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School Leader Concerns Help N.C. House Decide To Delay Veto Override Of Bill Ending Some Retirement Options

Governor Roy Cooper on Monday vetoed House Bill 1055, Retirement Complexity Reduction Act of 2018, which has been drawing concerns statewide from state employees and educators because it would eliminate some of the more popular current retirement options they would like to use in the future. Just before distribution of this newsletter, the bill was pulled off the House floor and re-referred to the chamber’s Rules Committee. This action appears to indicate the concerns have either led the House to drop the veto override vote altogether or that issues with the bill could be addressed in other related legislation prior to final adjournment of the 2018 session tomorrow.

The major issue with the bill, from the perspective of current state employees and educators, is that it eliminates three of the seven current benefit payment options to members who retire on or after January 1, 2019. The options proposed for elimination, which are among the most popular, include Social Security Leveling, Modified Joint & Survivor – 100%, and Modified Joint & Survivor – 50%. This means that if the bill becomes law as is, any current state or school employees who want to take advantage of one of these retirement options would need to retire no later than December 1, 2018, which is the last possible retirement date before the options are eliminated.

House Bill 1055, one of several new retirement bills seeing General Assembly action this session, also does the following:

  • Rewrites 37 service purchase provisions in the Teachers and State Employees’ Retirement System (TSERS) and limit the service purchases to five years.
  • Clarifies the provision requiring chief financial officers of participating employers to transmit a copy of pension spiking "watch reports" to chief executive officers and governing boards.
  • The act would take effect the day it becomes law and apply as indicated in the various provisions.

Although the Governor opted to veto this bill, it had broad support in both the Senate and House and passed both chambers easily with little debate before being sent to his desk. It is classified as an agency bill that was initiated by the staff of North Carolina State Treasurer Dale Folwell, who had attended at least one legislative committee to speak in favor of the legislation, saying it is needed for equity in retirement options and to save the state money overall.

Governor Cooper, in his veto message, expressed concern that the legislation could ultimately result in costly lawsuits for the state.

“Some past attempts to alter the retirement system have been ruled unconstitutional for taking away vested rights for teachers and state employees,” the Governor wrote in his veto message to the General Assembly. “Although this legislation was designed to save the state money, I believe taking away these retirements options from our teachers and state employees could und up losing the system more money than this legislation seeks to save.”

Lawmakers are working toward final adjournment of the 2018 short session tomorrow to meet their own self-imposed deadline, so any additional action on House Bill 1055 or issues related to it must be addressed by then. One N.C. House member who had been working to make chamber leaders aware of the concerns from public employees told the N.C. Association of School Administrators (NCASA) advocacy team this afternoon that the bill “could be subject to resurrection,” if the House and Senate can work together to quickly craft a compromise in other legislation to ease the public employee concerns.

Since the fate of this legislation remained unsettled this afternoon, NCASA will provide an additional update on its final outcome in next week’s newsletter and prior to that on our website at www.ncasa.net.

NCASA