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No current employees or retirees would lose benefits under Senate Bill 467. The bill's sponsors explained the
rationale for the bill in May and invited questions and comments at a committee meeting, but the committee did not vote.
Taken together, the State pension and health plans have a claimed $60 billion unfunded liability. The legislature's non-
partisan staff did research into what millennials care about when they look for jobs and found no evidence of people 20
to 35 years old being motivated by traditional pensions or retiree medical coverage so the committee was told.

“The State is paying for benefits that don't help recruitment,” according to Senator Andy Wells, R., Catawba Co.
New employees won't appreciate retiree benefits "until year 29," he said in committee. State pensions for workers who
retire after 30 years are 54 percent of their final salaries. The average pension benefit is less than $21,000 a year, according
to the State Treasurer's Office.

Employees contribute 6 percent of their pay to the pension system. The State and other employers have contrib-
uted an average of 4.5 percent over the last 15 years, according to the Treasurer's Office. Defenders of the State retirement
system warned against ending it, saying a move to 401(k) plans may not save money. A 2015 report from the National
Institute on Retirement Security found that costs went up and workers found it hard to retire in three states that switched
from pensions to 401(k) plans. Additionally, shutting down the pension plan would cost $350 million in the first year,
according to the Treasurer's Office.

Mark Jewell, President of the N.C. Association of Educators, told the Committee that a secure retirement system
and health insurance keeps talented teachers in classrooms. "Not offering retiree health care is a travesty that North
Carolina should not accept," he said.

Richard Rogers, Executive Director of the N.C. Retired Governmental Employees Association, was quoted as
saying that employees would not stay in their jobs if they do not have retirement benefits. The proposed changes would
end up increasing the State's cost to replace and train workers, he said in a later interview in the Raleigh News & Observer.
"It's important for us to retain career public servants," Rogers said. The Fraternal Order of Police has maintained this
same view for many, many years.

Some senators on the committee questioned whether the changes would be good for workers. The bill says the
State would contribute 6 percent to the 401(k)-style plans in the first year, but makes no assurances for future years. "We
could eventually have a scenario where the General Assembly decides not to make a contribution going forward," said
Sen. Jay Chaudhuri, D., Wake County.

One final issue of interest (which I wrote about in the June issue of The BlueNote) was - - and still is - - a COLA
for retirees. Going into the final budget negotiations the Senate provided no COLA for retirees and the House provided
a 1.6% increase. The final version of the State Budget (i.e. Senate Bill 257) provided a 1% COLA for teachers and State
retirees.

How did the House and Senate end up with a 1% COLA? According to the North Carolina Retired Governmental
Employees’ Association’s Executive Director, Richard Rogers, it most likely came about as a result of the House agreeing
to keep a Senate budget provision that will eliminate retiree health care benefits for new hires beginning in 2021. By
agreeing to keep this provision, the House was able to leverage the 1% COLA. A budget item changing so drastically in
conference is rare.

Local government retirees (a/k/a “LGERS”) were denied the opportunity to be considered for a cost of living
adjustment (i.e. COLA) in the legislative process.

The General Assembly adjourned shortly after 2:00 a.m. on Friday, June 30th. The Adjournment Resolution
scheduled additional sessions of the General Assembly during 2017 and establishes the date for convening the 2018
session.

The legislature reconvened on Thursday, August 3rd and held a one-day Session on the 4th. It was authorized to
consider any legislation that has been vetoed by the Governor, any court litigation matters, any matters related to im-
peachment of State officials and a few other selected matters. The House and Senate collectively considered eight bills
and passed seven. None were of interest to law enforcement.

The General Assembly reconvened again on Wednesday, September 6, 2017 to consider overriding any vetoes
by the Governor, any court litigation, and changes to the judicial divisions and districts that assign Superior Court judges,
District Court judges and District Attorneys, to consider revising districts for cities and counties for election of their local
government officials, to consider proposed amendments to the North Carolina Constitution, and to revise the districts for
election of our State Senators and Representatives. If the redistricting matters cannot be resolved initially during the
September 6th session, the legislature is authorized to continue meeting to resolve these districts as long as it is resolved
no later than November 15, 2017. There is already talk of another Session sometime in October.

Once these 2017 sessions are adjourned, the General Assembly is scheduled to be out of session until they re-
convene on Wednesday, May 16, 2018 at 12:00 noon.

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