We have written about several bills impacting city pensions making their way through the Legislature. Here we update you on the bills’ progress as we head into floor action. Sine Die, the official last day of the session, is March 10.
PERS 1 COLA
SB 5676 are companion bills that provide a one-time 3% COLA (cost-of-living adjustment) to PERS plan 1 and TRS plan 1 retirees, capped
at $110 per month. AWC opposed funding the COLA through increased employer contribution rates—paid by cities—instead of using state funds. This bill passed the Legislature on March 2, and is on its way to the Governor’s desk for
signature.
LEOFF 2 benefit improvements
HB 1701 provides for new pension benefit enhancements for LEOFF 2 members using the Benefit Improvement Account (BIA). The bill would
create two types of benefit improvements funded by the BIA:
- A lump sum benefit of $100/month of service for current retirees; and
- A gradually increasing retirement benefit multiplier from 2% to 2.5% for 15 to 25 years of service for new members.
Current members will have a choice between the two benefits. The bill also establishes a new minimum contribution rate policy that reduces employer contributions depending on the plan’s funded status. Benefits improvements are ultimately funded
by a one-time transfer from the LEOFF 2 account to the BIA. AWC is neutral on these bills because there is no fiscal impact on cities due to LEOFF 2 being more than fully funded.
HB 1701 passed the Senate and now heads to the Governor.
LEOFF 1 benefit improvements
SB 5791 makes LEOFF plan 1 members eligible for a similar lump sum benefit offered to plan 2 members in the above bills. The bill was
amended in committee to remove references to the LEOFF 2 benefit improvement scheme, and only creates a benefit for LEOFF 1 members. AWC did not weigh in on this bill as it creates no fiscal impact for cities.
SB 5791 passed the House and now heads to the Governor.
ROTH options for deferred compensation plans
HB 1752 requires the Department of Retirement Systems to offer public employees post-tax ROTH investment options in addition to the traditional
pre-tax deferred compensation plans. These savings plans are optional and in addition to the employee’s standard pension. A floor amendment was adopted to require DRS to offer ROTH plans starting December 1, 2023.
The Senate passed the bill unanimously, and the bill is now on its way to the Governor’s desk.
Interruptive military service credits
HB 1804 expands the interruptive military service credit to public employees who were awarded an expeditionary medal during a period of
armed conflict in addition to those that received a campaign medal. An interruptive military service credit allows public employees to get a subsidized retirement contribution for the period where they take a leave of absence for military service
if the employee returns to work after being honorably discharged.
HB 1804 is waiting to be scheduled for a floor vote in the Senate.
Disability benefits
HB 1669 allows a PERS plan member who is totally disabled to receive a retirement allowance of 70% of their final average salary. The employee
seeking the disability benefit may be subject to comprehensive medical exams to determine continued eligibility for the benefit.
The bill has passed the Legislature and is on its way to the Governor’s desk.