Hot Issues

Topics

• Retirement
• 2010 Utah Education Budget
• Capitol Bulletin: Weekly Review

• 2010 Legislative Summary
• 2010 Legislative Update Archive

March 12, 2010

2010 Legislative Summary

Please unbuckle your seatbelts and exit to the right. The 2010 Legislature roller coaster ride is over.

“Given the economic circumstances and issues we faced from day one of the legislative session, public education and educators fared remarkably well in the end,” said UEA Executive Director Mark Mickelsen. “I am especially pleased that teachers in the Jordan School District received a lifeline that may help them avert painful layoffs this spring.”

Many legislators and others attributed the outcomes for public education on the hundreds of e-mails, letters and personal contacts received from teachers and parents. Especially helpful and successful were the personal contacts with legislators made during UEA’s six Educator Day on the Hill activities. More than 100 educators participated this year.

The session was marked by tough battles over state employee retirement benefits, association leave rules, and a nearly $1 billion budget shortfall that threatened to compound Utah’s already tenuous public education funding situation.

 “We understand that growing the economy is the No. 1 issue for all of us and…long-term sustained growth requires education,” remarked Gov. Gary Herbert in concluding comments to legislators at the close of the session. “I hope you’re hearing the accolades and the…appreciation from people in the education world. I’ve received handwritten notes from the UEA…and others that have said ‘thank you’ for making tough choices but doing it appropriately (for education).”

UEA President Kim Campbell said, “the goal expressed by the governor, legislative leadership, and the Democratic minority was to hold public education to last year’s funding levels. In this tough economic climate, although there were cuts and growth wasn’t funded, they came very close to reaching their goal in the overall budget. The fact that public education received ongoing money will help avoid a disastrous funding cliff in next year’s budget. We thank our legislators and Governor Herbert for their hard work and support of public education.”

“If I could have changed one thing about this legislative session, it would be more focus on long-term, sustainable public education funding,” noted Campbell.

Here are a few highlights from the 2010 Legislative Session:

Budget—

The Governor and majority party legislative leaders worked to trim a proposed $21 million cut to public education to about a $9 million reduction from last year’s budget. However, there is no new funding to educate an estimated 11,000 new students expected next year. The net result is a cut of about 3 percent, far less than reductions faced by many other departments and agencies.

The public education cuts will come largely from funds for new school buildings and a 50 percent cut to teacher-directed supply money, with additional reductions to be determined by local school boards. At the last minute, lawmakers found money to help pay for new school library books. A last-minute attempt to insert charter school funding changes and eliminate association leave pay (see below) failed.

The WPU will remain at $2,577 despite no funding for the additional 11,000 students. School districts must absorb those costs in other areas.

A major change in the education budget proposal is a shift from one-time to ongoing money. During the downturn in the economy, one-time rainy day and federal stimulus money was used to fill budget shortfalls. In the new FY2011 budget, lawmakers and the governor agreed to replace most of the one-time money with ongoing funds.

“The change from one-time to ongoing funding is a huge win for public education,” said UEA Government Relations Director Kory Holdaway. “Without this change we would have faced a major funding cliff in future years.”

Retirement—

Two major bills dealing with the Utah Retirement Systems passed during the 2010 General Legislative Session. SB43 (third substitute): Post-retirement Employment Amendments and SB63 (third substitute): New Public Employees’ Tier II Contributory Retirement Act passed the Legislature on March 1 and are awaiting the Governor’s signature. While the UEA still believes the state would have been better served by allowing a year to study these issues and develop alternative solutions, these bills are much improved from their original form.

The bills were improved, in large part, because of the hundreds of letters, e-mails and personal contacts with legislators. The UEA Legislative team extends its thanks to everyone who helped in sharing concerns with legislators, especially members of the newly-formed retirement coalition (UEA, Utah School Employees Association, Utah Public Employees’ Association, and Fraternal Order of Police), 4,000 of whom gathered on the steps of the Capitol February 6 to protest cuts to public employee retirement benefits.

Contacts with legislators also helped stop two additional bills that would negatively impact retirement benefits for current employees. SB42 would have extended the years of service required for retirement and SB94 would have eliminated the 1.5 percent employer 401(k) contribution state employees currently receive.

For those working in education, here’s what SB43 and SB63 will do:

Current Employees: All retirement benefits, including years-of-service requirements, three-year highest salary averaging and the 2 percent multiplier for each year of service, remain just as they are now for all employees hired prior to July 1, 2011.

Current Retirees: Neither bill affects pension payout, COLA increases or any other aspect of current retiree benefits. If you have retired from the URS and returned to work in an entity participating in the URS, the new law removes the requirement that an employer contribute to an employee 401(k).  After July 1, 2010, employers may continue to contribute to the rehired employee’s 401(k), but only up to the “normal cost,” which will be 11.87 percent, about 2 percent less than the current contribution rate.

Retirees Who Return to Employment: SB43 applies to anyone who retires from the Utah Retirement Systems after July 1, 2010, and returns to work with any entity participating in the URS. It requires a retired employee to wait one full year before returning to employment with a state agency. A teacher who retired would have two options upon being rehired:

1. Stop receiving a pension payment and earn another 2 percent towards retirement per year upon ultimate retirement.
2. Receive a monthly pension payment after sitting out a full year before returning to work. There would be no replacement contribution to the employee’s 401(k) as is currently the practice.

New Employees: SB63 applies to public employees hired after July 1, 2011. Upon hiring, new employees will elect one of two retirement benefit options:

1. Defined Contribution: 10 percent of the employee’s salary will be placed in a 401(k)-type defined contribution plan for the employee.
2. Hybrid Defined Contribution/Defined Benefit: About 7.75 percent of the employee’s salary will fund a defined benefit plan paying 1.5 percent of salary for each year of service based on a 5-year final average salary. Employees would be required to have 35 years in the system or reach age 65 to qualify. An additional 2.25 percent of salary (for a maximum total of 10 percent) would be contributed to a 401(k) plan. Under the hybrid option, if the required defined benefit funding rate exceeds 7.75 percent, additional funding first comes off the 2.25 percent 401(k) contribution. If the amount exceeds 10 percent of salary, the employee pays the difference.

Both plans would have a four-year vesting period, meaning the employee must work four years to get any benefit at all.

Other Bills of Note—

HB4: Current School Year Supplemental Minimum School Program Budget (Supported by UEA, Passed)
This bill, passed early in the session, appropriated supplemental funds to hold public education harmless for the current fiscal year (FY2010). This bill was significant in that it spared public education from significant cuts like those required of other state agencies and departments.

HB246: Retirement Benefits for Charter School Employees (Supported by UEA, Passed)
This bill, sponsored by Rep. Christine Watkins, allows a charter school employee, a charter school, or an employee and a school jointly to purchase service credit within the Utah Retirement Systems equal to the period of the employee’s employment in a charter school located within the state.

HB268: Public School Innovations (Opposed by UEA, Failed)
This bill would have allowed a school or group of schools within a school district to create an innovation plan and adopt the plan with approval of the district school board and the State Board of Education. UEA opposed this bill because it would have allowed schools to exempt themselves from certain laws, including orderly termination, and to unilaterally remove themselves from negotiated employment agreements.

HB295: Expanded Use of School District Property Tax Revenue and
SB175: School District Capital Outlay Equalization Amendments (Supported by UEA, Passed)
These bills give school districts, for a two-year period, the flexibility to shift local capital fund revenues to fund general operations. SB175 phases out the property tax funding equalization for Salt Lake County over a five-year period. The bills are expected to give school districts, especially those in extreme financial difficulty such as Jordan and Grand County, added flexibility in dealing with the current economic conditions.

SB16: Utah Performance Assessment System for Students Amendments (Supported by UEA, Passed)
This bill expands the use of adaptive online testing in place of CRTs for districts that choose to participate.

SB77 (first substitute): School District Leave Policies (Opposed by UEA, Failed)
This bill, sponsored by Sen. Margaret Dayton, would have prohibited all paid association or union leave and required reimbursement for costs for certain unpaid leave including benefits. Parents for Choice, the Utah Taxpayers Association and Utah Citizens for Tax Fairness supported the bill. The UEA and Utah School Boards Association testified against it. The bill ultimately failed in the House on a vote of 25-43 with 7 absent. Several Representatives spoke against the bill including Reps. Black, Gowans, Powell, Mascaro, Moss, McIff and Watkins. Those against the bill primarily argued association leave was an issue of local control, better left to elected school boards. Sen. Dayton attempted to amend the school funding bill to include the SB77 provisions, but her efforts were defeated in the Senate.

SB147: Education Related Parent Organizations (Opposed by UEA, Failed)
This bill would have barred the PTA from appointing a representative to the investment advisory committee for the investment of Land Grant Trust Fund money. The irony is that Utah may not have had school trust land money without the efforts of the PTA.

SB150: Reading Requirements for Student Advancement (Supported by UEA, Passed)
This bill requires a school district or charter school to provide notice to a parent of a student in the first, second, or third grade if the student is reading below grade level and of available reading interventions available through the school district or charter school. It also requires a school district or charter school to provide appropriate reading remediation. A provision to retain students in grades 1-3 reading below grade level was eliminated.

SB275: Removing Signature from Initiative and Referendum Petition (Opposed by UEA, Passed)
This bill repeals the requirement that a voter must submit a notarized statement in order to have their name removed from an initiative or referendum petition. It also allows extra time from the date a petition is submitted until it is certified. The bill will, in effect, make it much easier for opponents to nullify a successful initiative or referendum.