BP BHEAD INT S [atlas:bill]

AN ACT Relating to funding of the state retirement systems; amending RCW 41.45.020, 41.45.030, 41.45.060, and 41.45.090; and adding new sections to chapter 41.45 RCW.

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

Sec. 1. RCW 41.45.020 and 1995 c 239 s 306 are each amended to read as follows:

As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Council" means the ((~~economic and revenue forecast~~)) pension funding council created in ((~~RCW 82.33.010~~)) section 2 of this act.

(2) "Department" means the department of retirement systems.

(3) "Law enforcement officers' and fire fighters' retirement system plan I" and "law enforcement officers' and fire fighters' retirement system plan II" mean the benefits and funding provisions under chapter 41.26 RCW.

(4) "Public employees' retirement system plan I" and "public employees' retirement system plan II" mean the benefits and funding provisions under chapter 41.40 RCW.

(5) "Teachers' retirement system plan I," "teachers' retirement system plan II," and "teachers' retirement system plan III" mean the benefits and funding provisions under chapter 41.32 RCW.

(6) "Washington state patrol retirement system" means the retirement benefits provided under chapter 43.43 RCW.

(7) "Unfunded liability" means the unfunded actuarial accrued liability of a retirement system.

(8) "Actuary" or "state actuary" means the state actuary employed under chapter 44.44 RCW.

(9) "State retirement systems" means the retirement systems listed in RCW 41.50.030.

(10) "Work group" means the pension funding work group created in section 3 of this act.

NEW SECTION. Sec. 2. A new section is added to chapter 41.45 RCW to read as follows:

(1) The pension funding council is hereby created. The council consists of the:

(a) Director of the department of retirement systems;

(b) Director of the office of financial management; and

The council may select officers as the members deem necessary.

(2) The pension funding council shall adopt changes to economic assumptions and contribution rates by an affirmative vote of at least four members.

NEW SECTION. Sec. 3. A new section is added to chapter 41.45 RCW to read as follows:

(1) A pension funding work group is hereby created. The work group shall consist of one staff member selected by the executive head or chairperson of each of the following agencies or committees:

(a) Department of retirement systems;

(b) Office of financial management;

(d) Ways and means committee of the senate;

(e) Appropriations committee of the house of representatives; and

(f) Economic and revenue forecast council.

(2) The state actuary shall make available to the work group all information related to economic assumptions and contribution rates.

(3) The pension funding work group shall provide support and recommendations to the pension funding council. Meetings of the pension funding work group may be called by any member of the group for the purpose of assisting the pension funding council, reviewing actuarial valuations of the state retirement systems, reviewing economic assumptions, or for any other purpose which may assist the pension funding council.

(4) The pension funding work group shall solicit and administer a biennial actuarial audit of the actuarial valuations used for rate-setting purposes. This audit will be conducted concurrent with the actuarial valuation performed by the state actuary. At least once in each six-year period, the work group shall solicit and administer an actuarial audit of the results of the experience study required in RCW 41.45.090.

(5) Upon completion of the audit, the work group will review the results and develop contribution rate recommendations for the pension funding council. Recommendations from both affected employee and employer groups will be actively sought during the work group process. Prior to their recommendations to the council, the work group shall conduct an open public meeting on these recommendations.

Sec. 4. RCW 41.45.030 and 1995 c 233 s 1 are each amended to read as follows:

(1) ((Beginning September 1, 1995, and every two years thereafter, the state actuary shall submit to the council information regarding the experience and financial condition of each state retirement system. The council shall review this and such other information as it may require.

~~(2) By December 31, 1995, and every two years thereafter,~~)) The council, by affirmative vote of ((~~five~~)) four councilmembers, shall adopt changes to the following long-term economic assumptions:

(a) Growth in system membership;

(b) Growth in salaries, exclusive of merit or longevity increases;

(d) Investment rate of return.

(2) The council shall work with the ((~~department of retirement systems,~~)) pension funding work group and the state actuary((~~, and the executive director of the state investment board,~~)) and shall consider long-term historical averages, in developing the economic assumptions.

(3) The assumptions adopted by the council shall be used by the state actuary in conducting all actuarial studies of the state retirement systems.

Sec. 5. RCW 41.45.060 and 1995 c 239 s 309 are each amended to read as follows:

(1) The state actuary shall provide actuarial valuation results based on the assumptions adopted under RCW 41.45.030.

(2) Not later than September 30, ((~~1996~~)) 1998, and every two years thereafter, consistent with the assumptions adopted under RCW 41.45.030, the council shall adopt ((~~both~~)) changes to: (a) A basic state contribution rate for the law enforcement officers' and fire fighters' retirement system; and (b) basic employer contribution rates for the public employees' retirement system plan I, the teachers' retirement system plan I, and the Washington state patrol retirement system to be used in the ensuing biennial period.

(3) The employer and state contribution rates adopted by the council shall be the level percentages of pay that are needed:

(a) To fully amortize the total costs of the public employees' retirement system plan I, the teachers' retirement system plan I, the law enforcement officers' and fire fighters' retirement system plan I, and the unfunded liability of the Washington state patrol retirement system not later than June 30, 2024; and

(b) To also continue to fully fund the public employees' retirement system plan II, the teachers' retirement system plans II and III, and the law enforcement officers' and fire fighters' retirement system plan II in accordance with RCW 41.40.650, 41.26.450, and this section.

(4) The aggregate actuarial cost method shall be used to calculate a combined plan II and III employer contribution rate.

(5) The council shall immediately notify the directors of the office of financial management and department of retirement systems of the state and employer contribution rates adopted.

(6) The director of the department of retirement systems shall collect those rates adopted by the council.

Sec. 6. RCW 41.45.090 and 1989 c 273 s 9 are each amended to read as follows:

The department shall collect and keep in convenient form such data as shall be necessary for an actuarial valuation of the assets and liabilities of the state retirement systems, and for making an actuarial investigation into the mortality, service, compensation, and other experience of the members and beneficiaries of those systems. The department and state actuary shall enter into a memorandum of understanding regarding the specific data the department will collect, when it will be collected, and how it will be maintained. The department shall notify the state actuary of any changes it makes, or intends to make, in the collection and maintenance of such data.

At least once in each six-year period, the state actuary shall conduct an actuarial ((~~investigation~~)) experience study of the mortality, service, compensation and other experience of the members and beneficiaries of each state retirement system, and into the financial condition of each system. The results of each investigation shall be filed with the department, the office of financial management, ((~~and~~)) the budget writing committees of the Washington house of representatives and senate, and the pension funding council. Upon the basis of such actuarial investigation the department shall adopt such tables, schedules, factors, and regulations as are deemed necessary in the light of the findings of the actuary for the proper operation of the state retirement systems.