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December 13, 2010 in News
Pension, health care cuts proposed
Gregoire: ‘Make tough decisions’
OLYMPIA — The state should cut off automatic increases to some state retirees and keep others from retiring then being rehired for their old jobs, Gov. Chris Gregoire said today.
It should also revamp health insurance programs to find savings from large purchase and reductions in unneeded services, she added.
The pension changes would not be popular, and some health care changes will not be easy, she said. “We’re in the worst financial crisis in 80 years. Now is the time to make the tough decisions.”
Gregoire unveiled several proposals Monday afternoon that she said could spell big savings over the next two-year budget cycle and beyond. It’s part of a slow roll-out of her fiscal 2011-13 budget, which will continue Tuesday and wrap up with a full budget book Wednesday.
Among the proposals floated Monday were an end to automatic increases to most of the retirees on the state’s oldest pension systems, PERS 1 and TRS 1. The increases were passed by the Legislature in 1995 as protection against inflation, but with inflation low, Gregoire is calling for the state to go back to the old system of letting the Legislature vote on any adjustments it sees fit.
The state should also get rid of early retirement incentives for new employees who choose to retire before age 65, she said. And it should make two changes in the retirement systems for employees of the state universities and colleges: cap the state’s contribution to those plans at 6 percent, which it does for other state employees, and ban the practice of allowing college employees to retire then be rehired for their old job, allowing them to collect a pension and a paycheck.
On health care changes, Gregoire wants state medical insurance plans — which cover some 335,000 public employees, family members and retirees, and some 1.3 million low-income children and families on Medicaid and other programs — to adopt a generics first policy for prescription drugs, divert more patients from the emergency rooms to clinics for non-emergency cases and monitor patients with histories of high-cost services.
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IHike4Fun on December 13 at 5:15 p.m.
I’ve never been a state employee so I don’t understand how pensions work. Don’t state employees pay into a retirement plan like ‘normal’ folks? If it’s money they’ve paid in don’t they control the cash flow out? Maybe someone can explain it to me.
Ed Byrnes on December 13 at 6:08 p.m.
There is a combination of defined benefit plans for regular state employees, which pay out a percent of highest ending salary regardless of the market along with a 401k in which the state matches contributions of the employee to a 6 percent matching cap. The percent of salary is based on years of service.
The thing with faculty and administrative employees at colleges and universities is that they do not have any defined benefit plan so their entire retirement is a 401k/IRA plan and the benefit paid out is completely subject to the vicissitudes of the stock market, hence the higher up front employer contribution since the state has no later pension burden when the employee retires.
As a public university employee I would love to get a defined benefit plan like other state workers do because it puts me at less risk, nonetheless I have to accept the more risky IRA only plan. I am certain that Gregoire will not move any of us faculty to a defined benefit plan so I am stuck with one of this governors’ broken promises, of which the recovered funds will be used to overcompensate the ever increasing numbers of the state management service employees, who we notice are never mentioned in any of these cuts.
If any of you have ever wondered if I would ever call a democrat a liar, cheater and scoundrel here goes: Governor Gregoire is a lying, cheating scoundrel.
lowtechmaster on December 13 at 6:22 p.m.
No person should be allowed to retire and then be rehired into their old position. How that has been allowed I do not understand. I am a retired state employee (Massachusetts) and such a “double dip” was not possible. I could not work in my old position after I retired. If I worked for the state in a new position after I retired, my salary from that job would have been deducted from my pension. It is certainly time that state employees in Washington be treated as something other than pampered pets. Their contribution to their health care is far lower than that in nearly all other states. If Social Security recipients are not guaranteed any yearly increase, why should retired Washington state employees be guaranteed one? (Massachusetts retires get a 3% annual COLAS, but it is only on the first $12,000 of a pension, or $360 per year.) And why the state of Washington is not grouping purchases in at least one area is an egregious violation of the state’s fiduciary responsibility to the tax payers!
Bob_Knows on December 13 at 6:38 p.m.
The state should cut their bloated wages and benefits down to comparable with private business.
west on December 13 at 6:45 p.m.
401ks for private workers are worker driven. They put in so much and maybe employer puts in something, or nothing…not very much, the match is never 1 to 1. And the worker has one investment company to invest his money, like Fidelity etc. The worker is the sole brain or advisor to which and how much money goes into which fund. He has no finacncial advisor..he is the boss. He can lose his butt and no one bails him out. If the market crashes..he loses. If market crashes, state pensions and 401’s are crash proof..guaranteed pension that will never go down. Why do they have better retirements than the poor Spokane guy or girl working for Spokane’s cheap low pay,private employers??
JBlim on December 13 at 6:56 p.m.
Careful what you wish for, Bob Knows, comparable wages will mean a pay increase for most state employees.
hawken on December 13 at 7:16 p.m.
As usual Blim doesn’t have a clue:
State and local government employees make more than employees in the private sector by the hour.
Avg hourly wage/benefits
Total Compensation State Employees are paid 45% more
Wages and salaries ” ” 34% more
Benefits ” ” 70% more
Paid leave ” ” 77% more
Health insurance 118% more
Defined-benefit pension 595% more
http://sunshinereview.org/index.php/Public_employee_salary
hawken on December 13 at 7:30 p.m.
According to the BEA data, Washington state employees earned an average $54,079 in 2007, versus $49,777 for the average private-sector worker. Those figures include employer contributions to retirement plans, health insurance, Social Security and the like, as well as wage and salary income.
http://seattletimes.nwsource.com/html/localnews/2011277862_statewages07m.html
james_l on December 13 at 7:37 p.m.
Funny how hawken leaves out the very next paragraph in the Seattle Times article he cites:
“However, such analyses don’t tell the whole story because the government and private-sector work forces are composed very differently. Washington state’s payroll, for instance, includes relatively more high-earning occupations, such as educators and finance specialists, and relatively fewer low-earning occupations, such as wait staff and retail clerks.”
hawken on December 13 at 7:41 p.m.
That’s why I cited the “averages.”
eagleproducer on December 13 at 7:47 p.m.
How are “averages” calculated, Doc?
misjustice on December 13 at 7:58 p.m.
Yes, Doc, do tell?
Scoutster on December 13 at 8:44 p.m.
Rheeeet, rhaaant!
misjustice on December 13 at 9:00 p.m.
spoke; he’s on another thread, bashing gay people, guess he won’t be back here to educate us.
Dazzeetrader11 on December 13 at 10:22 p.m.
Cut the number of State Employees by half.
Stop the “donations” to the pensions.
Rid the St of the unions and cut another 10% in spending overall…and solvency can be achieved. No other way. Nothing helps without huge spending cuts.
JBlim on December 13 at 10:27 p.m.
Just half? Don’t you want to cut them all?
Scoutster on December 13 at 10:37 p.m.
The problem with solutions like “cut the number of public employees in half” is that it is only half a solution.
It’s like saying “go to Buffalo, NY”. Millions of ways to get there, but everyone has their favorite.
Ed Byrnes on December 13 at 11:03 p.m.
No takers about the elite status of the Washington Management Service employees?
Scoutster on December 14 at 12:34 a.m.
I’m with ya on that one, ebyrnes…
A dumbass structure no smart organization in 2011 would use to manage either performance or outcomes. Eliminate the strata.
IHike4Fun on December 14 at 12:34 p.m.
“which pay out a percent of highest ending salary regardless of the market along with a 401k ”
I think it is the first part of this statement that is not supportable in the long term. This means that a state employee will continue to be paid when they retire (i.e. they are still on the state payroll though they are no longer working). This is a continued and escalating drain on tax revenues. If I was a state employee and had based my retirement on this type of entitlement I would be scared stiff. Sooner or later this will come to an end.