|3-Sept||8:00 am||MDT||Glendive MDT|
|3-Sept||10:30 am||Dawson College||Dawson Community College -UC 102
300 College Dr
|3-Sept||1:00 pm||Dawson College||Dawson Community College -UC 102
300 College Dr
|3-Sept||7:00 pm||Sleep Inn||Sleep Inn
Tongue River Room
1006 S Haynes Ave
|4-Sept||9:00 am||Sleep Inn||Sleep Inn
Tongue River Room
1006 S Haynes Ave
|4-Sept||12:30 pm||Pine Hills||Pine Hills
4 N Hayes Ave
|4-Sept||2:15 pm||Pine Hills||Pine Hills
4 N Hayes Ave
Mail ballots were sent July 2nd for the purpose of ratifying the 2013-2015 collective bargaining agreement.
PLEASE BE AWARE OF THE QUICK TURN AROUND TIME. CHECK YOUR MAIL AND RESPOND QUICKLY.
Please notice that MDT has a new Field Representative, Raymond Berg.
He is planning to have meet and greets around the state in the near future. Presently he has visited Lewistown, Miles City, and Glendive MDT offices. Raymond would like to meet new leaders or have conversations with members interested in becoming more active. Please feel free to contact Raymond at the Helena Headquarters at 1-800-221-3468 or email him at firstname.lastname@example.org to assist in scheduling upcoming meetings in your district.
Ready for a round of health screenings for state workers? Here’s the schedule!
MDT Chapter Ratifies Contract
MPEA’s Highway Department Chapter ratified its collective bargaining agreement July 10. There are a number of improvements in the contract, according to MPEA Field Services Director Dick Letang, principal negotiator.
All employees will now be able to select either overtime or compensatory time in April or October. In the past, such a designation had to be made in January.
The ratified contract improves shift differential for Motor Carrier Service Officers by using 10 p.m. instead of midnight as the start time.
Oil/gas activity in Eastern Montana has impacted everyone needing a place to stay for the night. To assist in solving the problem, the ratified agreement will enable construction workers to pick up an additional $12 per night for use of a camper or RV. This is on top of the current per diem and lodging.
Letang said that the telecommunications technicians will receive a $5 increase for their tool allowance. This raises the unreceipted tool allowance to $40 per month.
Negotiating with Letang were Jodi Bachini, from the Helena lab; Tom Stuber, with the planning division in Helena; MCS Officer Brad Martin, Helena; Clay McLendon, MCSAP Great Falls; Pete Thelen, construction engineer, Kalispell; Ken Golob, Lewistown; and, Kevin Atkins, MCS, Billings.
In June, Legislative Fiscal Division Estimates $481 Million Ending Fund Balance
Agreement Reached on Pay, Health Insurance
As has been reported, the tentative agreement on wages and health insurance for state workers for the coming biennium was overwhelmingly approved by members of MPEA, MEA-MFT and AFSCME, the three unions involved in negotiating the agreement
The ratified agreement increases base pay, across-the-board, by 5 percent in the first full pay period in July 2013, and by another 5 percent the first full pay period in July, 2014. Significantly, the pay increases begin in July. This biennium’s agreement with the administration had January start dates and despite the small size and late start-up dates of this biennium’s negotiated proposal it wasn’t adopted by the legislature, and for most of the past two decades pay increases didn’t become effective until October.
The ratified agreement also calls for an increase in the state’s contribution to the health insurance program. This biennium there were no increases to the health plan. The ratified agreement calls for an increase of 10 percent in January, 2014, and another 10 percent in January 2015. The health plan uses a calendar year. This will increase the current contribution of $730 per month to $803 in 2014 and to $884 in 2015.
A number of health care changes are about to be implemented. Most of the federal Affordable Care Act isn’t fully implemented until January, 2014. The primary care clinic for the state employees is getting ready to open this summer. Montana is grappling with its Healthy Montana Kids program. The next couple years should give planners an idea of what the impacts will be from these efforts.
The ratified agreement also provides for a biennial appropriation of $75,000 to fund the labor/management training initiative.
The total biennial cost (all funds) has been estimated at $138 million.
In June , the Legislative Finance Committee received what has come to be known as the Big Picture report which provides a preliminary review of the financial condition of the state for the 2015 biennium.
The report estimates an ending fund balance of $481.4 million, or, $331 million higher than the $150.4 million estimated by the 2011 Legislature.
The report cites the following as the principal reasons for the increased revenue:
Revenue is currently estimated to be 5.1 percent higher in the 2013 biennium than anticipated during the session. Revenue in the 2015 biennium is currently anticipated to be 7.1 percent higher than the revenue in the 2013 biennium.
Spending growth rates have slowed from growth rates in previous biennia. Specifically, secure care in the Department of Corrections has leveled off; inflation for schools that is statutorily based is anticipated to be 0.89 percent in fiscal year 2014 and 2.3 percent in fiscal year 2015; and the growth of Medicaid caseloads appears to have slowed from previous growth rates.
Members Vote to Support Governor’s Proposal to Fix PERS
A motion to support Governor Schweitzer’s proposed plan to fix the public employees retirement system’s fiscal problems was endorsed by MPEA at its Annual Meeting June 16. The Governor’s approach to correcting the unfunded liability within PERS followed a discussion on the system by former MPEA executive director Tom Schneider.
Schneider, who first became involved in the retirement systems in 1956 as an employee of the Teachers Retirement System, said PERS is underfunded by $1.6 billion. “I understand where the figures come from but it is incorrect to think this underfunding has to be made up today.
“We have a 30-year period, there is nothing immediate. We can get a handle on it by moving slowly and in the right direction, but we have to start now!” Schneider explained.
He then began to discuss House Bill 122 from the 2011 Legislative Session. “They only implemented half of the PERS Board’s proposed bill and that’s the part that reduced benefits. The other half of that legislation was to increase employer contributions and those provisions were stripped from HB122.”
In reviewing the Governor’s proposal, Schneider explained that it made progress by attacking the unfunded liability in five-year increments. “The Governor’s proposal is the other half of House Bill 122 plus House Bill 632 which used some of the unobligated coal tax revenue.” More specifically, for PERS the Governor has proposed that employers and employees each contribute an additional 1 percent to the retirement plans, raising an estimated $13.7 million per year from each source, and the state would contribute an estimated $18 million per year from coal-tax severance funds. There would be an additional local government contribution as well.
The Governor has said “By the year 2020 we will be actuarially sound.”
Schneider also touched on legislative staff attorney David Niss’ opinions of making changes to the system for current employees. Schneider said Niss had told both the State Administration and Veterans Affairs and Legislative Council that “what exists for current employees is a contract you can’t break, but if you try here is a road map that will provide you with the most credibility.”
Schneider concluded his remarks by noting that he had spent 55 years working to improve the systems “and I’m not going to walk out now.”
Schneider was asked to distinguish between a defined benefit plan and the defined contribution structure being promoted by some politicians. It was explained that a defined contribution plan has no annual guaranteed annual benefit adjustment, places all risk on the employee and provides no guarantee that there will be anything there when it comes time to retire. “A simple illustration of my problem with the DC approach is the fact that the retirement systems lost $3.5 billion dollars when the market fell in 2008. If the employees had been in a DC plan, THE EMPLOYEES would have lost $3.5 billion dollars out of their own pockets.”
Schneider also said it is actually cheaper to fund the present system. He also noted that taking new employees out of the pension mix is fiscally stupid because new contributors are needed to fund the benefits of those who retire and without them unfunded liabilities grow.
Actuaries Cost Defined Contribution Conversion
There was legislation in the 2011 session to eliminate Montana’s defined benefit retirement structure and replace it for new hires with a defined contribution system that places all risk on employees and eliminates a guaranteed monthly amount. MPEA expects to see that legislation again in the 2013 session.
Anticipating reintroduction of such a change staff at the Montana Public Employees Retirement Administration (MPERA) had its actuaries perform an analysis to determine the financial effects upon the Public Employees Retirement System if it were closed to new members as of July 1, 2012 and all future eligible employees would be placed in a defined contribution system.
The actuaries from the Cheiron firm began by noting that at the last valuation date of June 30, 2011, PERS had an unfunded liability of $1.6 billion, which was 150 percent of current covered payroll. Paying off the unfunded actuarial liability depends upon contributions from future payrolls. If the system is closed to new members, the covered payroll of the defined benefit plan would decrease each year.
The actuaries note that there are two immediate impacts. First, such a change would cause an immediate increase in the amortization amount and consequently an immediate increase in the annual required contribution. Second, the actuaries currently develop figures based on a rolling 30-year period, meaning that they restart the 30 years at each valuation date. With a closed membership, the actuaries would move to a closed amortization period of 30 years from the date that the system is closed to new members.
So, what are the costs!
In the fiscal year beginning July 1, 2012, the actuaries expect contributions of about $85 million but these would drop below $15 million by 2036; this assumes that the current employer contribution rate of 7.13 percent will continue for all future years
According to the actuaries, if you assume contributions equal to the annual required contribution were made for each year beginning July 1, 2012, the contributions would need to be increased to $216 million in 2012 and then would slowly decrease , but would still be almost $140 million by 2036. Put another way, as a percentage of pay the employer contribution would increase from about 18 percent in 2012 to almost 67 percent of pay in 2036.
The actuaries note that the advantages to a defined contribution system is that the contribution becomes fixed and predictable and that there are no unfunded liabilities. Additionally, these plans are more portable and have lower administrative costs.
At the same time, according to the actuaries, studies have shown that rates of return in defined benefit plans consistently exceed those obtained in individual defined contribution plan accounts. Another advantage of defined benefit plans is the pooling of longevity experience; early deaths offset the cost of those whose lifetimes far exceed the average. Also, since large defined benefit plans are ongoing, investment losses can be absorbed and recovered by future investment gains over long periods of time.
The actuaries summed up their report to MPERA by noting that for a given level of contributions, retirees will receive more income from a defined benefit plan than from a defined contribution plan.