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House | May 31, 2016 | Chamber | House Session Pensions and Retirement

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Questions committee representative Waddle. >> One question [INAUDIBLE AUDIO] >> So section 33 does two things. [INAUDIBLE AUDIO] First of all, [INAUDIBLE AUDIO] For each of the systems primarily it changes the threshold from 3000 to 10000 members. [INAUDIBLE AUDIO] [INAUDIBLE AUDIO] [INAUDIBLE AUDIO] Representative Lambert. >> I have a question for staff. Do we know how many groups that impact going from 2,000 to 10,000? >> Staff. Anyone? Trevor's office [INAUDIBLE AUDIO] [BLANK_AUDIO] [BLANK_AUDIO] Representative Bishop. >> A question for Mr. Watt. Could you explain generally what the purposes are of the department's request for this change does it and understand what purposes may be missed if we approve the amendment. [INAUDIBLE AUDIO]. >> Follow up question >> Follow up >> Is their administrative convenience or fraud prevention purpose in the rest of the. The provision. I try to understand the purpose of it o that I can better understand what the amendment effect with it. >> Retirement director. >> [INAUDIBLE AUDIO] the concern that we have. Is that we are getting the adoption from member of retirees we are currently paying a 425000 [INAUDIBLE AUDIO] in the retirees look to us to make sure what they get is accurate Getting a file from the district ductile amount I mean we gotta be able to we look at it as our job as to protect the retirees. Not say one is creating any fraud or anything. I'm just saying it can easily happen because we don't have the ability to check. So what we want. [INAUDIBLE AUDIO] [INAUDIBLE AUDIO] [BLANK_AUDIO] To court that the ratio was 2000. this would change it to 10,000? >> We've been administering it to the 10,000 for more than a dozen years Statute that limit our ability to transfer data back and forth unless we've got 10,000 members. >> Follow up. >> So now the organization that wants to have [INAUDIBLE AUDIO] has to have more than 10,000 members. Is that what I'm hearing? >> That's the current status and the statutes You stop Dayton's statute and match what we have to do. >> Okay, Now I'll be a minute.

The amendment moves it back to 2000? >> No, sir. The number doesn't change that. The number just takes out the repeals. >> So it doesn't change that at all? [BLANK_AUDIO] Miss the amendment doesn't affect that portion of the PCS. >> So we still at 10,000 then? >> Yes, sir. >> Representative [INAUDIBLE AUDIO] >> Actually, Rabin and Michaux, what the first section of the bill does is it updates the statues to another Another statute that has the 10,000 as far as the addresses go. What the amendment does is that the second part of the bill there's about four or five lines of repeals there. Basically what those repeals would do would totally do away with all those reductions for everybody no matter what How many members they had. So in other words, one just modifies it and updates it. The other one does away with it after one year. Totally does away with it. >> So let me be very clear what when we do it again now is taking away any [INAUDIBLE AUDIO] >> The amendment is to take out the section that does away with it entirely. >> When you say it does away with it entirely what are you saying? As the bill currently stands there's about five or six lines in there that repeals. Okay >> [INAUDIBLE AUDIO] what the original law was, what was changed and where we're going today. [INAUDIBLE AUDIO] >> All right. And I I'll try and get this right. All right. Apparently two different statutes to deal with this, okay. One limits the treasure's ability to transfer this data unless they have 10,000 members. This section did not comply with that This is a change in this section to comply with the other that in other words as Mr. Watt said, they've already for about 12 years been not allowing um organisations with under 10,000 members um to get on the Reductions but the other section of the law that this is changing is just to make it in compliance with the other statute that they also [UNKNOWN] The second section that deals with the repeals, if it's allowed to stay in there and July of 2017, all of the dues deductions, all of the health benefits deductions for all retirees would go away, they would no longer be able to have their vision, no longer to be able to have their dues, no longer to be able to have Have their dental or any other benefits deducted from their retirement now that would all go away after 2017, unless you adopt representative Harley's amendment [BLANK_AUDIO] >> So back to the numbers I'm still back on the numbers situated, I'm looking at 2010 [INAUDIBLE AUDIO] right now you have to have more than 10,001 has been deducted. >> That's correct. >> And the amendment does not change that or the amendment changes It doesn't change it at all [BLANK_AUDIO] >> I don't think there's any opposition to the first part representative Michele made it to the second part, the repeal that the opposition had seen. That's what I'm trying to get to. All right. I've got other questions I have Representative Elmore. >> This may be a question for staff. The work he's referring to, the 2,000 to 10,000, you're trying to make the retirements system apply to it but current employees, current State employees, isn't that the way that provisions written for deductions for current employees and this would align it together? >> Staff. >> I do not know the answer so [INAUDIBLE AUDIO] Is there anyone from the retirement system? >> I don't think the secretary can address the [INAUDIBLE AUDIO] Governors statute [INAUDIBLE AUDIO] so active employees could do

I think the controller's office can do organisations with 2000 for active employees but we can't do it for retirees already. This is a conforming change to the other retirement statutes that effectively limited 10,000 Representative Gill. >> I think my question [INAUDIBLE AUDIO] that I thought this removed the [INAUDIBLE AUDIO] of the authorization deduction. This amendment that It's the same amendment that I submitted. >> Actually we have duplicate amendments. >> And my amendment was really trying to make sure that we do not sunset the authorizations for deductions so I ask that those sections be repealed or taken out Rep Bell. I have Rep Bell. >> Thank you Mr. Chairman I have a question for Rep Hurley on this. I just wanna know if the intent of your amendment was to keep things as they are rather than to make those changes? >> Exactly. >> That's what I thought it was. All right. Any other committee members? I'm gonna take a moment and take a few questions if we have anyone form the public who would like to speak? All right. >> Thank you Mr Chairman and thank you members of the Committee. My name is Artis Watkins. I'm government relations director for the state employees association of North Carolina. |We would encourage everyone to please support Rep Hurley as a member. We think it's an important amendment. We're not here to fight or {UNKNOWN] opposition to the first sections A, B, C and D Of section 13 but we do believe [INAUDIBLE AUDIO] and they're right that E through J are very critical to be removed. And we thank Rep Hurley for the amendment. >> Thank you. Anyone else? At the back [BLANK_AUDIO] Althea Theodor with the North Carolina retired school personnel association and we too would ask for support for Representative Hurley's amendment please We have our [INAUDIBLE AUDIO] deducted as well. Thank you. >> Thank you. Anyone else? >> Mr. Chairman, members of the committee, my name is Richard Rogers with the North Carolina Retired Governmental Employee's Association. We are also supportive of this amendment but we have almost 27,000 members of our association Years of this deduction for their dues as well as supplemental insurance within what we envisioned so we support the amendment, thank representative Harley for ya'll support. >> Thank you. Any others? Back to the committee. Representative Lombard. >> I'd like to direct a quick question. As I understand That the 10,000's being used now but the judge council lifted [UNKNOWN] I wanna make sure that if this amendment passes the presiding county can continue to participate with the deduction, the 10,000 is not a problem for them. I've had conflicting feedback whether the presiding county will be impacted by the 2010 The treasures office can answer that question. >> The seven local governments that participated into this reductions programme would not be affected, they would be [UNKNOWN] to the current statute. >> Any further questions on the Harley amendment? All right. Is there a motion on the Hurley amendment? Representative Michaux. >> [INAUDIBLE AUDIO] >> We have a motion. Is there a second? >> Second. >> Second? All right. All those in favor signify by saying aye. >> Aye. >> Any opposition. All right the ayes have it and the Hurley amendment carries. Representative Gill, you amendment is identical to Representative Hurley's would you like to withdraw that? >> I'll withdraw it. >> All right. Thank you. The next amendment I have is ASH 25 version three. This is Representative Elmore. Thank you Mr. Chair. What this amendment will do, it deals with the pensions pike in

section of the changes and what it is is an additional option for entities that have been caught in the window When the pension spiking legislation started to when this law passes, that window of time and it gives them an additional option of a payment plan that would expand to a 5 year period with no interest with payments in 6 month periods. I think what this would do is help Give some flexibility to these local entities that have been affected by the pension spiking legislation and I urge your support for the amendment. >> All right questions from the committee. Representative Michelle. >> There's additional grace/g the problem to come up with several [INAUDIBLE AUDIO]. >> Ah, it helps address it. >> How you mean it helps address it? >> Well, people have different interpretation, I want you to be [INAUDIBLE AUDIO] This would give them an additional option with the money that they owe. Basically extending the payment period past what the new legislation states which I think is 27 months with interest. This would take it to 5 years and that should lessen the impact on their reserve fund Which that's what's gonna be affected by making these payments. >> Other questions, from the committee, representative division? >> Is that not inconsistent with deterring folks from doing the pensions packing/g [BLANK_AUDIO] Representative Elmore/g >> Thank you all this would do is it only affects the folks from the time that the pensions fund was implemented to win this law passes so this window of time it only affects this sheet of paper here, folks that don't have green [INAUDIBLE AUDIO] about 15 entities to give them some flexibilities on how to pay back on it. >> Representative [INAUDIBLE AUDIO] >> [COUGH] [INAUDIBLE AUDIO] its Representative Elmore brother/g [COUGH] He's got the grade on it. Or the ones that are marked up one her is already And want it to be in effect. The ones that are not [INAUDIBLE AUDIO] have they been paid or not been paid? >> Rep Waddel, the ones not in green have not been paid, the ones in green have been paid. >> [INAUDIBLE AUDIO] >> Well [INAUDIBLE AUDIO] between the time that the [INAUDIBLE AUDIO] >> That's correct. If you remember in the original spiking law there was notification that would go out to the local entities to let them know when they were reaching the spiking limit And it would also give them the number. As you can see from the green we've had a number of entities that have recognized that and obviously paid their bill, there are some that have not. [INAUDIBLE AUDIO] [INAUDIBLE AUDIO] >> Yes. Sure will but as soon as we get all the questions fro, the committee. Rep McNeill. >> Yes, my question [INAUDIBLE AUDIO] [INAUDIBLE AUDIO] changes the deal from the 27 months that they're allowed to [INAUDIBLE AUDIO] in there to five years No interest. >> No it would not change the way the bill reads from here on out. If this passes it becomes law. What's in the bill would affect people from when it becomes law into the future. All this affects is that window of time from the enacting of the pensions spiking to today Which would be the 15 that you see on the sheet. >> Follow up. >> Follow up. >> I'd like to [INAUDIBLE AUDIO] >> Mr. Chairman, members of the committee, Tony Solari Various treasures office. Now when the law was passed, and some of this local units of government have started getting invoices for the pension spiking, some of

those bills are fairly high and we're not unsympathetic. Some of the local units were saying with 500 500,000 thousand dollar bill here, and it's pointless for us to try and pay this back in one year. And so in response to those concerns we brought legislation, and said you know let's get options to chunk this down and make the payments over the course of 27 months. Representative Elmer wants to extend that period to 60 months and we're all [INAUDIBLE AUDIO] [BLANK_AUDIO] The Chair has questions for the treasure [UNKNOWN] >> Mr. Chairman, the local government commission is not okay with that because then the school board has confirmed the local government commission cuz this will be considered long term debt and the local government commission cannot approve zero interest debt. >> Thank you for the comment. >> Rep [INAUDIBLE AUDIO] >> I have one other question. Is there any assessment of how much money we're talking about? Just a known quantity of Of the parties and how much it would cost to extend the installment program to fixed demands and not charge interest? >> A question for staff or if anyone who has that information [INAUDIBLE AUDIO] >> Treasure's office Can anyone answer that question? >> What was the question? >> The question is what the total amount of the financial obligations in this list are and how much it would cost to add the option to take prepayment plan for 60 months and not charge interest, which is what I understand Well so we haven't seen the amendment yet. This is our first impression based on what I'm hearing from [INAUDIBLE AUDIO] treasurer's office, based on what I'm hearing is you could take this sheet that's in your packet and look at the unpaid bills and if you wanted to Put a hypothetical interest rate on it, multiply by what's not paid, then you have the number you're looking for. [BLANK_AUDIO] Further questions? >> Chair has a question of the treasure, I wanna make sure I am clear on some comments that we just laid some few moments ago, if this amendment goes forward it creates a problem with local government commissioner referenced to long-term debt Yes, [INAUDIBLE_AUDIO] state treasure, the local government commission has to approve long-term debt for any unit of government, we're not authorized to approve a payment structure without Interest. This would be a debt, the treasure is not in a position to finance local units of governments obligations without interest. We're not a bank for the school board association or for boards of education. You know you got an equity problem here is it fair for other school boards to pay their debt and then to finance others you know you got some people who owe some very large amounts of money here and so the goal is to keep the finance the state retirement strong Too strong and to stop the bleeding, I think the general assembly recognized the number of years ago that Pensions packing calls the problem with the retirement system that it was that you are sure it managed due to pensions parking and I was a member of the general assembly When the bill was passed we recognized that we needed more contributions not less contributions, when the retirement system was designed it was not designed for this very large salaries and for this high pensions and so this was the attempt to the General assembly to fix the problem and so without this provision to put additional funds into the retirement system then the bleeding will continue and so we strongly support the pensions packing provision and you've got to figure out a way to put the money there, now as a Questions the general assembly has to solve but the treasures office does not want to be in the position of having to finance debts owed by the school boards. >> Thank you. >> Mr chair can I have a question for representative [INAUDIBLE]

local government commission does Authorize loans without interest with water projects and things of that nature, how is that possible if the local government commission is not able to approve loans with no interest. >> Those are federal loans, okay if you need an interest amount what is the minimum interest that That you need to be able to approve it. >> All pension fee are based on very conservative policies and we assume that every year our investment department will earn 7.25%.The pension trust fund on the Qualified excess benefit arrangement gave along to supplemental plans and you charged them 7.25%.So we assume that to be the case that we need? I would just say that, I think that 27 months is plenty. I think anymore puts administrative burden On the retirement system. [BLANK_AUDIO] is going up to five years. All that you're doing is you're making the other agencies pay for this expense and I don't think that's good fiscal policy. But that's the department state treasurer's opinion. >> Thank you. >> Representative Bishop I just had a comment if I might Mr. Chairman and maybe it's a question. I'm looking at the sheet and I didn't have it in my packages. Representative Bill has been kind enough to share his. But if I understand correctly, looks like there are about 30 of these that are marked in green that have already been repaid. Is that correct? And so if the effect of the The effect of the amendment would be to allow those who haven't repaid which appeared to be some of the larger ones to have the benefit of that when other agencies have met their responsibility to repay their obligations And so I would say I don't know whether that's accurate. Do I understand that correctly? All right. Thank you. >> All right. Representative Lambeth. >> I'm now confused. Can we do 27 months with no interest? Treasurers office. >> You have the law, you do what you want. But our recommendation is give them one year interest free, the second year I would recommend that you charge seven and a quarter interest rate. That's our official position. [INAUDIBLE] We're gonna have to do is continue to add more funds to the general fund to fund the pension system. And I hope that that makes sense. This does. >> Representative Langdon. >> I agree with the number of people that's on this list. We're State treasure's office is exaggerating that [INAUDIBLE] so I hope that we'll consider that [INAUDIBLE] We're not talking about that much as far as the number of people. Lower the amount. >> Rep Waddel. >> Thank you Mr Chairman, just Question for the Treasury office, I guess the ones that have already paid their invoices they were interested to say there's no interest to 27 months, or they just pay. >> Stay true for retirement system, they're [INAUDIBLE_AUDIO] to pay their [INAUDIBLE_AUDIO] they get their check and they are [INAUDIBLE_AUDIO], no interest is charged. >> Thank you. >> Follow up. >> Follow up. >> When I pay this invoice do they pay it immediately [INAUDIBLE_AUDIO] or? >> It's [INAUDIBLE_AUDIO] system, they pay much with it, they pay much immediately [BLANK_AUDIO] Mitchele. >> [INAUDIBLE AUDIO] [INAUDIBLE AUDIO] >> That would be correct. >> At this juncture there's no interest charge on that? >> That's correct. >> If they pay it immediately. But of they don't pay it immediately [INAUDIBLE] Okay [INAUDIBLE] today we have no mechanisms to charge interest on the amounts not collected. >> [INAUDIBLE] [INAUDIBLE] Representative Mitchell thank you[INAUDIBLE]

the bill before you without the amendment adds a 27 month option with interest. Currently there's only the 12 Option. So we're changing 12 to 15 to give them four months to go back and forth and make adjustments from the retirement income and then we're adding a second option if they wanna take a full 27 months which will end up being three fiscal years if they pay interest. >> If they pay Follow up? >> [INAUDIBLE AUDIO] What does the amendment say? >> The amendment is just for the people who have not paid yet. An option to go five years without interest. >> So we've got a choice [INAUDIBLE AUDIO] >> That's correct. Yes. Rep Hurley. >> |Thank you Mr Char. I was just looking at some of the [INAUDIBLE AUDIO] go back to July 1st 2015 which is almost a year already and they haven't paid evidently. Now when were these invoices sent out? When they were viewed and when that [INAUDIBLE AUDIO]>> The invoice sets effect on the date of July, given that there was a little bit of lifetime on some of the earlier ones and we've recognized that and working with the agencies on making payment arrangements.>> [INAUDIBLE AUDIO] They had almost a year already. They haven't paid anything >> All right. Rep Elmore. >> Can I speak [INAUDIBLE AUDIO] my amendment? >> Yes. >> I didn't wanna get into the specifics of my particular county with the amendment but I will explain the situation. My county Had the superintendent from another county. They offered him the exact pay that he was getting in that county and then provided contract to sway, he was entitled to a raise the following year. It was a minimal raise, it was the average raise that the teachers received. What kicked him into the pensions spot was actually the actions Is of the other county, that's what triggered the pension spiking law. So what has happened in my county, is they are having to pay for the pension spiking that was done in the prior county. It is going to put a burden on our fund balance which has linked to our capital Debt and so without some form of payment option with the county, it's going to possibly jeopardize our loans that we have spread in the capital debt. It put a massive strain on the fund balance and creates cash flow issues for the county, so My particular situation, my own situation the county feels like they are paying for the actions of another school board in another county. That's beside the point with the amendment, this just gives the an option for these 15 people that are on this list, that’s' it. My amendment won't affect anybody else, just these 15 people that they can have Has the five years to pay off this debt. Thank you. >> Other questions Rep Bishop? >> Well that may be an exceptional circumstance given the circumstances that would Warrant the exception, it seems to me for just your county, but it doesn't say anything about the other 14 on the list and the reasons that they're called in the pensions plaque. If it's [INAUDIBLE AUDIO] situation where it's more attributable to somebody else's action then I think that would be appropriate to take into consideration But I don't understand a reason to treat those 15 different from all the others who [INAUDIBLE AUDIO] >> All right. We're gonna have to move on with this amendment. We are a little past time and we're gonna go just a little longer. I would like to see if there's anyone else that would like to speak on this amendment. All right, in the back. >> Good morning. I'm Lee Anne, normally I represent the North Carolina School Boards Association. Today I'm representing the North Carolina Council of School Attorneys. We appreciate Rep Elmore and his amendment that will help many of the The situations that our school districts have found themselves

in, where they were under a contract with their superintendent or assistant superintendent before the pension spiking bill passed a couple of years ago and they were still under the terms of that contract and thus were not able to change the Contract before the person retired. However I do want to bring to your attention that there are two lawsuits, one by the Johnson County Board of Education and Wilkes County Board of Education in Superior Court in Wake county and one in front of the Administrative law judge. Section six of the bill actually Actually would undo those lawsuits. In addition to changing the timing in section six as Representative McNeal mentioned, there's also an exemption from the Administrative Procedures Act, and it goes back in time to January first 2015 And thus would negate those lawsuits. We would ask that you remove that language in section six so that those lawsuits can proceed and as filed. It has been the habit of this General Assembly to not pass legislation that would retroactively change something that would Act pending litigation. >> That's not domain to this amendment. Anyone have anything else on this particular amendment just now? Representative Michaux. >> I'm looking at [UNKNOWN] numbers. I think as far as that amendment goes, allowing these folks to have extra time without interest, with interest, you've arranged somehow, they all have an opportunity [INAUDIBLE AUDIO] that's a small [INAUDIBLE AUDIO] [INAUDIBLE AUDIO] some of those institutions. [INAUDIBLE AUDIO] they need a little- >> That's really what the 27 months was for, was to give time, and so that's what that was fore. I think the amendment stretches that out Out to five years which in some cases I think could be a little extreme with no interest cuz you gotta remember that's taxing the pension system. And those that are participants in the pension system and you have to look at that as, is that fair to the ones that are paying their Bills. But the 27 months that's what that's for Rep McNeill. >> [INAUDIBLE AUDIO] >> All right. >> [INAUDIBLE AUDIO] Since we had this discussion I would be willing to pull the amendment, redraft it to where it can deal with interest and maybe narrow the focus. I don't know how far I can narrow the focus down Because there's some rules with, you can't have a local bill dealing with this kind of stuff so we have to have it- >> We'll be willing to work with you. >> Sure if the treasure's office is willing to work with me on getting the language the way that is acceptable to everyone So I withdraw the amendment. >> Thank you Rep Elmore. >> Thank you [INAUDIBLE AUDIO] [INAUDIBLE AUDIO] Mr. Chair may I have a quick question. >> Rep Lambeth. >> Since we didn't have the option 27 months before and this is proposing that March 1 so that actually you could extend that attitude when the 27th some time in late 18. Do we know if that is just not acceptable to those on those list and they need more time. To make things like a farely long time. I agree but that's something the minutes has been withdrawn so we'll

work with the [INAUDIBLE AUDIO] sponsor and see if we can tweet that, we are going to try to get through one more amendment as I said we are passed time we are going to try to go through at least one more amendment if we have to Forward till next week but I'm hoping that we can get through the next amendment, this is the last one. One final amendment and this is representative Elmore/g again, this is amendment number ASH 21 version eight. >> Thank you Mr chair this This one looks worse than the other one but it should have less discussion, for my understanding the federal government is requiring us to determine a retirement age by federal regulation, basically the concept is converting your retirement system to an age based system versus the service based system System right now all of the retirement system is service based, the concern that I have with the way 1134 was written it sets that minimum age at 55 well if we move forward with that that could create gaps of service meaning folks can retire before 55 but still not be able To draw their retirement or draw less to benefit since this is for new hires only I think it's pretty mature to make that decision and policy that quick so what this amendment does it sets the minimum age standard at 50 which meets the federal requirements ridicule turn at the very end protection of The last page of the amendment section three [INAUDIBLE AUDIO] it creates a study through PED to look at how can we pervert from service base retirement to age base requirement and what other states have done to make that transition, I think we got plenty of time to do it but this amendment would help Thing that would help us make the [INAUDIBLE AUDIO] like we're supposed to, but being truly studied that issue converting to an age based system with the benefits compensation, all of those factors that play into it. So I think this is a very conservative move with that decision making. And I would appreciate support to the amendment Thank you. Questions for the bill sponsor? Rep McNeill. >> I just like to respond to this. At this point And I appreciate Rep Elmore's willingness to put forward this amendment and to have a study done. I'd just like to point out a couple of facts. I think everyone in this room wants to see a long term viability of our retirement system. 30, 40 50 years out into the future. We all want to make sure that the money is going to be there to pay the current retirees and the future retirees. At some point we have to make minor adjustments to the retirement system. For some of you may think this is not a minor adjustment Number 1 again, I wanna point out like representative Emor/g did, that this does not affect any current employees. It affects those people that are hired after January 1st, 2017 and I think there is another little provision in there that Was after the Legislature comes back into session. But anyway, I wanna point out, that life expectancy in 1960 was 69 years, now, it's 79. People are living longer so a person that retires at age 50 or 51 or 2 or 3 Three or five is going to draw retirement longer than they worked. Anybody that knows how the retirement system works understands that employee puts in a certain percentage, the employer puts in a certain percentage and then basically everything else is funded either from the general fund Or taxpayers or investments. Investments have not been doing all that great lately, so the money has to come form somewhere else. I think with small changes in the retirement system, as we move forward we can make sure that it's viable for everybody. Several states around Have already changed, Virginia has rule of 90, South Carolina has rule of 90 and several other states have changed so they have already raised the retirement ages. Virginia did it in 2010 and South Carolina did in 2012. So I appreciate wanting to do a study but |I think several states

around us have already raised the retirement age. And I've heard a lot since this bill was introduced about being competitive. We Want our state to be competitive to lure retirees, to lure teachers [INAUDIBLE AUDIO] when you look at the age in which a person can retire I think we're already more competitive than Virginia and South Carolina. 55. I also want to Wanna point out that age 55 is for general employees. The retirement age in this bill for law enforcement is 50. So I don't want anyone to get confused and think that this is gonna make law enforcement officers work till they're 55. That's not the case, they can still retire at 50. So I think For the long term viability of the retirement system I think 55 is a good age. The average age of people retiring is 58. Most people work till they're 58, I retired when I was 58 and I think a lot of other people work past that. So Talking about a study, most states require the recently hired to work longer to be eligible for retirement. 67% of open statewide defined benefit plans have a higher minimum retirement age than North Carolina. So you can see where there are two thirds of States that have a higher minimum retirement age than we do. I'd also like to point out that the retirement age in North Carolina up until I think the early 70s was 60 years. So if you go back several generations they could not retire until That was 60 that was changed in law going forward, but I think with the life expectancy of people, I think 55 is a good age for retirement so I just request that you, I don't have a problem with this Study part of it but I would like to go ahead and take the 55 out, I would have to oppose that. [BLANK_AUDIO] >> Other committee members, questions. Representative Waddell? >> Thank you Mr Chairman. Just a question Thinking on the state employees, including teachers and the movement to 55. how is that different from the law enforcement officers? I'm just trying to look at the Well we're just keeping the standard gap. There's always been a gap where retirement officers could retire earlier than general employees. So that pretty much maintains that gap. >> Follow up Original the way it's being treated now in the retirement system ended 30 years of service 50 years old for law enforcement officers. >> Representative McNeill. >> No. Right now the law is that if you're a law enforcement officer With 30 years of service you can retire at an age. >> And I guess if you're a law enforcement officer, >> Follow up. >> If you're a law enforcement officer and you go into law enforcement what's the minimum age that you would be allowed to go into law enforcement? Chair, McNeill. >> For a deputy sheriff it's 21 years of age and for a city police officer it's 20 years of age. >> Follow up? >> So essentially starting at 20 they would be 50 when they get 30 years of service [BLANK_AUDIO]representative McNeill but let me just give you one example,a young man goes to work for a small city in the water department and he worked for three years Name a county deputy Sheriff. Okay, his three years of service in the water department counts towards his retirement. He has to have five years of service as a law enforcement officer, so theoretically, if he had his three extra years that he worked at the water department. And if just say he accrues two years of Sick time during his career and he uses that towards his service credit. He could theoretically retire at 45 or 46

[BLANK_AUDIO]>> Further questions? Representative Hurley >> If I hear from Personnel Or anybody else that want s to speak to the 55 is 34 to how it might work in the States or is there anybody out here that may want to speak cuz the mula 80 when I was state player retired it was the rule of 80 not 90. That ten years sort of frightens me. As far as, does it fail have anything to say or want to add anything to the competition. >> Is there any clarification to her question. >> He was just talking. >> Right. >> Can't even believe this. >> Yes. >> Yes Sir Mr. Chairman, obviously I'm not gonna be able to clarify anything but I would like to say a couple of words on this as possible. >> All right Thank you Mr. Chairman. Again [INAUDIBLE AUDIO] of the state employees association. We defiantly wanted to weigh in on this and I appreciate where representative McGee is going we are tying to find ways to make the system last as long as possible for the good people who are in it and the good people who are following behind and hoping to be enjoying the retirement some day. However we believe this is a huge policy that doesn't have to changes right now and that is not the way to go because it affects, it diminishes benefits for future employees. Two-third of the system representative McNeil just mentioned out their. If you look at other. States have been member retirement ages. But we never talk about the fact 50% of the other states out their have a formula for this retires of 2.0, 1.82 of course. Their pay cheques would be 9% higher every month if we followed what other states did When it come to that. Please let's not follow other states when it comes to things that hurt or punish our retirees. Slow down I think that representative Elmore amendment makes sense because we do understand the same thing from the treasurer of that, the age of 50 is coming down From the federal government after requirement. So will would urge you to support representative Elmore's amendment and do a study. Look at things like this 50% of the other state that have a 2.0 formula, look at the minimum age, look at anything you need to. But when it's an election year for a new treasurer this body has Reluctant to make major policy changes.We are asking you to reluctant in this case as well and look at everything, but supporting representative Elmore amendment and I do appreciate ability to speak a second time. >> Thank you representative Holley. >> I'm still a little confused I need more clarity. So what we are trying to do. From a right now it's 50 or is it 50 50 are we are trying to go to 55. Is that correct? >> No right now it's not 50 >> We are taking it from age dependency years of service. From years of service to age>>does anyone from the treasurer office could help With the question. >> [INAUDIBLE] treasure's office. The PCS would move as representative Elmore stated accurately from a service based retirement eligibility To a retirement eligibility that is mostly related to service and age. So under the change a person with 30 years of service at age 53 would wait till 55 to earn reduced benefit They could still accept the reduced benefit reduced by two years earlier than that. They'd have to wait to get the full benefit for the age. Currently there's no age requirement and >> [INAUDIBLE] [INAUDIBLE] All right. It appears from time we're gonna have to- >> [INAUDIBLE] >> I'd like to go ahead and get this amendment voted out. Yeah. All right we have the final Now will comment from the bill sponsor. >> I just want to answer Representative Holley's question. This bill does not adopt the rule of 90. What I said was Virginia, South Carolina and a couple of other states have the rule of 90, that's not what this is doing. >> Thank you. >> May I speak one last time? On the amendment. >> Yes. >> Thank you. As you can see from the questions that are raised in no more time than we had, it truly justifies the need to study this issue.

This is a huge issue and I've always been a believer in proactive government more so than reactive. I feel like the bill in its current form Is reacting to a federal reg that comes down versus us truly studying what the other states are doing. All of the factors that different people have brought up I think shows a justification for meeting the federal reg and studying the issue, so we can come back with a comprehensive plan to tackle this.So I would really appreciate your support on the Amy other comments from the committee? Anything else? >> I'd just like to say that part of the reason behind this provision in the bill is because., as the ill sponsor said, the facts are people are living longer, which is a good thing People are living a lot longer that it used to but a good thing can create a problem down the line when you have people that can retire and then draw retirement many more years than they actually worked, what that does is that it creates a system that's unsustainable 65 was the life expectancy, as you know I'm a financial planner I just received my financial planning magazine for this month, this is we have to start planning now for age 100 plus. Now I'm not saying we are all going to live to be 100 plus the facts are That people are living much longer. It's creating a huge burden on the defined benefit pension plans, and there's only two ways we can address it. One is pump a whole lot more money into the system or two begin to look at the retirement age on the front end. That's it. So at this time, can I have a motion on On the amendment. >> I know that we [INAUDIBLE AUDIO] >> I have a motion to approve the amendment. Is there a second? >> I have a second. All those in favor say aye. >> Aye. >> All those opposed. >> No. >> No. All right, if I could I'm gonna have to have a show of hands. That was one the Chair could not determine. All those in favor of the Elmore amendment please signify by showing your hands. We have three, four, five, six. All right. All those opposed. All right so the amendment carries. That is I think all the amendments. As I have no further amendments, since we are at 11:30 and we still have the room a little longer, at this time we could go ahead and move the bill the committee would like. The Chair would like to move the bill if it can. Representative Waddell. >> Mr. Chairman I rise for a motion. I believe that we have a favorable report to House Bill 1134 with the amendments rolled in to a new PCS. >> You've heard the motion to approve the bill With the amendments rolled in as a new PCS. Is there a second? All right. I have a second. Also the Chair has determined this bill probably needs to go to appropriations so I am going to refer it to appropriations from here. All right. All those in favor For the bill, signify by saying aye. >> Aye. >> Any position? >> No. >> All right, thank you. Bill passed. >> [NOISE].