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“For those who like to stir the pot, you should know what you’re cooking before you get burned.”

Anonymous

In my view, Governor Ferguson’s recent press conference coupled with President Trump’s tariff mania has put the development of the biennial budget in flux. It seems that assumptions were made in developing either chamber’s budget without looking at what the final dish could be… and the hits keep coming… the Federal cut in school food service support has just happened. How much more?

The Governor has said he will veto the wealth tax. Proposed budgets counted on $2.4 billion in the two-year House budget approved Tuesday and $4.2 billion in the one passed by the Senate on Saturday. (The sums are different because they are not identical approaches.)

So, clearly budget proposals will need to be reconfigured with less revenue projected. Ferguson did say $100 million may be acceptable but that is a far cry from what budgeteers were assuming. Hanging over the process is the status of funding, or not, the collective bargaining agreements, and/or the use of furloughs. It would be highly unusual for the D’s to not side with unions in supporting the CB and opposing furloughs.

Neither house has the ability to override the veto by party voting alone, although close. As a consequence, the pressure to use LEOFF surplus for general fund areas has heightened. (See below)

Then, add the impact of a trade war which was partially cited as a factor in the state’s updated revenue forecast, which showed a $845 million decline in projected revenue over the next four years. That projection was pre-tariff announcement.

So ‘secret’ budget negotiations are occurring. In other actions, floor and committee activities continue.

A brief summary of selected bills:

Re: Pensions:

To review: LEOFF 1 has a surplus of close to $3 Billion. How best to use those excess dollars?

There is a real difference between the House and the Senate leadership in how to deal with this surplus in LEOFF 1. The struggle is between , , , and . (See below) This issue will be part of budget negotiations. The good news is that all of them save state and local/school district dollars by reducing rates and decreasing or eliminating the surcharge related to the unfunded liability. The bad news is that although there are short-term savings, there are projected long term costs for employers and the state in increased rates in the future.

1. : Merges the assets, liabilities, and membership of LEOFF 1, PERS Plan 1, and TRS Plan 1. It creates an annual cost-of-living adjustment to the retirement benefits of retirees in the PERS/TRS Plans 1 and TRS Plan 1 and eliminates the remaining unfunded actuarial accrued liability and benefit improvement rates.

   The bill saves the state over $600 million in GF dollars and city/local governments over $400 million. The bill must seek approval from the IRS which implies uncertainty as to legality. Cities and counties would like to see the excess used to help them cover the insurance costs for these retirees.

   The Senate proposed budget () includes funding for this bill. The House budget does not.

2. reduces employer normal cost contribution rates for the PERS, TRS, SERS, and the Washington State Patrol Retirement System for fiscal year/school year 2026.

   • Reduces the Plan 2-member contribution rates for PERS, TRS, and SERS for fiscal year/school year 2026. IMPORTANT This will indeed save district dollars in the short-term. However, it will add costs in the long term as proposed rates fall below what is needed to sustain steady funding.
   
   

   House Appropriations is expected to pass this bill out of committee 3/3.

3. : Concerning benefits authorized to be offered by the public employees’ benefits board. This bill would allow HCA to the following employee-paid, voluntary benefit plans: 39 (a) Emergency transportation; (b) Identity protection © Legal aid; (d) Long-term care insurance; (e) Noncommercial personal automobile insurance; (f) Personal homeowner’s or renter’s insurance; (g) Pet insurance; (h) Specified disease or illness-triggered fixed payment insurance, hospital confinement fixed payment insurance, (i) Travel insurance.

   It has been referred to Rules having passed out of House Appropriations.

4. : Permits individuals retired from PERS, TRS, SERS and the public safety employees’ retirement system additional opportunities to work for up to 1,040 hours per year while in receipt of pension benefits in non-administrative positions. In addition, someone who enters service in a second-class school district as either a district superintendent or an in-school administrator shall continue to receive pension payments while engaged in such service until the retiree has rendered service for more than 1,040 hours in a school year. This bill will sunset 1/1/2030.

   This bill is scheduled for Executive Session before House Appropriation 4/5.

5. : Concerning employer contributions and incentives for public and school employee health benefit plans.

   This bill suspends bargaining for 2027-2029 and eliminates Smart Health as a program offering. The legislature intends to set the employer contribution rates for employee health care benefits for the 21 2027-2029 fiscal biennium… Bargaining agreements reached for the 2027-2029 fiscal biennium shall not include employer health care contributions, wellness, flexible spending account contributions, or any other provisions related to employee health care expenses.

   Currently, according to the collective bargaining agreement the state pays 85% of the insurance premium; the employee 15%. It is rumored that the state would change the percentage to 80/20. WEA is opposed to this cancellation of a portion of the CB agreement. And of course, any state cut in current employee benefits often results in requests during collective bargaining for districts to make up the difference.

   Funding for this bill is included in the Senate budget and is awaiting a hearing before Ways and Means.

6. : Pension Rate Adjustment—($228.3 Million) Funding is adjusted to reflect the changes in pension contribution rates in HB 1467), which re-amortizes Public Employees’ and Teachers’ Retirement System Plans 1 benefit improvements over a 15-year period, suspends half of these benefit improvement rates during the 2025–27 and 2027–29 fiscal biennia, and changes the long-term investment rate of return used to project costs in the retirement systems from 7.0 to 7.25 percent.

   This is a trailer bill that has yet to be acted upon by the House but is in the House budget (Secs. 759,760, 913).

7. : Extending the expiration of certain school employee postretirement employment restrictions to 2027.

   Senate Ways and Means has scheduled this bill for Executive Session 4/8.

8. : Concerning termination and restatement of plan 1 of the law enforcement officers’ and firefighters’ retirement system. Deposits remaining assets in the Pension Funding Stabilization Account, from which they may be transferred to the State General Fund. In 2027-2029. (Sec. 141 (1)

   It is believed that terminating and reinstating LEOFF Plan 1 would be legal. Also, unlike SSB 5085 above, the excess dollars would be put into the GF and legislators could then spend it as they see fit rather than dedicating it to COLA’s.

   This bill is scheduled for the Executive Session before House Appropriations 4/3.

Bills that could have fiscal impact /costs to districts:

Re: Budget: From TWIO:

SEBB Rate—($376.7 million) The monthly employer funding rate for the School Employees’ Benefits Board (SEBB) program is adjusted to $1,306 for Fiscal Year 2026 and $1,336 for Fiscal Year 2027. These rates assume the implementation of HB 1123 (Hospital Rates), and a reduction in the premium stabilization reserve for self-insured medical claims from seven percent to five percent.

Pension Rate Adjustment—($228.3 Million) Funding is adjusted to reflect the changes in pension contribution rates in HB 1467, which re-amortizes Public Employees’ and Teachers’ Retirement System Plans 1 benefit improvements over a 15-year period, suspends half of these benefit improvement rates during the 2025–27 and 2027–29 fiscal biennia, and changes the long-term investment rate of return used to project costs in the retirement systems from 7.0 to 7.25 percent.

1. : Expanding protections for workers in the state paid family and medical leave program.

   This second substitute House bill extends employment protection rights and coverage protections in the Paid Family and Medical Leave (PFML) Program.

   It is scheduled for a public hearing on 4/5 and Executive Session 4/8 in Senate Ways and Means.

2. : Concerning workplace standards and requirements applicable to employers of isolated employees.

   This bill is funded in the House budget and has been placed on the Senate floor calendar.

3. : Allowing bargaining over matters related to the use of artificial intelligence. This bill requires most state and local government public employers to bargain with employees’ unions over the use of artificial intelligence technology that affects the employees’ wages or performance evaluations.

   This bill is scheduled for public hearing 4/5 and Executive Session 4/8 before Senate Ways and Means.

4. : Concerning workers’ compensation benefits. This bill modifies/increases the percentages of wages an injured worker, particularly those unmarried with children, may receive for workers’ compensation benefits.

   It is scheduled for Executive Session 4/3 before Senate Ways and Means. It is funded in the House budget.

5. : An act relating to unemployment insurance benefits for striking or lockout workers.

   This bill is funded in the Senate budget (Sec. 232(17). It is before House Appropriations with public hearing on 4/4 and Executive Session planned for 4/7.

6. : Expanding access to leave and safety accommodations to include workers who are victims of hate crimes or bias incidents.

   This bill is in the Senate budget (Sec. 219(19) and is in House Rules.

7. : Implementing the recommendations of the long-term services and supports trust commission.

   This bill prohibits persons who have left Washington and elect to continue participation in the Long-Term Services and Supports Trust Program (Trust Program) from withdrawing from the program.

   • Allows an employee who received an exemption from the Trust Program to rescind that exemption prior to July 1, 2028, and begin participating in the Trust Program.
   • Provides a voluntary exemption from the Trust Program for active-duty service members concurrently engaged in off-duty civilian employment and automatically exempts employees holding a nonimmigrant visa for temporary work.
   • Establishes an enforcement structure for the Employment Security Department to collect Trust Program premiums.
   • Eliminates the Long-Term Services and Supports Council, including its This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not part of the legislation, nor does it constitute a statement of legislative intent. It requires the benefit unit to be adjusted annually for inflation using the Consumer Price Index. Removes the condition that there must have been no interruption in service of five or more consecutive years in order to become a qualified individual under the Trust Program by paying the premium for a total of 10 years.
   • Authorizes a pilot project to assess the Trust Program’s capabilities for managing eligibility determinations and distributing payments to long term services and supports providers.
   • Establishes a private market supplemental long-term care insurance option that is designed to provide coverage for persons once their Trust Program benefits are exhausted.



A public hearing is scheduled for 4/5 and Executive Session 4/7 before House Appropriations.

8. : Concerning public employee collective bargaining processes.

   This bill makes changes to bargaining unit certification processes by requiring employers and unions to provide offers of proof when they challenge an employee’s inclusion in a bargaining unit and changes the process for the consolidation of bargaining units.

   • Makes changes to the Public Employment Relations Commission’s (PERC) hearing processes by allowing the PERC to unilaterally set hearing dates and draw an adverse inference from a party’s failure to respond to subpoenas, unless the union asserts union privilege.
   • Prohibits public employers from making grievance settlement agreements that require workers to waive claims arising out of state and federal law.
   
   

   This bill passed the Senate 31/18 and is in House Rules.

Fred Yancey
The Nexus Group LLC