Employees group works to block changes to State Health Plan, retirement system

jfrank@newsobserver.comMarch 26, 2013 

Janet Cowell

— The pressure building for weeks between the state treasurer’s office and the state employees association erupted at a legislative hearing Tuesday.

It comes as the association zealously tries to protect nearly 700,000 current and retired state employees and teachers from significant changes to their health insurance coverage and pension system. The changes in benefits are being considered by Treasurer Janet Cowell and lawmakers.

The employees’ complaints about a so-called “power grab,” largely confined to internal newsletters in recent weeks, landed in front of lawmakers as they considered a measure to make mostly technical changes to the $2.7 billion State Health Plan.

“I’ve never seen anyone who wants to be in charge of everything, but responsible for nothing more than Janet Cowell,” said State Employee Association of North Carolina Executive Director Dana Cope, taking aim directly at the two-term Democrat.

Mona Moon, the health plan’s interim director, told the House Insurance Committee that the legislation clarified the treasurer’s ability to implement wellness programs for state workers, such as surcharges and pilot programs designed to reduce coverage costs.

But the state employees association argued that the bill gives Cowell far-reaching unilateral power.

“This is significant,” said Ardis Watkins, a SEANC lobbyist. “This is a massive change.”

Watkins and Moon went back-and-forth trading dueling claims in response to lawmakers questions.

Moon told state lawmakers that the provision in House bill 232 wouldn’t lead to increases in state employee health insurance costs and any additional fees would need approval from the health plan’s governing board.

Her assurances did little to assuage the association’s concerns. Watkins called it a “slippery slope.” SEANC has challenged state treasurers in the past on various matters involving state employee benefits.

Much of the current debate focused on the surcharges approved in February by the State Health Plan’s trustees. Current and former state employees in the system’s more generous plan would pay a $20-a-month surcharge for smoking, another $15 if they don’t choose a primary care doctor and another $15 if they fail to complete a health assessment. For a single employee, noncompliance would triple premium costs, the association said, though if completed it could reduce monthly premiums.

Republican state Rep. Jeff Collins said such programs are necessary to cut state costs. “The healthier our employees’ lifestyles become, the lower the lower the total program costs to run,” the Rocky Mount lawmaker said.

“I don’t think you can pick one or two lifestyles and suggest that makes an unhealthy person,” countered Rep. Pat McElraft, an Emerald Isle Republican.

In the meantime, the association is looking at four different bills filed this session that propose changes to the $78 billion state retirement system run by the treasurer. The discussion comes as state leaders consider a shift from a pension program to a defined-benefit system.

“We don’t understand the need to go in and make major changes to the retirement system out of fear that there might be a bill to change the way the legislature funds it,” Watkins said.

The treasurer’s office is pushing House Bill 381, which would limit an employee’s ability to increase their salaries in the final years before retirement and boost their pensions. The measure also would eliminate the 10-year requirement for state workers hired after Aug. 1, 2011, to get vested in the retirement system, moving it back to five years.

Cowell did not respond to interview requests.

But a spokesman said the treasurer believes the 10-year rule makes it difficult to hire new state employees, particularly younger workers who are more likely to change jobs. Cowell also supports allowing employees to choose a defined-benefit program. The treasurer remains silent on one of the most controversial ideas: a minimum retirement age of 62 for state employees who started work on or after Aug. 1, 2011. Her staff floated the proposal at a recent meeting with state employees, who balked at the idea. The group fought off a similar effort in 2010.

The provision is not in Cowell’s bill, but Collins, the House sponsor for the measure, said the idea remains on the table.

“We need to do some things to shore up the long-term health of the state retirement plan,” he said. “This is a long-term process. We are making a number of changes to the state retirement plan through the next few years.”

Frank: 919-829-4698

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