SB 5862 is proposing an ad hoc 3% cost-of-living adjustment (COLA) for Public Employees’ Retirement System Plan 1 (PERS 1) beneficiaries’ monthly benefit. Under this bill, the increase is set to be effective July 1, 2026, and applies to beneficiaries who have been on the plan since July 1, 2025. The increase in the monthly benefit is capped at $110.00.

PERS 1 closed to new members in 1977, and, as of 2025, 506 members were still active employees in the system, with an average age of 71. There are 39,306 retired PERS 1 members, with an average age of 79. PERS 1 does not include a built-in annual COLA like PERS plans 2 and 3, and thus regular COLAs were never pre-funded when its members were still working. Until 2011, PERS 1 COLAs came through the “Universal COLA,” but that funding plan was dropped by the Legislature that year. Since then, the Legislature has passed various ad hoc one-time COLAs for PERS 1 retirees.

Cities, as PERS employers, have helped fund these ad hoc COLAs through the Unfunded Actuarial Accrued Liability (UAAL) surcharge, which is tacked on to current employer contributions. AWC has concerns that the planned method of funding this and continued ad hoc PERS 1 COLAs—supplemental employer contributions using today’s tax dollars—will have significant impacts on city budgets into the future. We are asking that the state fully fund any PERS 1 COLAs without increasing the UAAL and any costs to local employers.