Part-time state workers could soon be allowed to participate in the state401(k) retirement savings plan, under a bill that advanced at the state legislature Tuesday.
The House Pensions and Retirement Committee passed three bills making a wide range of changes to state pension law. Many were minor or technical tweaks, but some could have a real effect on state employees.
In addition to allowing part-time workers into the state's 401(k) program — which is separate from the pension plan— the changes would also simplify the rules in the pension system for state workers to purchase credit toward their years ofgovernment service, if they want to retire early.
Another proposed change wouldgive state workers more protection in cases where the governmentmistakenly under-countstheir years of service, by changing the law to say the state "shall" correct the error, rather than "may" correct it.
State services strained as NC struggles to hire government workers
It all comes at a time when state government is struggling to fill vacant jobs, as well as staring down a potential billion-dollar hole in the pension and health plans for state workers, which critics say the legislature set the stage for in last year's state budget.
Representatives for the State Employees Association of North Carolina, a lobbying group for state workers, were in the room watching as House Bills 988, 989 and 1020 passed the committee Tuesday.
Concerns over pension stability
For years, North Carolina has had one of the most stable state pension systems in the country. But State Treasurer Dale Folwell, a Republican who's leaving office next year following his loss in this year's GOP primary for governor, has been raising concerns about the future of the retirement system.
He told WRAL last year that the pension and health plans could be facing a more than $1 billion hole because of a new law, which passed in last year's state budget andwent into effect in January, that allows current hospital and other health care workers at UNC-Chapel Hill and East Carolina University to leave the State Health Plan and the state's retirement plan — and prevents any future employees of those state-run health systems from joining the state health and pension plans.
The leadership of both universities lobbied for the changes, saying they want tocreate their own health and retirement benefits to better compete with private-sector health care companies.
Folwell told WRAL last year that beyond potentially violating federal tax law, those new changes could also harm the financial health of the state health and pension plans by removing thousands of employees — many of them healthy, highly paid doctors and nurses — out of the state plans. The rest of the state workforce would be left to pick up the tab,he said.
"It's immoral," Folwell said last year. His accusation was strongly denied by UNC and ECU spokespeople, who said the changes should be beneficial to taxpayers in the long run.
Changes at UNC, ECU could cost NC pension plan $1 billion or more, state treasurer says
Those new changes became law last year with little public debate. A similar version of the proposal passed the state Senate in April but was immediately killed in the state House. In September it popped back up in the statebudget, which was written in secret and passed into law with no opportunities for amendments or public comment.
One of the bills advancing Tuesday, HB 1020, made some tweaks to the rules for calculating retirement eligibility for people who move back and forth between those health entities and the rest of the state work force. That part of the bill received no discussion from any lawmakers on the committee or the lobbyists and members of the public in the committee, and it'sthought tobe a minor change.
The discussion focused more on another part of the bill that would stop lobbying groups and other associations in the future from being allowed to let their members automatically deduct their dues from their retirement checks. Groups that already do that would be grandfathered in, but future groups would be unable to do that.
Rep. Jeffrey Elmore, R-Wilkes, questioned whether that would create an unfair playing field for future political groups that work on behalf of state workers. But those concerns didn't sway other members of the committee and the bill passed.
