Week Eight, and Fireworks Over PERS, at the N.D. Legislature
By Tom Gerhardt, NDU Director of Public Affairs
Legislators gaveled in Wednesday morning after a few days off for Crossover, and it sure didn’t take long for things to heat up.
Right before Crossover, Rep. Al Carlson, the House Majority Leader, introduced an 80+ page policy amendment to the budget bill for PERS (Public Employee Retirement System), HB 1023. The amendment changes the governance of PERS, eliminating the Board of Trustees and replacing it with an advisory committee under a new state agency called the PERS Office. The governor would appoint an Executive Director to oversee the new agency.
The bill breezed through the House before Crossover, without a formal hearing, and was sent to the Senate Government and Veterans Affairs Committee where it was heard Thursday. That’s where things got interesting.
Representative Carlson entered the committee room and asked Chair Nicole Poolman why an appropriations bill was being heard in her committee, calling it “highly unusual.”
Senator Poolman responded, telling Rep. Carlson that there was quite a bit of policy in his amendment.
Carlson told the committee that legislative involvement is crucial and that those making the final decisions should be elected officials. “As a legislator, I take very seriously the jobs we’re given, and that’s to pass laws and to appropriate money. Nobody else can do that except us.”
The issue stems from the 2015 session when PERS announced it was switching health insurance providers, from Blue Cross Blue Shield of North Dakota to Sanford Health.
PERS Executive Director Sparb Collins testified against the bill, specifically sections 5 and 33.
Section 5 would prevent the PERS Board from using its Century Code authority to use the health insurance reserve fund to buy down premiums. Section 33 would modify Century Code and transfer authority for program administration from the PERS Board to the PERS Office.
Collins told committee members passing those parts of the bill would result in increased cost and loss of grandfathered status. Collins also had concerns about changing fiduciary oversight from a board to a sole trustee (the Governor). Finally, Collins pointed out that the current PERS Board has two legislative members (Sen. Dick Dever and Rep. Pam Anderson). The change to an advisory committee would not include legislative members.
North Dakota United President Nick Archuleta testified on this, urging the GVA Committee to strip away the 85 pages of amendments and give a DO PASS recommendation to this PERS funding bill.
“First and foremost, the amendments to HB 1023 change the PERS Board from one that governs the Public Employee Retirement System to one that serves as a mere advisory role to the Governor or his designee. This change mutes the employee voice in the governance of the plan and concentrates that power in the hands of the Governor or a political appointee,” Archuleta said.
Archuleta went on to say, “Our office has been contacted several times by public employees who, knowing that they will not be receiving a salary increase for the next two years, are very nervous that these amendments are the first step in a scheme to eliminate their pensions.”
Senator Dever concluded testimony for HB 1023 by saying he was neither for it nor against it, but urged the committee’s careful consideration of the amendments. Dever further encouraged the committee to ask questions, saying, “This is a drastic, drastic change.”
The committee took no action on the bill.
HB 1406 was also before the GVA committee Thursday morning introduced by Representative Carlson. This is the bill that calls for the current six-year contract to go out for bid every two years. The bill also says the contract must begin on Jan. 1 of an even-numbered year.
PERS Executive Director Sparb Collins testified against the bill, saying it could result in significant reductions in plan design and could need additional appropriations to maintain. He said if additional funds were not added, the fund would lose grandfather status, resulting in more expenses for the plan while driving up deductibles.
Collins said bidding every two years could impact willingness of new carriers to enter bidding.
As for the Jan. 1 timeline, Collins said it would no longer be coordinated with the state budget process. He says the Legislature would have to make decisions based on estimates, while under the current process lawmakers know the exact plan being purchased.
HB 1407 calls for a two-year contract. Collins said, “A six-year process may encourage carriers to invest in the relationship by being more aggressive in pricing and other guarantees.”
SB 2135 calls for the creation of an initiated and referred measure study. North Dakota United is included in that commission in the bill that passed the Senate. It was introduced by Sen. David Hogue before the House GVA Committee this morning. NDU President Archuleta testified in favor of the study, saying, “Like most North Dakotans, NDU’s 11,500 members strongly support the Initiated and Referral Process. North Dakotans feel that these processes give them a voice on the rare occasion that the actions of the legislative majority run counter to the will of the voters that put them in office.”
No action was taken on SB 2135.
SB 2030 updates Century Code language from “North Dakota Education Association” to “North Dakota United.” It also keeps NDU representation on the Teachers Fund for Retirement Board. It passed on the House floor today by a 76–14 vote. SB 2030 also passed in the Senate before Crossover. It’s great news for NDU!
(Yes. — editor’s meme)
We’ve got a heavy schedule of bills we will be following next week, including multiple bills before the House Appropriations Committee that deal with individual budgets for our state’s colleges and universities. (Let’s run through them, “Bills in Brief” style. — editor’s note)
BILLS IN BRIEF
SB 2003 — This also contains the budget for the North Dakota University System Office. House Appropriations will hear these bills Monday, Tuesday and Wednesday next week.
HB 1382 — This is Rep. Rick Becker’s education savings account (cough, cough … voucher — editor’s note) bill that the House turned into a study. President Archuleta will offer testimony against it.
SB 2250 — This is a Pre-K bill. It provides early childhood education to children throughout the state. NDU testified in support of this bill in front of the Senate Education Committee, with President Archuleta saying, “Research overwhelmingly indicates that young learners who experience early childhood education are far more likely to experience long-lasting success throughout their academic careers.” He’ll also testify Monday afternoon before the House Education Committee in support of the bill.
SB 2186 — This is the education innovation bill that we at NDU are excited about. Introduced by Senator Poolman and carried by Sen. Erin Oban, the bill passed unanimously on the Senate floor. The bill will help ignite and release the creativity of teachers and learners alike across North Dakota.
Thursday an updated state revenue forecast will be released at 9:30 a.m. in the Brynhild Haugland Room. It will have a dramatic impact on the remainder of the legislative session as lawmakers will use it to guide them through budget decisions. Office of Management and Budget (OMB) Director Pam Sharp and lawmakers I talked to are not overly optimistic the forecast will provide good news. Stay tuned.
Finally, remember to join Nick and me live on Facebook this Monday at 4:30 p.m. (CST). We’ll talk more about PERS and take a look at the week ahead.