The LEOFF 2 Board and the Select Committee on Pension Policy are both moving forward with proposals for benefit changes during the 2022 legislative session.

The Select Committee on Pension Policy (SCPP) is responsible for the PERS retirement plan, among others, and has been considering options for providing a cost of living adjustment (COLA) for PERS plan 1 retirees. At the SCPP meeting on November 16 the Committee voted to recommend a one-time 3% COLA capped at $110 per month. This proposal is expected to cost local government employers $12 million in the current biennium and $29 million in the next biennium.

AWC is concerned about funding for a COLA because the PERS plan 1 is already underfunded and cities and other public employers are subject to a surcharge on PERS 2 rates to pay off that unfunded liability. Under current conditions, the unfunded PERS 1 liability would be paid off in 2025. AWC has consistently expressed reservations about increasing employer costs related to PERS 1. AWC asked that any additional cost for the COLA be funded by the State since the PERS 1 plan did not provide for COLAs in its original design or funding plan, and the State has seen greater than expected revenues in recent years. That being said, the proposal recommended by the Committee has a relatively minimal cost especially compared to the other COLA options considered.

The LEOFF 2 Board, which oversees the law enforcement and fire fighter plan 2 pension program, also has been weighing a benefit enhancement. The Legislature previously funded a Benefit Improvement Account of approximately $450 million, which was intended to fund new benefit enhancements. The LEOFF 2 Board has been considering which potential new benefits to provide. At the Board’s November 17 meeting, they voted to recommend moving forward with two proposals for further consideration at the December meeting: adding a lump sum benefit of $100 per month of service with a minimum of $20,000 for catastrophic and duty disability retirees and duty death beneficiaries; and an increase in the plan benefit multiplier from 2% to 2.5% for those between 15 and 26 years of service.

The LEOFF 2 Board expects to review cost data for the proposal and to draft legislation at their December 15 meeting. Similar to AWC’s position on the Plan 1 COLA, AWC shared concerns with the Board about any increase in costs to employers for the benefit enhancements. Board staff has indicated that there will not be a need for a rate increase and that rates could be fixed for three years under the benefit enhancement proposals.

AWC will continue to monitor both proposals and report on their status as they move through the legislative process.