NCPERS holds the 2014 Legislative Conference
Were you unable to attend the Legislative Conference? Read this blog post for some of the educational information provided!
The NCPERS 2014 Legislative Conference kicked off Monday, January 27th, 2014 at the Capitol Hilton in Washington, DC. NCPERS President, Mel Aaronson began the conference with welcoming remarks discussing why NCPERS has a Legislative Conference; he stated that public employees and their pensions are the offspring of legislation and everything about us is determined through legislation.
Mel introduced Ron Brownstein, political director of the Atlantic Media Company and NCPERS first speaker. Brownstein discussed the current difficulty in Washington to move in any direction; the fundamental issue we face is we have two coalitions with very different ideas of American government and they cannot find a way to bridge their differences. He believes that if there were better relationships in Washington across party lines, the tone of Washington would be more civil, but he does notmthink the outcomes would be very different because barriers are structural. He stated the three main issues as follows: neither party can maintain party advantage, we are living in a period where the country doesn't trust either party enough to grant them any kind of lasting hold on power where they can set a lasting direction, and the current structure of political system now is oriented toward divided government.
The morning continued with a discussion on pension activities at the Department of Labor with Phyllis Borzi, the Assistant Secretary of the Employee Benefits Security Administration. Borzi spoke on the retirement needs in the private sector and where private and public sectors regulator needs intersect.
AFSCME Director of Collective Bargaining, Steven Kreisberg presented on the new Illinois pension changes. Kreisberg discussed the political basis for the impairment of Illinois retirement plans as follows: historic underfunding, 1995 legislation, legislature's unwillingness to tax, the current appetite for spending and pensions as the lowest priority, solvency issues, pension debt paid last, and lastly democratic control. The Illinois legislature has made changes to the Illinois pension systems even though Article 13 Section 1 of the Illinois constitution guarantees pension contracts. Those changes, effective July 1, 2014 are as follows: cost-of-living adjustments (COLA) reductions, COLA freezes, pensionable salary cap, increase retirement age (effects employees who are 45 and younger), and funding changes (decreases employee contribution by 1% of pay). The Legislature is using the decrease in employee contributions as a legal argument along with their ability to police powers of the state. Multiple legal challenges have already been challenged and AFSCME will be filing on behalf of actives. Stay tuned for more information on the current Illinois situation.
Robert Klausner of Klausner, Kaufman, Jensen & Levinson, and NCPERS Legal Advisor ended the morning with a discussion on the Detroit bankruptcy and its implications. He began by stating that he thinks the Illinois decision is the more important decision than Detroit's bankruptcy decision, because Illinois is a straight interpretation of a state constitution that unambiguously says the pensions are contracts. Klausner discussed the current situation in Detroit for the public pensions. Private foundations have said they will put up $350 million toward the pensions if the state matches, in order to save the Detroit Institute of Art. The governor has agreed so the art is off the table and the pensions are safe. However, the OPEB liability is the most substantial debt and the Michigan constitution does not protect post- retirement benefits through the pension clause.
The second half of the day began with presentations from staff members from Capitol Hill. Current pension legislation in the U.S. Senate was discussed by Michael Kreps, majority staff member of the Senate HELP Committee and Preston Rutledge, minority staff member of the Senate Finance Committee. Discussions on the Senate Finance and House Ways & Means agendas were discussed by Kara Getz, majority staff member of the Senate Finance Committee and Aharon Friedman, majority staff member of the House Ways & Means Committee.
Hank Kim presented Oregon State Treasurer, Ted Wheeler (D) the NCPERS Elected Official of the Year Award. Treasurer Wheeler accepted the award, with remarks on the causes of the Great Recession as too much leverage on wall street, lack of financial controls and greed. Treasurer Wheeler discussed the lost the economic security of the middle class during the Great Recession. When discussing retirement security, Treasurer Wheeler stated that retirement security is not an individual problem, it is a societal issue, and there is a societal cost at not addressing the issue.
John Adler, the Retirement Security Campaign Director at SEIU spoke on the retirement security for all campaign, where the campaign is now and what we want to accomplish for 2014. Adler discussed the goal of everyone in the US being able to retire free of financial hardship and worry. Adler discussed the three different types of Secure Choice Pension plans: the original NCPERS plan, which would need to amend ERISA; Secure Choice Lite, which would require state legislation but no change to ERISA; and the California model (SB 1234) which required state legislation but no change to ERISA. He also described other state policy options: State Supplemental Social Security Plan, Multiple Employer Plan and task force/ study commission.
On Tuesday attendees will be heading to Capitol Hill to discuss pension issues with their legislators. Presentations from the conference will be available on the NCPERS website next week.
Stay tuned for the Healthcare Symposium on Tuesday!