HOUSE BILL REPORT

SSB 6466

As Amended by the House

BYSenate Committee on Ways & Means (originally sponsored by Senator Vognild)

Revising retirement benefit calculation for certain county employees.

House Committe on Ways & Means/Appropriations

Majority Report:  Do pass with amendment.  (19)

      Signed by Representatives Locke, Chair; Belcher, Braddock, Brekke, Brough, Ebersole, Fuhrman, Grant, Grimm, Hine, Holland, McLean, Nealey, Peery, Sayan, H. Sommers, Spanel, Sprenkle and Wang.

House Staff:Randy Acker (786-7136)

AS PASSED HOUSE MARCH 3, 1988

BACKGROUND:

Retirement allowances in the Public Employees Retirement System (PERS), are calculated using the member's "Average Final Compensation" (AFC).  The AFC for a member in PERS, Plan I (PERS I) is based on the highest average compensation earned by the member during any two year period.  A PERS I member who is employed by a local government may include in his or her AFC a lump sum payment for sick leave which was earned during the two year AFC period.  The member may not, however, include in the AFC any payment made for sick leave which was earned prior to the two year AFC period. 

The long standing policy of the Department of Retirement Systems (DRS) has been to assume that sick leave is cashed out by an employer on a "first in, first out" basis.  If, however, an employer adopts a written policy statement which clearly provides for a different method of accounting for the accrual and use of sick leave, DRS will honor that policy. (WAC 415-108- 510) 

For example, if a PERS I member retires with over 1,000 hours of accrued sick leave and is covered by a collective bargaining agreement that allows 30 days (210-240 hours) of sick leave to be cashed out, the 30 days will not be included in the member's AFC unless the employer has previously adopted a consistent "last in, first out" accounting rule for the accrual and use of sick leave. 

Also, even if the employer does have a "last in, first out" policy, only those hours of sick leave which were earned during the two year AFC period may be included in the AFC.  (An employee who earned 1.84 hours of sick leave per week of work would only be able to include a maximum of 192 hours in the AFC, even if the employer allowed a cash out of 240 or more hours.) 

If a local PERS I employer provides a cash out of sick leave which is included in the member's AFC, the employer is billed for the excess cost which is imposed on PERS by the cash out. 

PERS I members who are employed by the state or by a school district may not include a cash out of their sick leave in their AFC.  PERS II members may not include any type of lump sum cash out in their AFC. 

Snohomish, Pierce and Spokane are class A counties.

SUMMARY:

An employee of the public works department of a class A county who retired on February 1, 1985 may have an additional sixty days after the effective date of this act to appeal a final decision of the director of the Department of Retirement Systems that was rendered on April 17, 1986.

Fiscal Note:      Available.

House Committee ‑ Testified For:    Sam Kinville, Washington State Council of County and City Employees.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    This bill would correct an inequity that was caused by a series of errors and resulted in a retired employee receiving a smaller retirement benefit than the employee should be entitled to.

House Committee - Testimony Against:      None Presented.