WASHINGTON - Public plan trustees and executives better start paying attention to trends in public plan legislation on a nationwide basis because a bill being debated 1,000 miles away might end up in their state legislature.
"When a new idea is seized up in one part of the country, another part is looking at it," said Carol Smith, legislative consultant with The State Affairs Co., Reston, Va. The public relations firm tracks different types of state legislative issues.
Speaking at the National Conference on Public Employee Retirement Systems' Legislative Workshop in Washington, Ms. Smith said legislators will be looking for answers to their issues in other states with similar situations. In order to be more effective players in the process, fund officials really need to stay on top of the trends in public plan legislation nationwide.
"Legislators are going to be increasingly looking at other states as models," she said. "They're going to be looking for what's working."
About 4,000 bills concerning public employer retirement systems have been filed in state legislatures so far this year, Ms. Smith said. She expects there will be many more, mostly because filing deadlines haven't closed and some state legislatures aren't even in session yet.
Ms. Smith noted several trends in the thousands of bills being introduced in the 1997 legislative sessions.
Almost every state that has an income tax will consider proposals this year that would exempt retirement benefits from state income tax.
Ms. Smith said she expects the issue to become quite controversial because eliminating taxes obviously means less revenue for the state.
Nearly half of all the legislatures currently have bills that deal with early retirement. In Texas, the bill pertains particularly to firefighters; in Arizona, the bill targets all public safety employees.
At least 10 states have legislation pending regarding cost-of-living adjustments for retirees. For example, Texas has one bill that would approve a new cost-of-living adjustment for firefighters; Massachusetts has one which would give a 3% annual increase for retirees.
Ms. Smith said she expects social issues to come up again in several states. Some issues she expects to surface deal with tobacco investments and divesting companies that do business with Cuba. In addition, legislators, including some in New York, have been talking about whether the state should divest its assets from Texaco Inc. stock. So far, no legislation has been crafted, Ms. Smith said.
Montana is considering legislation that would create a legislative committee to establish a retirement plan to replace or modify the state's current defined benefit system.
Ms. Smith said she expects several states will follow in Montana's path.
In an interview, Ms. Smith couldn't really say which bills had a chance of passing. This is the first year State Affairs has taken a thorough look at legislative efforts on public retirement plan issues.
For the most part, legislators are making efforts to protect their respective retirement systems nationwide, she said.
"They really want to increase the protections for state plans," Ms. Smith said of the legislators. "There's definitely a trend (where legislators) make sure plans are protected."
