AN ACT Relating to the state public pension commission; amending RCW 41.52.010, 41.52.020, and 41.52.040; and adding a new section to chapter 41.52 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 1, chapter 17, Laws of 1963 ex. sess. as last amended by section 16, chapter 87, Laws of 1980 and RCW 41.52.010 are each amended to read as follows:

There is created the state public pension commission. The commission shall consist of ((~~five~~)) one member((s)) of the house of representatives to be appointed by the speaker thereof, ((~~five~~)) one member((s)) of the senate to be appointed by the president of the senate, and ((~~five~~)) seven members to be appointed by the governor((: PROVIDED, That no more than three senators nor more than three representatives shall be appointed from the same political party. All original legislative members shall be appointed before the close of the 1963 extraordinary session of the legislature and successors shall be appointed before the close of each regular session during an odd-numbered year thereafter: PROVIDED, FURTHER, That if prior to the close of each regular session during an odd-numbered year, the governor shall issue a proclamation convening the legislature into special session, or the legislature shall by resolution convene the legislature into special session, following such regular session, then such appointments shall be made as a matter of closing business of such special session)). Legislative members shall be subject to confirmation, as to senate members by the senate, and as to house members by the house. No terms of legislative members shall be extended without such confirmation.

The members appointed by the governor shall have the following qualifications:

(1) ((~~At least~~)) One ((~~of the~~)) member((s)) shall ((~~be experienced in actuarial principles~~)) have experience in the actuarial field;

(2) One member shall be a trustee or official of a retirement system; ((~~and~~))

(3) ((Three members shall have had general experience and knowledge in fields pertinent to retirement system operating, but shall not at the time of appointment or during their terms of office be trustees or officials in any retirement system)) One member shall have experience in the field of government finance;

(4) One member shall be an active member of a public retirement system;

(5) One member shall be receiving retirement benefits from a public retirement system; and

(6) Two members shall have experience in the fields of security investment, pension administration, or pension law, but shall not be active or retired members of a public retirement system.

Sec. 2. Section 2, chapter 17, Laws of 1963 ex. sess. and RCW 41.52.020 are each amended to read as follows:

The members of the commission shall be appointed ((~~biennially for terms commencing July 1st and expiring on June 30th on each succeeding odd-numbered year and~~)) for staggered terms of six years with the terms of three members expiring on June 30th of each odd-numbered year. In making the initial appointments to the commission, the governor shall appoint three persons to terms expiring June 30, 1987, two persons to terms expiring June 30, 1989, and two persons to terms expiring June 30, 1991. The initial term of the member of the house of representatives shall expire June 30, 1989, and the initial term of the senator shall expire June 30, 1991. Members shall serve until their successors are appointed or elected, and qualified. The terms of office of legislative members who shall not continue to be members of the senate and house shall cease as of the date the certificates of election of their successors are issued. ((~~Vacancies in office of legislative members shall be filled by appointment from the same house by the remaining legislative members of that house.~~)) All vacancies shall be filled for the remainder of the unexpired term. Vacancies in memberships ((~~appointed by the governor~~)) shall be filled by appointment by the ((~~governor~~)) original appointing authority.

Sec. 3. Section 4, chapter 17, Laws of 1963 ex. sess. as amended by section 2, chapter 128, Laws of 1967 and RCW 41.52.040 are each amended to read as follows:

The commission shall have the following powers and duties:

(1) Study the pension and benefit laws applicable to officers and employees in governmental service throughout the state and appraise and evaluate the existing laws pertaining to this subject;

(2) Study and consider the financial problems of the several retirement and pension funds and make recommendations as to revisions in financial provisions and methods of amortizing the accrued liabilities of such funds without impairment of any of the rights and equities of participants and beneficiaries but in conformity with sound and established principles of financing pension fund obligations;

(3) Study and make recommendations concerning the extension of pension coverage to public employees to whom pension protection has not been accorded;

(4) Study and make recommendations concerning the preservation and continuity of earned rights and credits in public employment for pension purposes including a thorough study of the legal, financial and other aspects of so-called legal vesting of pension rights;

(5) Evaluate all pension proposals in terms of policy, cost implications, and their impact on other public employee retirement programs;

(6) Consider all aspects of pension planning and operation aiming toward the development of a standard pension policy grounded in fundamental principles;

(7) Consider the feasibility of codifying pension laws;

(8) Make available to such public officers and employees at all levels of government as it shall deem advisable, information as to pension and benefit studies, recommendations, and evaluations as to afford them an opportunity to become familiar with all aspects of pension problems so they may develop sound legislative and fiscal policies in accordance with established concepts of good retirement planning and sound financing;

(9) Report from time to time, at least biennially, to the members of the legislature, and to the governor, its conclusions and recommendations;

(10) ((Prepare an explanatory note for each pension bill introduced in the legislature, which note shall briefly explain the financial impact and policies of the bill, indicate the impact on the relative position of the system affected with the other public pension systems, and which shall be attached to or printed upon the printed bill;

~~(11)~~)) Study and make recommendations on the investment policies and procedures of all public pension systems.

NEW SECTION. Sec. 4. A new section is added to chapter 41.52 RCW to read as follows:

(1) When a bill of the legislature that proposes to change benefits or participation in benefits of a public retirement system or that proposes to change a fund liability of a public retirement system is filed for introduction in either house of the legislature, the office in which the bill or resolution is filed shall send a copy of the bill or resolution to the commission. The copy sent to the commission shall be accompanied by an actuarial analysis prepared by an actuary who is a fellow of the society of actuaries, a member of the American academy of actuaries, or an enrolled actuary under the federal employees retirement income security act of 1974.

(2) The commission may have a second actuary either review the actuarial analysis accompanying the bill or prepare a separate actuarial analysis. An actuary who reviews or prepares an analysis for the commission under this subsection shall have at least five years of experience as an actuary working with one or more public retirement systems and shall be a fellow of the society of actuaries, a member of the American academy of actuaries, or an enrolled actuary under the federal employees retirement income security act of 1974.

(3) The actuarial analysis shall show the economic effect of the bill on the public retirement system, including a projection of the annual cost to the system of implementing the legislation for at least ten years. If the bill applies to more than one public retirement system, the cost estimates in the analysis may be limited to each affected state-financed public retirement system and each affected public retirement system in a city having a population of two hundred thousand or more, according to the most recent federal census. The actuarial analysis shall state the actuarial assumptions and methods of computation used in the analysis and shall state whether or not the bill, if enacted, will make the affected public retirement system actuarially unsound using an advanced funding actuarial cost method or, in the case of a system already actuarially unsound, using an advanced funding actuarial cost method, more unsound.

(4) The actuarial analysis required by this section shall be attached to the bill for which it is required before a committee hearing on the bill may be conducted. The actuarial analysis shall remain with the bill or resolution throughout the legislative process, including submission to the governor.

(5) If an amendment is passed and attached to a bill in a committee or on the floor of either house of the legislature, which amendment shall or may have a material effect upon the potential costs of the bill if passed, then the bill as so amended shall be referred to the public pension commission for an actuarial analysis of the effect of the amendment or a determination that the actuarial analysis previously provided remains valid for the bill as so amended.

(6) A bill for which an actuarial analysis is required by this section is exempt from the requirement of a fiscal note as provided by chapter 43.88A RCW.