Retirement Benefits
Close friends and neighbors are calling me in a panic over HB 213 (Unused Sick Leave at Retirement Amendments). They are panicked, because the public employees' association is misleading them, saying that the legislature is stealing from them benefits they already have accrued. As many of the e-mails rightly say, public employees have gone without pay raises for too long; therefore, it is unfair to steal accrued benefits. I agree; that's why we're not going to do that.
My question is: Is it fair for those underpaid employees to pay dues to an association, only to have that association mislead them, so that the association can generate a barrage of panicked phone calls and e-mails to legislators?
Here is my response to constituents:
Public employees work hard to keep our State going. The legislature realizes that fact and appreciates the sacrifices our State's employees make; that is why there is broad legislative agreement that public employees will get a pay raise this year.
If public employees think I've mischaracterized HB 213, I invite them to get back to me. If I haven't mischaracterized HB 213, I invite them to ask their association why it has.
We will have difficult and important discussions on the going-forward portion of HB 213 (i.e., what will happen with sick leave benefits accumulated after 1/1/06). But that has to be a factual discussion. An important fact, and a fact I want to make clear with our public employees, is that the benefits you have accumulated to date are held precious to you -- and precious to the legislature.
My question is: Is it fair for those underpaid employees to pay dues to an association, only to have that association mislead them, so that the association can generate a barrage of panicked phone calls and e-mails to legislators?
Here is my response to constituents:
The state is looking at restructuring post-employment benefits.
Why? Because it has to.
A recent IRS ruling threatens to change the way these benefits are taxed. This means we must look at the issue.
Change can be scary. We realize that. However, to set your mind at ease, I would like to clarify the main assumption of these discussions. That assumption is – we will not take away the benefits you have accumulated.
First off, if you are already retired, don’t bother reading the rest of this message. Nothing is changing for you.
If you’re still working, you currently have the option upon retirement of taking some amount of your eligible accumulated sick leave in cash (up to 25% of the value). The rest goes to health insurance (1 month for every 8 hours).
Under HB 213 your accumulated sick leave still converts to health insurance at the same rate (1 month for every 8 hours). The difference is in the 25% that you now are able to get in cash. The IRS rule requires that this amount be paid into a 401K.
So, this means – for all your sick leave accumulated up until now – 25% of the value will go into a 401K, and the rest can still be converted to health insurance (1 month for every 8 hours). Again, these benefits are yours – you earned them and will receive them – though the IRS is forcing us to change how you receive them.
Now, let’s talk about future benefits you accumulate (after 1/1/06). Here, again, we’re not talking about any of the benefits you accumulated before 1/1/06. For all additional benefits you accumulate after 1/1/06, twenty-five percent (25%) of the value will go into a 401K. The remainder will go into a medical reimbursement plan – an account from which you can pay for medical expenses or insurance. The amount of money in that account will be the amount of your retirement wage multiplied by the number of hours of unused sick leave you accumulate after 1/1/06.
Please understand, the 1/1/06 date only changes your expectations for the unused sick leave you accumulate after that date. Everything you accumulate before 1/1/06 will go 25% to a 401K and the rest to health insurance (1 month for every 8 hours). Don’t believe the nonsense out there about having to retire to keep those benefits. That is a cruel story. You earned your benefits, and you get to keep them.
Why? Because it has to.
A recent IRS ruling threatens to change the way these benefits are taxed. This means we must look at the issue.
Change can be scary. We realize that. However, to set your mind at ease, I would like to clarify the main assumption of these discussions. That assumption is – we will not take away the benefits you have accumulated.
First off, if you are already retired, don’t bother reading the rest of this message. Nothing is changing for you.
If you’re still working, you currently have the option upon retirement of taking some amount of your eligible accumulated sick leave in cash (up to 25% of the value). The rest goes to health insurance (1 month for every 8 hours).
Under HB 213 your accumulated sick leave still converts to health insurance at the same rate (1 month for every 8 hours). The difference is in the 25% that you now are able to get in cash. The IRS rule requires that this amount be paid into a 401K.
So, this means – for all your sick leave accumulated up until now – 25% of the value will go into a 401K, and the rest can still be converted to health insurance (1 month for every 8 hours). Again, these benefits are yours – you earned them and will receive them – though the IRS is forcing us to change how you receive them.
Now, let’s talk about future benefits you accumulate (after 1/1/06). Here, again, we’re not talking about any of the benefits you accumulated before 1/1/06. For all additional benefits you accumulate after 1/1/06, twenty-five percent (25%) of the value will go into a 401K. The remainder will go into a medical reimbursement plan – an account from which you can pay for medical expenses or insurance. The amount of money in that account will be the amount of your retirement wage multiplied by the number of hours of unused sick leave you accumulate after 1/1/06.
Please understand, the 1/1/06 date only changes your expectations for the unused sick leave you accumulate after that date. Everything you accumulate before 1/1/06 will go 25% to a 401K and the rest to health insurance (1 month for every 8 hours). Don’t believe the nonsense out there about having to retire to keep those benefits. That is a cruel story. You earned your benefits, and you get to keep them.
Public employees work hard to keep our State going. The legislature realizes that fact and appreciates the sacrifices our State's employees make; that is why there is broad legislative agreement that public employees will get a pay raise this year.
If public employees think I've mischaracterized HB 213, I invite them to get back to me. If I haven't mischaracterized HB 213, I invite them to ask their association why it has.
We will have difficult and important discussions on the going-forward portion of HB 213 (i.e., what will happen with sick leave benefits accumulated after 1/1/06). But that has to be a factual discussion. An important fact, and a fact I want to make clear with our public employees, is that the benefits you have accumulated to date are held precious to you -- and precious to the legislature.
posted by steve u. at 2/03/2005
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3 Comments:
Thank you for your excellent post on HB 213. Although I am not personally concerned about it (I have only been with the state 15 years and understand the bill to be as you explained it, but many of my employees are and have been anticipating this benefit for a long time. The State has treated me very well while I have been here and I am grateful for the opportunities I have had. I would love to hear your opinion on HB 109 or to have the opportunity to discuss it with you. In my opinion, there has never been a more far-reaching bill in Utah state government. I assume that it will pass. I had an opportunity to attend the Utah Republican Party Central Committee this morning and we had about a dozen of our legislators discuss a myriad of issues. It's certainly going to be a busy session.
H.B. 213 ALSO proposes a change in accounting from paying out sick leave after retirement from an hourly rate (8 hours for a month of coverage) to a wage-related rate. In essence those in the public employee system that retire with the highest salaries will end up with a much larger health care account than those who have mid to low salaries, but who perhaps have dedicated their entire lives in service to the state.
This proposal is VERY unfair to the majority of employees who make so much less than their directors and managers, especially after recent years of salary freezes and lack of sufficient MCAs. I appreciate the legislature is trying to cut costs and assign a dollar amount to what they will have to pay out in future years, but cutting benefits to those who will need it the most strikes me as disingenuous and wrong. Please vote no on H.B. 213.
To verify:
http://www.le.state.ut.us/lfa/fnotes/2005/hb0213.fn.htm
Dear Representative Urquhart:
I am very saddened to read your comments. I can see from your comments that you will be supporting HB213. What I find most disturbing is your comments:
"...the public employees' association is misleading them (state employees), saying that the legislature is stealing from them benefits they already have accrued.
"Is it fair for those underpaid employees to pay dues to an association, only to have that association mislead them..."
You have alleged that this organization has misled its members but you do not mention that organization by name. Why? This is serious allegation you have made.
I am sure that you are not referring to the Utah Public Employees Association (UPEA) for which I am a member. I have read their e-mails stating us to contact our legislator and they have not said this bill will affect benefits they already have accrued.
More than likely, what has happened is that the average state employee has read Rep. Clark’s bill and is confused by its language. It is not written so the average person can understand its intent easily.
I think you should either state which organization is misleading its members by name or you should retract statement because it is false.
It is bad enough that we have gone three years without a pay raise and are losing are benefits but to have you an elected offical question the integrity of all state employees association is downright wrong. Shame on you.
Thank you for reading my comments.
Your neighbor
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