AWC testified in opposition to HB 1390, which would provide a one-time three percent Cost of Living Adjustment (COLA) for some PERS 1 members. The COLA would be capped at a maximum increase of $62.50 per month, for members of the Public Employees’ Retirement System (PERS) Plan 1 who are not receiving a minimum benefit. AWC expressed concern that an increase in benefits for PERS 1 members would result in a reduction of Washington cities’ ability to provide essential services to the public.
The additional benefits provided in this bill would come directly from state and local government budgets through what is called the supplementary contribution – an additional contribution rate that public employers pay on top of PERS 2 contributions. In the last fiscal year, cities spent an additional $58.3 million on supplementary contributions for PERS 1 liabilities.
For example, the 2017 PERS 2 rates looked like this:
- PERS 2 employees paid 7.9 percent of reportable compensation
- PERS 2 employers paid 12.70 percent of reportable compensation:
- 7.9 percent of reportable compensation;
- 0.02 percent for DRS administrative costs; and
- 4.76 percent to pay for PERS 1 supplementary contributions (unfunded liabilities).
If passed, HB 1390 would raise employer supplementary contributions costs by increasing PERS 1 unfunded liabilities, and directly reduce funds available for providing vital services to Washington residents.
Please contact your legislators and ask them to oppose HB 1390.