With only a brief pause to discuss an amendment, bills in both the House and Senate providing PERS Plan 1 participants with a cost of living increase (COLA) moved forward without a single ‘nay’ vote.
HB 1390 and SB 5400 both propose a one-time, 3% increase to monthly benefits for Pers Plan 1 participants capped at $62.50. Funding for this increase would come from additional PERS Plan 2 employer contributions. These employers are already paying 4.76% of reportable compensation to pay for PERS Plan 1 supplementary contributions. This increase would raise the rate to 4.88%.
This increase would raise the rate to 4.88%.
Currently, 238 cities participate in PERS Plan 2. Estimates indicate that in 2018, these cities contributed:
- $73.6 million to PERS Plan 2; of which,
- $27.2 million went to cover unfunded PERS Plan 1 liabilities.
To fund the 3% increase, cities would be responsible for an additional 0.12% contribution of reportable PERS Plan 2 income, equaling an estimated:
- $686,000 for the first year; and
- $8.2 million over the next ten years.
AWC remains opposed to this increase as it places the burden of funding on employers. We encourage you to calculate your city’s current level of payments to cover unfunded PERS Plan 1 liabilities and share that number with your legislator.