired teachers and support staff with the same bonus failed to gain traction, as well.
According to Sen. Del Marsh (R - Anniston), who sponsored our bill, the budget chairs have committed to passing a retiree bonus next year. We will, once again, pre-file the bill at the earliest opportunity and ensure it is in place for the promised passage when lawmakers convene for the 2022 regular session in January.
State Employee Retirees’ Trust Fund: SB394 sponsored by Senator Greg Albritton (R-Atmore) died. It would have created a State Employee Retirees’ Trust Fund to be managed by the ERS Board of Control to fund periodic bonus checks for state retirees.
Homestead Exemption: HB344 sponsored by Representative David Faulkner (R-Mountain Brook) passed. This legislation provides certain homestead exemptions to be claimed and verified by mail or electronically as provided by the local tax assessing official.
Alabama Gaming Proposal: SB319 sponsored by Senator Jim McClendon(R-Springville) died. This proposed constitutional amendment establishes the Alabama Education Lottery and the Alabama Gaming Commission. 50% of the proceeds from the lottery would have gone towards the Education Trust Fund and 50% would have gone to the General Fund. The establishment of the Alabama Gaming Commission will allow casino-style games at five locations.
ARSEA expects that a Special Session will be called to readdress gaming in Alabama.
Revised Compensation for Retired Judges: HB109 sponsored by Representative Jim Hill (R-Moody) died. ARSEA followed this legislation that would have revised the compensation received for retired justices and judges who are called for active service.
Group Insurance Products: HB261 sponsored by Representative Kerry Rich (R-Albertville) and SB295 sponsored by (R-Trussville) died. This legislation would have provided a level of oversight through the State Employee’s Insurance Board (SEIB) and the Local Government Health Insurance Board (LGHIB) approving companies to offer employees and retirees group insurance products.
Pharmacy Benefit Managers: SB227 sponsored by Senator Tom Butler (R-Madison) was signed into law. This law restricts the ability of pharmacy benefit managers (PBMs) to negotiate lower prescription drug costs for Alabamians on group health insurance plans, including self-insured plans like SEIB and PEEHIP and other employer-based plans. ACT 2021-341
Public Safety Death Benefit: HB81 sponsored by Representative Phillip Pettus (R-Killen) was signed into law. This law allows the use of hazardous duty time to calculate years of service for in-service death benefits for firefighters, law enforcement officers, and correctional officers. ACT 2021-270
Fire Fighter Death Benefit: HB532 sponsored by Representative Russel Bedsole (R-Alabaster) passed. This legislation provides an additional benefit for any municipal firefighter that dies as a result of a cancer diagnosis during the ten-year period after the firefighter's last date of employment.
This session was cut short by the covid 19 pandemic. these bills died before being brought up to vote and were not discussed in the special session
Retiree Longevity Bonus: SB218 sponsored by Senators Jabo Waggoner (R – Vestavia Hills)/ Del Marsh (R – Anniston) and Greg Reed (R – Jasper) This bill would have provided a one-time, lump-sum retiree bonus that utilizes a sliding scale formula - $3.00 multiplied by the number of months of active service during a retiree’s career
FY20 General Fund Budget: SB157/HB152 sponsored by Senator Greg Albritton (R – Atmore)/Rep. Steve Clouse (R – Ozark). Included in this legislation was the appropriation for the State Employees Health Insurance Program. In 2020, the SEIB requested $930 per employee. The budgets were later passed in a quickly held special session and the insurance appropriation was included.
Adding Local Government Members to the ERS Board: SB154 sponsored by Senator Greg Reed (R – Jasper) and HB172 sponsored by Representative Reed Ingram (R – Montgomery). These bills passed their house of origin but were left awaiting votes in committee, never making it to the floor for any more action. This legislation was intended to revise the membership of the Board of Control of the Employees’ Retirement System (ERS) of Alabama by adding designated ERS members from local units (such as cities, counties, and public boards).
Elder Abuse – Financial Institution Delay of Transactions: SB166 sponsored by Senator Shay Shelnutt (R – Trussville) and companion HB207 sponsored by Representative Chris Blackshear (R – Smith Station) both bills were left in their house of origin awaiting a vote on the floor. This legislation would have allowed a financial institution to refuse or delay a financial transaction on an account of an elderly or vulnerable adult when a financial institution has reasonable cause to suspect that financial exploitation may have occurred or is being attempted.
Retiree Revolving Door Revision: SB 177 sponsored by Senator Garlan Gudger (R – Cullman) was left on the Senate floor awaiting a vote. This bill would have provided that a former public employee may resume employment with a former governmental employer during the two-year cooling off period. This bill also would have provided a former public employee may accept employment with another public employer and may represent the interests of that new public employer before his or her former public employer during the two-year cooling off period.
Tier Adjustment Bills – There were multiple bills that if passed, would have made an adjustment to the current Tier 2 retirement benefit for active employees. These bills were: SB201/HB268 Tier 3 Retirement Benefit created for active state employees, HB280: State Police Tier II plan reopened to any employee of Alabama State Law Enforcement Agency who is certified by the Alabama Peace Officers' Standards and Training Commission and performs law enforcement duties, 25 year retirement and hazardous duty time allowed, HB76/SB: Tier 3 Retirement Benefit created for active teachers
The Alabama Legislature had not yet adjourned its 2019 regular session when our ARSEA/APEAL Update was distributed last week, so we are devoting this issue to a final review of the bills affecting current and future retirees that our association introduced and supported over the course of the past three months.
Fiscal Year 2020 General Fund Budget - The House and Senate also approved a $2.1 billion General Fund budget that fully funds the request of the State Employees Health Insurance Program, which provides health coverage to both active and retired state employees. The funding should allow SEHIP administrators to avoid placing premium increases or additional out-of-pocket costs on plan participants for the third consecutive year. The budget also fully-funded the Employees’ Retirement System’s annual required contribution, commonly known as the ARC, which is the amount that actuaries determine is necessary for the state to contribute to cover retirement costs for the fiscal year. Securing necessary funding for both ERS and SEHIP was among the top priorities in ARSEA/APEAL’s legislative agenda this year.
Local Government Retirement Fairness Act - The Alabama Legislature awarded final passage to the “Local Government Retirement Fairness Act,” which allows local governments participating in the Retirement Systems of Alabama to opt out of the Tier II benefit plan that was forced upon them seven years ago. ARSEA/APEAL led the effort to pass the legislation, which was sponsored by Sen. Jabo Waggoner (R - Vestavia), along with a coalition comprised of the Association of County Commissions of Alabama, Alabama League of Municipalities, and the Professional Firefighters of Alabama. The two-tiered retirement system was passed by the Legislature in an effort to reduce the retirement cost of state and education departments. Local government entities were unnecessarily included in that legislation despite the fact they provide the funding for their individual pension plans. ACT 2019-132
Partial Lump Sum Option Legislation - Lawmakers also approved legislation that provides future state retirees with the option of taking up to 24 months of their monthly retirement allowance as a single, lump-sum payment upon separation from the workforce. The remaining retirement allowance would be distributed per the option chosen by the member. Under the provisions of the measure, which was sponsored by State Rep. Alan Baker (R - Brewton), the payment is calculated using the current - not long-term - value of the individual’s pension benefit, and federal taxes will have to be paid on the full amount that is claimed. The partial lump-sum option, known in government lingo as PLOP, is already available in 29 other states. ACT 2019-316
Special Needs Trust Allowance - The Legislature enacted a bill by Senator Cam Ward (R - Alabaster) that allows the retirement allowance of a member of the Judicial Retirement System, the Employees’ Retirement System, or the Teachers’ Retirement System to be paid into a special needs trust. A special needs trust allows a disabled beneficiary to utilize assets left to them without losing eligibility for SSI or Medicaid benefits. ACT 2019-221
DID NOT PASS
Retiree Longevity Bonus - Lawmakers failed to pass a longevity bonus that ARSEA/APEAL had requested for state and local government retirees participating in the Retirement Systems of Alabama. A similar bonus requested by the association representing retired teachers also died with last week’s adjournment.
Alabama Lottery - The Senate approved a proposed constitutional amendment that would have established an Alabama Lottery with proceeds earmarked for the General Fund budget after debt owed to the Alabama Trust Fund was repaid. The proposal would allow for only paper ticket lottery sales, and strictly forbade electronic lottery terminals. A House amendment adjusted the earmarking formula to 75% of the proceeds for the General Fund and 25% for the Education Trust Fund, but the constitutional amendment ultimately failed to achieve the three-fifths supermajority vote necessary for final passage.
ERS Tier II Benefit Revision - The House approved but the Senate failed to pass legislation that would establish a new retirement plan for state employees hired on or after October 1, 2020, or any Tier II plan member who elects to join the new plan.
Retiree Return to Work Earning Limit - The Legislature did not pass a bill to increase compensation that a retiree can earn while receiving an ERS or TRS retirement and performing duties with an employer participating in the retirement system. The measure would have increased the limit to $42,000 beginning in the 2020 calendar year and provided regular Consumer Price Index adjustments after 2025. It was sponsored by State Rep. Rex Reynolds (R - Huntsville), who is a retired police chief and a dues-paying member of ARSEA/APEAL.
FY18 General Fund Budget: SB178 and HB156 sponsored by Senator Trip Pittman (R – Daphne) and Rep. Steve Clouse (R – Ozark) was signed by Governor Ivey and included the appropriation for the State Employees Health Insurance Program. This year, the SEIB has requested $935 per employee. The employee rate of $930 is reflected in the budget, thus far. The budget includes language stating, “it is the intent of the Legislature that the Board not increase the out of pocket costs to active and retired members.” This version, as introduced, is from Governor Ivey’s proposed budget.
Retiree Longevity Bonus: SB215 sponsored by Senator Gerald Dial (R –Lineville) was signed by Governor Ivey. This legislation provides a one-time, lump-sum retiree bonus awarded June 2018 to those retired prior to April 30, 2018. Bonuses will be calculated using the following formula: $12 x years of service.
Local Government “Catch Up” Retiree Bonus: HB249 sponsored by Rep. Steve McMillan (R – Bay Minette). This legislation provides those local government entities that did not fund the 2017 lump-sum retiree bonus the opportunity to do so. If passed by the legislature and awarded by the entity, retirees would receive bonus payment, December, 2018 that utilizes a sliding scale formula - $24 x years of service = Bonus Amount (8,900 local government retirees were eligible to receive a bonus who were previously denied.)