Roundup of State Activity

NTSA is always busy working on your behalf and that of those whom you serve. Following is a look at what’s been going on in selected states, as well as NTSA’s assessment and what action we are taking. 

Both the House of Representatives and Senate are in recess until Sept. 15. Before leaving town the House did pass the cigarette tax needed to fund the Philadelphia public school system. That act earned the votes needed to bring HB 1353 (Kampf bill with Tobash amendment) back out of committee and to the floor. 

Although Gov. Tom Corbett (R) has suggested that he will call a special session on pensions, and the Senate came back to Harrisburg during the week of July 7 to complete work on the fiscal code, it would take quite the confluence of events that would lead to any meaningful activity on pensions between now and the election. NTSA will assess and update what we think the lame duck session might look like. 

NTSA Government Affairs is running down the source of an IRS letter to the New Jersey Department of Education (DOE) regarding the Supplemental Annuity Collective Trust (SACT) 403(b) program. The SACT program is a 403(b) plan the New Jersey DOE offers that is available to all New Jersey public school districts. Historically, the program offered a couple of collective trusts managed by the state. 

Legislation passed in 2012 replaced the state-managed collective trusts with the investment options offered in the New Jersey Higher Education ORP program. Presumably, these providers were to become 403(b) options for all New Jersey public schools. The bottom line: the New Jersey DOE has sent letters to New Jersey public school districts stating that the IRS has notified the DOE that it is not eligible to sponsor a 403(b) plan and that all contributions to the SACT 403(b) plan need to be stopped. 

At this point, all NTSA can say is that the whole matter seems quite peculiar and that we need to do a bit more digging. At this point consider this a “heads up” — with more to come.

NTSA is following up on our January meetings with stakeholders in Sacramento. NTSA understands that the California Teachers Association (CTA) may begin working 403(b) reform legislation now that Gov. Jerry Brown (D) has signed the budget providing the additional CalStrs pension contributions sought by the CTA. 

NTSA expects that 403(b) legislation will be on the table during the 2015 legislative session and that the dynamics in Sacramento will be typically complex. The introduction of a new record keeper for the CalStrs Pension 2 program and long-rumored launch of a 403(b) investment program sponsored by the CTA are two of the new variables that will certainly have an impact in Sacramento.

 

The legislature reconvenes next year and there already are shakeups under way in a couple of key committees. Both the Insurance Committee and the Public Education Sunset Advisory Commission will see new leadership in 2015. It is also worthwhile to note that there will be a new lieutenant governor setting the agenda in the Texas Senate. NTSA will keep an eye out for lobbyist registrations and hires in Austin. 

Gov. John Kasich (R) signed into law the budget bill containing an amendment effectively ending an openly competitive voluntary 403(b) market for Ohio’s public university system. The new law allows Ohio public universities to select and limit 403(b) providers at their sole and absolute discretion. Advocates of the measure stated that the change would allow Ohio public universities to improve service and extract fee reductions from voluntary 403(b) providers. 

NTSA will certainly follow the voluntary 403(b) provider selection process and the accompanying impact on 403(b) participant service levels. NTSA also will be certain to measure the fee reductions secured from the selected 403(b) providers. The new law only affects 403(b) plans offered by Ohio public institutions of higher education, but NTSA is preparing for an anticipated lame duck run at similar legislation for K-12.