There are more than a few bills this Legislative session that could impact public employee pensions. Some of the bills would make relatively small but important changes for city employees, while others could have major impacts for employers, employees, and retirees for years to come.

For those that would like a "Pensions 101,” House Appropriations Committee staffer David Pringle gave a good overview on state-managed pension plans at a recent hearing.  Watch the overview on TVW here.

PERS 1 COLAs

UAAL sunset: HB 1201 establishes a June 30, 2025 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, including for ad hoc COLAs for PERS 1 retirees that have been passed in recent years. AWC supports ending the UAAL and the extra costs it imposes on cities.

PERS 1 COLA (ad hoc & permanent): Several bills would offer either a one-time, ad hoc COLA for PERS 1, and one would impose an ongoing automatic PERS 1 COLA. You can read more about these bills and AWC’s position on them here.

HB 1057 / SB 5350 are companion bills that authorize a one-time, ad hoc 3% COLA for PERS 1 retirees, capped at $110 per month. The bills include legislative findings that PERS 1 retirees have lost purchasing power due to inflation, but that an automatic COLA could be cost prohibitive until the UAAL is reduced or no longer required. Both have been heard in their respective chambers, but neither has been scheduled for a committee vote.

HB 1459 establishes an automatic annual COLA for PERS 1 retirees capped at 3% and $110 per month starting in July 2023. It also reduces the statutory investment rate of return assumption to 7.2% and makes legislative findings that reducing the investment rate of return assumption, coupled with expected extraordinary investment returns, will balance the benefit increases with PERS 1’s future funding needs. The bill had a public hearing in the House Appropriations Committee and was scheduled for a committee vote on February 2, but no action was taken and it has not yet been rescheduled.

First responders pensions

LEO flexible work: Companion bills in the House and Senate (SB 5424 and HB 1413) remove references to “full time” from the definitions of “officers” in the Mutual Aid Peace Officer's Powers Act and the LEOFF retirement system, allowing part-time officers to participate in LEOFF 2 and exercise full mutual aid powers. The bills also allow police departments to adopt flexible work policies, including allowing officers to work less than full time and use alternative shifts and schedules. You can read more about the bills here. Both bills are making their way through the legislative process and had hearings or committee votes in late January.

911 operators to PSERS: HB 1055 / SB 5328 expand 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. Both bills had hearings in January, and the Senate version had a committee vote in the Senate Ways & Means Committee on February 7. The House version is scheduled for a committee vote in the House Appropriations Committee on February 13.

Other bills

Interruptive military service: HB 1007 / SB 5296 expand 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 refers to where a public employee is called away from their regular job for military service. A service credit credits certain “veterans” pensions for their time away from their regular employment while in military service. The House bill was passed out of the House on a unanimous vote is now waiting to be scheduled for a hearing in the Senate Ways & Means Committee. The Senate bill had a committee vote in the Senate Ways & Means Committee on February 7.

Retire/Rehire: HB 1056 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. The bill received a minor amendment in the House Appropriations Committee and was voted off the House floor unanimously on February 6. It is now waiting for a hearing in the Senate Ways & Means Committee.