Four pension bills that will impact city employee pensions are scheduled for hearings this week in the House Appropriations Committee. The bills include ones that would expand military service credit, move 911 operators from PERS to PSERS, expand post-retirement re-employment, and put a sunset on the current Plan 2/3 unfunded liability surcharge that is used to pay for Plan 1 COLAs.

Interruptive military service

HB 1007, sponsored by Rep. Dave Paul (D–Oak Harbor), expands the definition of “veteran” to include those receiving an expeditionary badge for participation in an armed conflict, for the purposes of civil service laws and military service credit in pensions for LEOFF 2 firefighters and law enforcement, as well as PERS employees.

Interruptive military service credits refers to when a public employee is called away from their job to serve in the armed forces (for example National Guard, or US military reserve) that interrupts their regular employment, and the pension system counts the employee’s time away towards their pension if they qualify as a “veteran.” Current law limits “veterans” to those serving during a period of war in certain listed conflicts or those awarded a campaign badge or medal in any conflict, but not those only awarded an expeditionary badge.

911 operators to PSERS

HB 1055, sponsored by Rep. Drew Stokesbary (R–uburn), expands the scope of PSERS to include jobs with a high degree of psychological risk and permits current public safety telecommunicators (like 911 operators) to choose to remain in PERS, or join PSERS 2 as a dual member of PERS and PSERS. Current public safety telecommunicators would have from January 1, 2024 to March 1, 2024 to elect to join PSERS. New public safety telecommunicators will automatically be enrolled in PSERS.

For 911 operators, an advantage of PSERS would be the lower early retirement age and vesting requirements compared to PERS. A disadvantage is that both employer and employee contribution rates tend to be higher in PSERS than in PERS.

Retire/re-hire

HB 1056, also sponsored by Rep. Stokesbary, permits PERS 2 & 3 retirees to return to public employment as an employee or contractor for up to 867 hours per year without losing their PERS retirement benefits, starting in 2024. Currently, a PERS 2 & 3 retiree that returns to public employment would lose their retirement benefits.

UAAL sunset

HB 1201, sponsored by Rep. Timm Ormsby (D–Spokane), establishes a June 30, 2025 sunset (i.e. end date) for the PERS 1 unfunded actuarial accrued liability surcharge (UAAL). After that date, the bill establishes a UAAL employer contribution rate of 0% until June 30, 2029 to supersede all other references to the UAAL in various other pensions statutes.

The UAAL is an additional employer-paid surcharge added to Plan 2 and 3 pension contribution rates. It is used to pay for additional unfunded costs to PERS 1 that have accumulated over the years, partly due to ad hoc cost-of-living-adjustments that the Legislature has approved. Unlike Plans 2 and 3, Plan 1 pensions did not include regular COLAs in their contribution rates when Plan 1 employees were still working, so any COLAs are fully funded by employers after the fact.

Dates to remember

HB 1007, HB 1055, and HB 1056 are all scheduled for public hearings in the House Appropriations Committee on Monday, January 16 at 4 pm.

HB 1201 is scheduled for public hearing in the House Appropriations Committee on Wednesday, January 18 at 4 pm.