Budget agency says retiree health plan is over-funded

Franklin College Statehouse Bureau 

INDIANAPOLIS – The state has overpaid an employee benefit plan, budget agency directors told a House committee on Wednesday.

State Budget Agency Director Adam Horst and Deputy Budget Director Jon Vanator told the House Ways and Means Committee that, if things go as currently expected, the state retiree health benefits plan will a surplus of $49.8 million by the end of this fiscal year and $61 million by the end of fiscal year 2013.

The plan, started in state fiscal year 2008, is overfunded by 130 percent, according to the actuarial study. The government funded the plan 100 percent for every employee in order to prevent a liability, but the study showed that there may only be a 60 percent chance that any given employee will be eligible for the plan. Paying the full amount for every active employee has caused overfunding.

Part of the state’s recommendation is to pay the general fund part of the excess, by using the cigarette tax revenue that helps fund the plan, for fiscal years 2012 and 2013 only. The proposed percentage of the cigarette tax is 5.74 percent.

“Our method of recovering that excess would be to direct cigarette tax revenue, which is a portion of the funding that goes into the plan … to the general fund,” Vanator said. 

“Instead of transferring money from the fund balance and putting it in the general fund, we’re going to let $53.6 million of cigarette tax money go to the general fund instead of going into the plan. We’re turning off the faucet on the cigarette tax money, until we catch up.”

The Budget Agency’s proposal would fund the plan, actuarially, at 103 percent. Horst said that there still would be some cushion to the benefits plan.

Originally published on www.thefranklinonline.com

Union workers file into Statehouse to oppose bill

Franklin College Statehouse Bureau

INDIANAPOLIS – As union workers flooded the Statehouse on Wednesday, the line for the entrance spilled down the front steps.

Workers were there to attend the Senate committee meeting hearing on Senate Bill 333, which would eliminate project labor agreements.

Project labor agreements are collective bargaining agreements that require all employees and workers on government-funded projects, whether union or non-union, to establish set terms and conditions.

Tom O’Donnell, executive director of Quality Connection, an electrical union cooperative group, said that a project labor agreement “makes one big agreement for a job, which standardizes your starting times, overtime” and other job specifics.

“It makes no sense at all to pass this bill, when that’s … the standard way they’ve done business for the past 25 years, on the major projects in the city of Indianapolis, and the state for that matter,” O’Donnell said.

“And it’s like, when they do this kind of thing, all that does is invite inferior labor to come in and do jobs. You know what I’m talking about there – pay somebody little or nothing to come in without being highly skilled.”

Union worker Jim Crabb was one of many waiting to enter the Statehouse to oppose the bill.

“It would raise the cost of projects,” Crabb said. “PLA guarantees that it will be done on time, usually under budget. We just want them to know that we are concerned, and that we’ll come out in forces. This early in the year, it’s not going to stop here.”

Sen. Greg Walker, R-Columbus, sponsored the bill and said that he feels research is inconclusive to whether or not project labor agreements guarantees quality and efficiencies. He also said that he believes there are skilled and trained workers outside of unions.

“The research is indeterminate,” Walker said. “I have read a great deal that does not have me convinced that the taxpayer is going to get the lowest cost projects with a PLA in place, but I also recognize the economic reality that you get what you pay for. Price is not the only decision and is not the only factor.”


Originally published on www.thefranklinonline.com