[atlas:bill]

AN ACT Relating to increasing member involvement in, knowledge of, and financial security in the retirement systems; amending RCW 41.50.075; adding new sections to chapter 41.50 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. It is the intent of the legislature to articulate the responsibilities of the pension oversight board and to further the study of issues in the state retirement systems. It is also the intent of the legislature to improve upon the coordination of and the reports from the department of retirement systems, the state investment board, and the office of the state actuary to make them more concise and user-friendly, to further the disclosure of the financial and actuarial status of the systems, and to empower interested parties in assessing accountability.

Sec. 2. RCW 41.50.075 and 2000 c 247 s 601 are each amended to read as follows:

(1) Two funds are hereby created and established in the state treasury to be known as the Washington law enforcement officers' and fire fighters' system plan 1 retirement fund, and the Washington law enforcement officers' and fire fighters' system plan 2 retirement fund which shall consist of all moneys paid into them in accordance with the provisions of this chapter and chapter 41.26 RCW, whether such moneys take the form of cash, securities, or other assets. The plan 1 fund shall consist of all moneys paid to finance the benefits provided to members of the law enforcement officers' and fire fighters' retirement system plan 1, and the plan 2 fund shall consist of all moneys paid to finance the benefits provided to members of the law enforcement officers' and fire fighters' retirement system plan 2.

(2) All of the assets of the Washington state teachers' retirement system shall be credited according to the purposes for which they are held, to two funds to be maintained in the state treasury, namely, the teachers' retirement system plan 1 fund and the teachers' retirement system combined plan 2 and 3 fund. The plan 1 fund shall consist of all moneys paid to finance the benefits provided to members of the Washington state teachers' retirement system plan 1, and the combined plan 2 and 3 fund shall consist of all moneys paid to finance the benefits provided to members of the Washington state teachers' retirement system plan 2 and 3.

(3) There is hereby established in the state treasury two separate funds, namely the public employees' retirement system plan 1 fund and the public employees' retirement system combined plan 2 and plan 3 fund. The plan 1 fund shall consist of all moneys paid to finance the benefits provided to members of the public employees' retirement system plan 1, and the combined plan 2 and plan 3 fund shall consist of all moneys paid to finance the benefits provided to members of the public employees' retirement system plans 2 and 3.

(4) There is hereby established in the state treasury the school employees' retirement system combined plan 2 and 3 fund. The combined plan 2 and 3 fund shall consist of all moneys paid to finance the benefits provided to members of the school employees' retirement system plan 2 and plan 3.

(5) The legislature shall expend from the funds created in this section only to satisfy the liabilities, if any, of each of the respective systems.

NEW SECTION. Sec. 3. A new section is added to chapter 41.50 RCW to read as follows:

(1)(a) The state pension oversight board is created and consists of the following members:

(i) Four active members or representatives from organizations of active members of the state retirement system appointed by the governor for staggered three-year terms;

(ii) Four retired members or representatives of retired members' organizations of the state retirement system appointed by the governor for staggered three-year terms, with no two members from the same system;

(iii) Five employer representatives appointed by the governor for staggered three-year terms;

(iv) The director of the department, the director of financial management, and the executive director of the state investment board; and

(v) Four members of the legislature, with one member representing each of the two largest caucuses in the senate and the house of representatives, appointed by the president of the senate and the speaker of the house of representatives. The legislators shall be nonvoting members of the board.

(b) The board shall establish policies and procedures for its internal management.

(2) The board shall provide open and balanced review of pension policy issues and advise and recommend changes on pension policy issues; contribution rates; long-term assumptions used in developing those rates; and legislation to the legislature, the governor, the pension funding council, and the joint committee on pension policy.

(3) The board shall from time to time make written recommendations to the legislature concerning deficiencies, conflicts, or obsolete provisions in, and need for reorganization or revision of, the statutes governing pension policy, and shall prepare for submission to the legislature, legislation for the correction or removal of those deficiencies, conflicts, or obsolete provisions, or to otherwise improve the form or substance of any portion of the statute law of this state as the public interest or the administration of pension policy may require.

(4) The board shall discharge its duties in the interest of the public employers, participants, and beneficiaries.

(5) The department shall provide staff and actuarial services to the board.

NEW SECTION. Sec. 4. A new section is added to chapter 41.50 RCW to read as follows:

The department is to produce a summary level and consolidated annual financial report with the focus of presenting information about the status of the various retirement plans to active and retired members, policy makers, and other interested parties. Information included in the report is to be provided by the office of the state actuary, the state investment board, and the department. The department shall consult with the state investment board and the office of the state actuary during the preparation of this report. The department shall meet with the department's advisory board in order to ensure the usability of the report. In addition, the department shall give annual notice of report review and then accept and consider input on the style and substance of the report from interested parties.

NEW SECTION. Sec. 5. A new section is added to chapter 41.50 RCW to read as follows:

Beginning in 2003 and every four years thereafter, the department shall convene a task force comprised of representatives of the department, the office of the state actuary, the state investment board, the office of financial management, the office of the state auditor, and the advisory committee to the department. This task force shall review all the major reports prepared by state agencies concerning the state retirement systems and examine the best practices from other states. The goals of the task force are to determine what information needs to be reported and to seek ways to: Promote more effective monitoring of the public retirement systems, streamline reporting, become more efficient in the production and distribution of the information, minimize redundancies and confusion, and maximize the public's investment in these reports. The task force shall report by the end of October in each year the task force is convened to the state pension oversight board with their recommendations for changing and consolidating these reports. Any changes in current state law that may be required to accomplish these recommendations shall be noted.

NEW SECTION. Sec. 6. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.