Z‑0341.2   _____________________________________________

 

SENATE BILL 5191

 

           _____________________________________________

 

State of Washington      57th Legislature     2001 Regular Session

 

By Senators Fraser, Long, Winsley, Franklin, Snyder, Honeyford, Carlson, Spanel, Jacobsen and Parlette; by request of Joint Committee on Pension Policy

 

Read first time 01/15/2001.  Referred to Committee on Ways & Means.

_1      AN ACT Relating to establishing a law enforcement officers' and

_2  fire fighters' health and welfare risk assumption program;

_3  amending RCW 41.26.110, 41.26.150, 43.84.092, 43.84.092,

_4  43.79A.040, 44.44.040, 48.62.031, and 48.62.051; adding new

_5  sections to chapter 43.63A RCW; adding a new section to chapter

_6  41.45 RCW; adding new sections to chapter 43.79 RCW; creating a

_7  new section; providing effective dates; providing an expiration

_8  date; and declaring an emergency.

     

_9  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

   

10                   LEOFF 1 EMPLOYER RISK POOL PROGRAM

     

11      NEW SECTION.  Sec. 1.  The purpose of sections 2 through 12 of

12  this act is to establish a risk assumption program whereby

13  employers of plan 1 active and retired members of the law

14  enforcement officers' and fire fighters' retirement system

15  voluntarily enter into membership in a risk pool for the purpose

16  of sharing the noninsured medical costs of long-term care and

                               p. 1                       SB 5191

_1  major medical services for retired members of plan 1.  Such long-

_2  term care and major medical services are those required under plan

_3  1 and approved by city and county disability boards.

     

_4      NEW SECTION.  Sec. 2.  The definitions in this section apply to

_5  sections 2 through 12 and 14 of this act unless the context

_6  clearly requires otherwise.

_7      (1) "Actuary" means the state actuary, office of the state

_8  actuary.

_9      (2) "Beneficiary" means any person in receipt of a retirement

10  allowance or disability allowance who is eligible for medical

11  services under the law enforcement officers' and fire fighters'

12  retirement system plan 1.

13      (3) "Director" means the director, office of community

14  development, department of community, trade, and economic

15  development.

16      (4) "Employer" means the legislative authority of any city,

17  town, county, or district or the elected officials of any

18  municipal corporation that employs any person who first became a

19  member of the law enforcement officers' and fire fighters'

20  retirement system prior to October 1, 1977, or any authorized

21  association of such municipalities.

22      (5) "Executive board" means the law enforcement officers' and

23  fire fighters' plan 1 risk pool executive board.

24      (6) "Long-term care" means those medically necessary services

25  required under RCW 41.26.030(22), authorized under RCW 41.26.150,

26  and received in a facility for skilled nursing care, intermediate

27  care, custodial care, hospice care, day care, in-home nursing

28  care, or other in-home care or services.  For purposes of

29  expenditures from the medical account, long-term care only

30  includes qualified long-term care services as defined in internal

31  revenue code section 7702B(2), and qualified long-term care

32  insurance contract as defined in internal revenue code section

33  7702B(b).

34      (7) "Medical account" means the law enforcement officers' and

35  fire fighters' plan 1 medical account.

36      (8) "Medical costs" means those costs incurred in the provision

37  of the medically necessary medical services required under RCW

SB 5191                        p. 2

_1  41.26.030(22) and authorized under RCW 41.26.150.  For purposes of

_2  expenditures from the medical account, medical costs only include

_3  cost of medical care as defined in internal revenue code section

_4  213(d).

_5      (9) "Risk assumption" means a decision to absorb the entity's

_6  financial exposure to a risk of loss without the creation of a

_7  formal program of advance funding of anticipated losses.

_8      (10) "Risk pool" means the long-term care and medical costs

_9  risk pool created for the law enforcement officers' and fire

10  fighters' medical benefits risk pool.

11      (11) "State risk manager" means the risk manager, risk

12  management division, department of general administration.

     

13      NEW SECTION.  Sec. 3.  (1) There is hereby established the law

14  enforcement officers' and fire fighters' medical benefits risk

15  pool.

16      (2) The risk pool is a risk assumption insurance program for

17  the sole purpose of employers sharing the noninsured medical costs

18  of long-term care and medical costs for beneficiaries.

19      (3) An employer's participation and withdrawal from the risk

20  pool is subject to rules established by the executive board.

     

21      NEW SECTION.  Sec. 4.  (1) The law enforcement officers' and fire

22  fighters' plan 1 risk pool executive board is hereby established.

23      (2)(a) The membership of the executive board shall consist of

24  nine persons as follows:

25      (i) The chair is appointed by the governor for a four-year term

26  of office.  The chair shall be familiar with risk pool operation,

27  medical, and long-term care matters but shall not have been

28  employed as a law enforcement officer or fire fighter or served on

29  a law enforcement officers' and fire fighters' plan 1 disability

30  board; and

31      (ii) Eight others selected by the governor from lists of

32  recommended persons made by their respective organizations as

33  follows:

34      (A) Two persons representing counties, one of which is an

35  elected official;

                               p. 3                       SB 5191

 

_1      (B) Two persons representing cities and towns, one of which is

_2  an elected official;

_3      (C) Two persons representing fire protection districts, one of

_4  which is an elected commissioner;

_5      (D) One person representing law enforcement officers; and

_6      (E) One person representing fire fighters.

_7      (b) If a member vacates his or her position, the governor shall

_8  select a person from a list recommended by his or her respective

_9  organization to replace the vacating member for the remainder of

10  the term of office for the vacated position.

11      (3) One position of the county, city, and town, and fire

12  protection district groups and the law enforcement officer

13  position have an initial term of two years and four years

14  thereafter.  The remaining positions have terms of four years.

15      (4) A vice-chair shall be elected at the first meeting of the

16  executive board and every two years thereafter.  Upon the absence of

17  the chair, the vice-chair shall act in his or her place.

18      (5) The executive board shall meet at least quarterly and shall

19  maintain minutes of each meeting and any records as may be

20  necessary, which are public records.

21      (6) The chair and four other members constitute a quorum.

22      (7) The members of the executive board shall not receive

23  compensation for their service upon the executive board but shall

24  be reimbursed for all expenses incidental to such service as to

25  the amount authorized by either RCW 42.24.090 or 43.03.050 and

26  43.03.060, whichever is applicable.

     

27      NEW SECTION.  Sec. 5.  The duties of the executive board are as

28  follows:

29      (1) Establish the basis of membership in the risk pool;

30      (2) Define and establish the benefits to be reimbursed by the

31  risk pool;

32      (3) Authorize distribution of moneys from the risk pool account

33  consistent with the provisions of rules and regulations

34  established by the internal revenue service;

35      (4) Determine, with the assistance of the actuary, employer

36  premiums to the risk pool, which shall include administrative

37  expenses of the office of community development;

SB 5191                        p. 4

 

_1      (5) Authorize reimbursement for medical and long-term care

_2  costs, required under RCW 41.26.030 and authorized under RCW

_3  41.26.150 that are not covered by standard medical insurance

_4  policies.  Reimbursement for medical costs shall be treated as paid

_5  first out of the amounts transferred under section 8 of this

_6  act.  The board shall adopt rules governing these reimbursements

_7  consistent with the provisions of the internal revenue code and

_8  rules and regulations established by the internal revenue service;

_9      (6) Purchase reinsurance as necessary; and

10      (7) Adopt rules under chapter 34.05 RCW.

     

11      NEW SECTION.  Sec. 6.  (1) In accordance with the requirements of

12  section 9 of this act, the director shall allot such funds as are

13  transferred from the medical account to the risk pool account and

14  to employers for (a) those reimbursements authorized under section

15  5(5) of this act, and (b) reimbursement of employers' medical

16  expenses up to the limit set by appropriation.

17      (2) The director shall:

18      (a) Appoint other staff as necessary for the operation of the

19  risk pool; fix their compensation within the limits provided by

20  law; and prescribe their duties;

21      (b) Enter into contracts necessary for the operation of the

22  risk pool, including risk management, claims, and administrative

23  services;

24      (c) Adopt rules under chapter 34.05 RCW pertaining to the risk

25  pool operation;

26      (d) Provide staff support to the executive board; and

27      (e) Perform those other duties and responsibilities required to

28  implement the medical benefits risk pool established in section 3

29  of this act.

     

30      NEW SECTION.  Sec. 7.  Funding for the risk pool account,

31  established in section 16 of this act, shall come from three

32  sources:  (1) Employer premiums; (2) funds which may be

33  transferred from the medical account; and (3) investment earnings.

     

34      NEW SECTION.  Sec. 8.  (1) Until December 31, 2005, or such later

35  date as permitted by the internal revenue code, one time each

                               p. 5                       SB 5191

_1  fiscal year the legislature may transfer to the medical account

_2  all or a part of any excess funds of the law enforcement officers'

_3  and fire fighters' retirement system plan 1, as determined by the

_4  state actuary consistent with the internal revenue code and rules

_5  and regulations of the internal revenue service.

_6      (2) Such transfer shall be done on a fiscal year basis, and may

_7  only be done once each fiscal year.

     

_8     NEW SECTION.  Sec. 9.  (1) The use of the medical account shall

_9  be solely for the purposes of:

10      (a) Reimbursement of medical costs and long-term care reduced

11  by any amount received or eligible to be received by a member

12  under workers' compensation, social security including the changes

13  incorporated under Public Law 89-97, insurance provided by the

14  employer, insurance provided by another employer, other pension

15  plan, or any other similar source;

16      (b) Insurance premiums, including medicare part B premiums;

17      (c) Costs incurred under this act by the executive board, the

18  state risk manager, and the office of the state actuary; and

19      (d) Accounting and management of the funds by an employer.

20      (2) Uses stated in subsection (1)(c) and (d) of this section

21  are subject to chapter 43.88 RCW.

22      (3) All undistributed transferred funds in the medical account

23  at the end of a calendar year shall be returned to the law

24  enforcement officers' and fire fighters' retirement system plan 1

25  by January 10th of the next ensuing year.

     

26      NEW SECTION.  Sec. 10.  The state risk manager shall adopt rules

27  governing the implementation, management, and operation of the

28  risk pool in consultation with the health and welfare advisory

29  board under RCW 48.62.051.  All rules shall be appropriate for the

30  type of program and class of risk covered.  The state risk manager's

31  rules shall include:

32      (1) Standards for the implementation, management, operation,

33  and solvency of the risk pool, including the necessity and

34  frequency of actuarial analyses and claims audits;

35      (2) Standards for claims management procedures;

36      (3) Standards for contracts between the risk pool and private

SB 5191                        p. 6

_1  businesses including standards for contracts between third-party

_2  administrators and the risk pool; and

_3      (4) Standards for an annual report with the state risk manager

_4  and state auditor including, but not limited to:

_5      (a) Copies of all the insurance coverage documents;

_6      (b) A description of the program structure;

_7      (c) An actuarial analysis, if required;

_8      (d) A list of contractors and service providers;

_9      (e) The financial and loss experience of the program; and

10      (f) Such other information as required by rule of the state

11  risk manager.

     

12      NEW SECTION.  Sec. 11.  The risk pool may not engage in an act or

13  practice that in any respect significantly differs from the

14  management and operation plan that formed the basis for the state

15  risk manager's approval unless the risk pool first notifies the

16  state risk manager in writing and obtains the state risk manager's

17  approval. The state risk manager shall approve or disapprove the

18  proposed change within sixty days of receipt of the notice.  If the

19  state risk manager denies a requested change, the risk manager

20  shall specify in detail the reasons for denial and the manner in

21  which the risk pool would fail to meet the requirements of this

22  chapter or any rules adopted in accordance with this chapter.

     

23      NEW SECTION.  Sec. 12.  (1) The state risk manager shall establish

24  and charge an investigation fee in an amount necessary to cover

25  the costs for the initial review and approval of the risk pool.  The

26  fee must accompany the initial submission of the plan of operation

27  and management.

28      (2) The costs of subsequent reviews and investigations shall be

29  charged to the risk pool being reviewed or investigated in

30  accordance with the actual time and expenses incurred in the

31  review or investigation.

32      (3) The risk pool shall pay any required fee or assessment

33  required by the health and welfare advisory board under RCW

34  48.62.051.

35 

                               p. 7                       SB 5191

 

_1      NEW SECTION.  Sec. 13.  Sections 1 through 12 of this act are each

_2  added to chapter 43.63A RCW.

   

_3    PERTAINING TO FUNDING STATE RETIREMENT SYSTEMS:  ADDING SECTIONS

   

_4     NEW SECTION.  Sec. 14.  A new section is added to chapter 41.45

_5  RCW to read as follows:

_6      (1) By September 30, 2001, and every two years thereafter, the

_7  state actuary shall identify, consistent with the rules and

_8  regulations of the internal revenue service:

_9      (a) Those assets which are (i) in excess of the assets required

10  for actuarial full funding of the law enforcement officers' and

11  fire fighters' retirement system plan 1 system; and (ii) not

12  exceeding the anticipated cost of health care benefits for

13  beneficiaries of the law enforcement officers' and fire fighters'

14  retirement system plan 1, for the ensuing biennium;

15      (b) The maximum allowable transfer from the law enforcement

16  officers' and fire fighters' retirement system plan 1 fund to the

17  medical account;

18      (c) The maximum allowable transfer from the medical account to

19  the risk pool account; and

20      (d) The maximum allowable per person reimbursement to employers

21  for law enforcement officers' and fire fighters' plan 1 medical

22  costs.

23      (2) The state actuary shall immediately transmit the value of

24  these identified amounts to the office of financial management,

25  the fiscal committees of the legislature, and the law enforcement

26  officers' and fire fighters' plan 1 risk pool executive board.

   

27               PERTAINING TO STATE FUNDS:  ADDING SECTIONS

     

28      NEW SECTION.  Sec. 15.  A new section is added to chapter 43.79

29  RCW to read as follows:

30      (1) The law enforcement officers= and fire fighters= plan 1

31  medical account is hereby established as a subaccount within the

32  law enforcement officers= and fire fighters= system plan 1

33  retirement account in the custody of the state treasurer,

34  established pursuant to internal revenue code section 401(h).  The

SB 5191                        p. 8

_1  assets held in the medical account shall be accounted for

_2  separately from the pension funds.  Medical account assets, however,

_3  may be commingled for investment purposes with the pension

_4  funds.  Investment earnings will be allocated on a reasonable

_5  basis.  The medical account and the pension funds together comprise

_6  the law enforcement officers= and fire fighters= system plan 1

_7  retirement account.

_8      (2) Only beneficiaries qualified for medical services under RCW

_9  41.26.030(22) and approved under RCW 41.26.150, are eligible for

10  medical costs or long-term care from the medical account.

11      (3) The account shall consist of such money as is transferred

12  to the account.  Any money transferred in the account, the use of

13  which has been restricted by law, may only be expended in

14  accordance with those restrictions.  No employer or employee

15  contributions shall be made to the medical account.

16      (4) The corpus and the income of the medical account may not be

17  diverted for any use other than providing long-term care and

18  medical costs for the calendar year in which the transfer from the

19  retirement account to the medical account is made.  Section 9(3) of

20  this act shall govern the year and reversion to the law

21  enforcement officers= and fire fighters= system plan 1 retirement

22  account as required by internal revenue code section 420(c)(1).

     

23      NEW SECTION.  Sec. 16.  A new section is added to chapter 43.79

24  RCW to read as follows:

25      (1) The law enforcement officers' and fire fighters' medical

26  benefits risk pool account is hereby established in the custody of

27  the state treasurer.

28      (2) The account shall consist of such money as is directed by

29  law for deposit in the account, and such other money not subject

30  to appropriation that the law enforcement officers' and fire

31  fighters' plan 1 risk pool executive board authorizes to be

32  deposited in the account.  Any money deposited in the account, the

33  use of which has been restricted by law, may only be expended in

34  accordance with those restrictions.

35      (3) The director, office of community development, department

36  of community, trade, and economic development, or the director's

37  designee, may make disbursements from the account.

                               p. 9                       SB 5191

 

_1      (4) Only those funds within this account necessary for the

_2  administration of the law enforcement officers' and fire fighters'

_3  plan 1 risk pool by the office of community development are

_4  subject to legislative appropriation.

   

_5               PERTAINING TO LEOFF 1:  AMENDATORY SECTIONS

     

_6     Sec. 17.  RCW 41.26.110 and 2000 c 234 s 1 are each amended to read

_7  as follows:

_8      (1) All claims for disability shall be acted upon and either

_9  approved or disapproved by either type of disability board

10  hereafter authorized to be created.

11      (a) By January 1, 2002, each city having a population of twenty

12  thousand or more shall establish a disability board having

13  jurisdiction over all members employed by said cities and composed

14  of the following five members:  Two members of the city

15  legislative body to be appointed by the mayor, one active or

16  retired fire fighter to be elected by the fire fighters employed

17  by or retired from the city, one active or retired law enforcement

18  officer to be elected by the law enforcement officers employed by

19  or retired from the city and one member from the public at large

20  who resides within the city to be appointed by the other four

21  members heretofore designated in this subsection.  Retired members

22  who are subject to the jurisdiction of the board have both the

23  right to elect and the right to be elected under this section.

24  Each of the elected members shall serve a two year term.  The

25  members appointed pursuant to this subsection shall serve for two

26  year terms:  PROVIDED, That cities of the first class only, shall

27  retain existing firemen's pension boards established pursuant to

28  RCW 41.16.020 and existing boards of trustees of the relief and

29  pension fund of the police department as established pursuant to

30  RCW 41.20.010 which such boards shall have authority to act upon

31  and approve or disapprove claims for disability by fire fighters

32  or law enforcement officers as provided under the Washington law

33  enforcement officers' and fire fighters' retirement system act.

34      (b) Each county shall establish a disability board having

35  jurisdiction over all members residing in the county and not

36  employed by a city in which a disability board is established. The

SB 5191                        p. 10

_1  county disability board so created shall be composed of five

_2  members to be chosen as follows:  One member of the legislative

_3  body of the county to be appointed by the county legislative body,

_4  one member of a city or town legislative body located within the

_5  county which does not contain a city disability board established

_6  pursuant to subsection (1)(a) of this section to be chosen by a

_7  majority of the mayors of such cities and towns within the county

_8  which does not contain a city disability board, one fire fighter

_9  or retired fire fighter to be elected by the fire fighters

10  employed or retired in the county who are not employed by or

11  retired from a city in which a disability board is established,

12  one law enforcement officer or retired law enforcement officer to

13  be elected by the law enforcement officers employed in or retired

14  from the county who are not employed by or retired from a city in

15  which a disability board is established, and one member from the

16  public at large who resides within the county but does not reside

17  within a city in which a city disability board is established, to

18  be appointed by the other four members heretofore designated in

19  this subsection.  However, in counties with a population less than

20  sixty thousand, the member of the disability board appointed by a

21  majority of the mayors of the cities and towns within the county

22  that do not contain a city disability board must be a resident of

23  one of the cities and towns but need not be a member of a city or

24  town legislative body.  Retired members who are subject to the

25  jurisdiction of the board have both the right to elect and the

26  right to be elected under this section.  All members appointed or

27  elected pursuant to this subsection shall serve for two year

28  terms.

29      (2) The members of both the county and city disability boards

30  shall not receive compensation for their service upon the boards

31  but said members shall be reimbursed by their respective county or

32  city for all expenses incidental to such service as to the amount

33  authorized by law.

34      (3) The disability boards authorized for establishment by this

35  section shall perform all functions, exercise all powers, and make

36  all such determinations as specified in this chapter.

37 

                               p. 11                       SB 5191

 

_1      Sec. 18.  RCW 41.26.150 and 1992 c 22 s 3 are each amended to read

_2  as follows:

_3      (1) Whenever any active member, or any member hereafter

_4  retired, on account of service, sickness, or disability, not

_5  caused or brought on by dissipation or abuse, of which the

_6  disability board shall be judge, is confined in any hospital or in

_7  home, and whether or not so confined, requires medical services,

_8  the employer shall pay for the active or retired member the

_9  necessary medical services not payable from some other source as

10  provided for in subsection (2) of this section.  In the case of

11  active or retired fire fighters the employer may make the payments

12  provided for in this section from the firemen's pension fund

13  established pursuant to RCW 41.16.050 where the fund had been

14  established prior to March 1, 1970.  If this pension fund is

15  depleted, the employer shall have the obligation to pay all

16  benefits payable under chapters 41.16 and 41.18 RCW.

17      (a) The disability board in all cases may have the active or

18  retired member suffering from such sickness or disability examined

19  at any time by a licensed physician or physicians, to be appointed

20  by the disability board, for the purpose of ascertaining the

21  nature and extent of the sickness or disability, the physician or

22  physicians to report to the disability board the result of the

23  examination within three days thereafter.  Any active or retired

24  member who refuses to submit to such examination or examinations

25  shall forfeit all rights to benefits under this section for the

26  period of the refusal.

27      (b) The disability board shall designate the medical services

28  available to any sick or disabled member.

29      (2) The medical services payable under this section will be

30  reduced by any amount received or eligible to be received by the

31  member under workers' compensation, social security including the

32  changes incorporated under Public Law 89‑97, insurance provided by

33  another employer, other pension plan, or any other similar

34  source.  Failure to apply for coverage if otherwise eligible under

35  the provisions of Public Law 89‑97 shall not be deemed a refusal

36  of payment of benefits thereby enabling collection of charges

37  under the provisions of this chapter.

38      (3) Upon making the payments provided for in subsection (1) of

SB 5191                        p. 12

_1  this section, the employer shall be subrogated to all rights of

_2  the member against any third party who may be held liable for the

_3  member's injuries or for payment of the cost of medical services

_4  in connection with a member's sickness or disability to the extent

_5  necessary to recover the amount of payments made by the employer.

_6      (4) Any employer under this chapter, either singly, or jointly

_7  with any other such employer or employers through an association

_8  thereof as provided for in chapter 48.21 RCW, may provide for all

_9  or part of one or more plans of group hospitalization and medical

10  aid insurance to cover any of its employees who are members of the

11  Washington law enforcement officers' and fire fighters' retirement

12  system, and/or retired former employees who were, before

13  retirement, members of the retirement system, through contracts

14  with regularly constituted insurance carriers, with health

15  maintenance organizations as defined in chapter 48.46 RCW, or with

16  health care service contractors as defined in chapter 48.44 RCW.

17  Benefits payable under any ((the [under the])) plan or plans shall

18  be deemed to be amounts received or eligible to be received by the

19  active or retired member under subsection (2) of this section.

20      (5) Any employer, jointly with any other employer or employers

21  of the state, may participate in the medical benefits risk pool

22  established under section 3 of this act.

23      (6) Any employer under this chapter may, at its discretion,

24  elect to reimburse a retired former employee under this chapter

25  for premiums the retired former employee has paid for medical

26  insurance that supplements medicare, including premiums the

27  retired former employee has paid for medicare part B coverage.

   

28                     INVESTMENTS AND INTERFUND LOANS

     

29      Sec. 19.  RCW 43.84.092 and 2000 2nd sp.s. c 4 s 5 are each amended

30  to read as follows:

31      (1) All earnings of investments of surplus balances in the

32  state treasury shall be deposited to the treasury income account,

33  which account is hereby established in the state treasury.

34      (2) The treasury income account shall be utilized to pay or

35  receive funds associated with federal programs as required by the

36  federal cash management improvement act of 1990.  The treasury

                               p. 13                       SB 5191

_1  income account is subject in all respects to chapter 43.88 RCW,

_2  but no appropriation is required for refunds or allocations of

_3  interest earnings required by the cash management improvement

_4  act.  Refunds of interest to the federal treasury required under the

_5  cash management improvement act fall under RCW 43.88.180 and shall

_6  not require appropriation.  The office of financial management shall

_7  determine the amounts due to or from the federal government

_8  pursuant to the cash management improvement act.  The office of

_9  financial management may direct transfers of funds between

10  accounts as deemed necessary to implement the provisions of the

11  cash management improvement act, and this subsection. Refunds or

12  allocations shall occur prior to the distributions of earnings set

13  forth in subsection (4) of this section.

14      (3) Except for the provisions of RCW 43.84.160, the treasury

15  income account may be utilized for the payment of purchased

16  banking services on behalf of treasury funds including, but not

17  limited to, depository, safekeeping, and disbursement functions

18  for the state treasury and affected state agencies.  The treasury

19  income account is subject in all respects to chapter 43.88 RCW,

20  but no appropriation is required for payments to financial

21  institutions.  Payments shall occur prior to distribution of

22  earnings set forth in subsection (4) of this section.

23      (4) Monthly, the state treasurer shall distribute the earnings

24  credited to the treasury income account.  The state treasurer shall

25  credit the general fund with all the earnings credited to the

26  treasury income account except:

27      (a) The following accounts and funds shall receive their

28  proportionate share of earnings based upon each account's and

29  fund's average daily balance for the period:  The capitol building

30  construction account, the Cedar River channel construction and

31  operation account, the Central Washington University capital

32  projects account, the charitable, educational, penal and

33  reformatory institutions account, the common school construction

34  fund, the county criminal justice assistance account, the county

35  sales and use tax equalization account, the data processing

36  building construction account, the deferred compensation

37  administrative account, the deferred compensation principal

38  account, the department of retirement systems expense account, the

SB 5191                        p. 14

_1  drinking water assistance account, the Eastern Washington

_2  University capital projects account, the education construction

_3  fund, the emergency reserve fund, the federal forest revolving

_4  account, the health services account, the public health services

_5  account, the health system capacity account, the personal health

_6  services account, the state higher education construction account,

_7  the higher education construction account, the highway

_8  infrastructure account, the industrial insurance premium refund

_9  account, the judges' retirement account, the judicial retirement

10  administrative account, the judicial retirement principal account,

11  the law enforcement officers' and fire fighters' plan 1 medical

12  account, the local leasehold excise tax account, the local real

13  estate excise tax account, the local sales and use tax account,

14  the medical aid account, the mobile home park relocation fund, the

15  multimodal transportation account, the municipal criminal justice

16  assistance account, the municipal sales and use tax equalization

17  account, the natural resources deposit account, the perpetual

18  surveillance and maintenance account, the public employees'

19  retirement system plan 1 account, the public employees' retirement

20  system plan 2 account, the Puyallup tribal settlement account, the

21  resource management cost account, the site closure account, the

22  special wildlife account, the state employees' insurance account,

23  the state employees' insurance reserve account, the state

24  investment board expense account, the state investment board

25  commingled trust fund accounts, the supplemental pension account,

26  the teachers' retirement system plan 1 account, the teachers'

27  retirement system combined plan 2 and plan 3 account, the tobacco

28  prevention and control account, the tobacco settlement account,

29  the transportation infrastructure account, the tuition recovery

30  trust fund, the University of Washington bond retirement fund, the

31  University of Washington building account, the volunteer fire

32  fighters' and reserve officers' relief and pension principal fund,

33  the volunteer fire fighters' and reserve officers' administrative

34  fund, the Washington judicial retirement system account, the

35  Washington law enforcement officers' and fire fighters' system

36  plan 1 retirement account, the Washington law enforcement

37  officers' and fire fighters' system plan 2 retirement account, the

38  Washington school employees' retirement system combined plan 2 and

                               p. 15                       SB 5191

_1  3 account, the Washington state health insurance pool account, the

_2  Washington state patrol retirement account, the Washington State

_3  University building account, the Washington State University bond

_4  retirement fund, the water pollution control revolving fund, and

_5  the Western Washington University capital projects account.

_6  Earnings derived from investing balances of the agricultural

_7  permanent fund, the normal school permanent fund, the permanent

_8  common school fund, the scientific permanent fund, and the state

_9  university permanent fund shall be allocated to their respective

10  beneficiary accounts.  All earnings to be distributed under this

11  subsection (4)(a) shall first be reduced by the allocation to the

12  state treasurer's service fund pursuant to RCW 43.08.190.

13      (b) The following accounts and funds shall receive eighty

14  percent of their proportionate share of earnings based upon each

15  account's or fund's average daily balance for the period:  The

16  aeronautics account, the aircraft search and rescue account, the

17  county arterial preservation account, the department of licensing

18  services account, the essential rail assistance account, the ferry

19  bond retirement fund, the grade crossing protective fund, the high

20  capacity transportation account, the highway bond retirement fund,

21  the highway safety account, the motor vehicle fund, the motorcycle

22  safety education account, the pilotage account, the public

23  transportation systems account, the Puget Sound capital

24  construction account, the Puget Sound ferry operations account,

25  the recreational vehicle account, the rural arterial trust

26  account, the safety and education account, the special category C

27  account, the state patrol highway account, the transportation

28  equipment fund, the transportation fund, the transportation

29  improvement account, the transportation improvement board bond

30  retirement account, and the urban arterial trust account.

31      (5) In conformance with Article II, section 37 of the state

32  Constitution, no treasury accounts or funds shall be allocated

33  earnings without the specific affirmative directive of this

34  section.

     

35      Sec. 20.  RCW 43.84.092 and 2000 2nd sp.s. c 4 s 6 are each amended

36  to read as follows:

 

SB 5191                        p. 16

_1      (1) All earnings of investments of surplus balances in the

_2  state treasury shall be deposited to the treasury income account,

_3  which account is hereby established in the state treasury.

_4      (2) The treasury income account shall be utilized to pay or

_5  receive funds associated with federal programs as required by the

_6  federal cash management improvement act of 1990.  The treasury

_7  income account is subject in all respects to chapter 43.88 RCW,

_8  but no appropriation is required for refunds or allocations of

_9  interest earnings required by the cash management improvement

10  act.  Refunds of interest to the federal treasury required under the

11  cash management improvement act fall under RCW 43.88.180 and shall

12  not require appropriation.  The office of financial management shall

13  determine the amounts due to or from the federal government

14  pursuant to the cash management improvement act.  The office of

15  financial management may direct transfers of funds between

16  accounts as deemed necessary to implement the provisions of the

17  cash management improvement act, and this subsection. Refunds or

18  allocations shall occur prior to the distributions of earnings set

19  forth in subsection (4) of this section.

20      (3) Except for the provisions of RCW 43.84.160, the treasury

21  income account may be utilized for the payment of purchased

22  banking services on behalf of treasury funds including, but not

23  limited to, depository, safekeeping, and disbursement functions

24  for the state treasury and affected state agencies.  The treasury

25  income account is subject in all respects to chapter 43.88 RCW,

26  but no appropriation is required for payments to financial

27  institutions.  Payments shall occur prior to distribution of

28  earnings set forth in subsection (4) of this section.

29      (4) Monthly, the state treasurer shall distribute the earnings

30  credited to the treasury income account.  The state treasurer shall

31  credit the general fund with all the earnings credited to the

32  treasury income account except:

33      (a) The following accounts and funds shall receive their

34  proportionate share of earnings based upon each account's and

35  fund's average daily balance for the period:  The capitol building

36  construction account, the Cedar River channel construction and

37  operation account, the Central Washington University capital

38  projects account, the charitable, educational, penal and

                               p. 17                       SB 5191

_1  reformatory institutions account, the common school construction

_2  fund, the county criminal justice assistance account, the county

_3  sales and use tax equalization account, the data processing

_4  building construction account, the deferred compensation

_5  administrative account, the deferred compensation principal

_6  account, the department of retirement systems expense account, the

_7  drinking water assistance account, the Eastern Washington

_8  University capital projects account, the education construction

_9  fund, the emergency reserve fund, the federal forest revolving

10  account, the health services account, the public health services

11  account, the health system capacity account, the personal health

12  services account, the state higher education construction account,

13  the higher education construction account, the highway

14  infrastructure account, the industrial insurance premium refund

15  account, the judges' retirement account, the judicial retirement

16  administrative account, the judicial retirement principal account,

17  the law enforcement officers' and fire fighters' plan 1 medical

18  account, the local leasehold excise tax account, the local real

19  estate excise tax account, the local sales and use tax account,

20  the medical aid account, the mobile home park relocation fund, the

21  multimodal transportation account, the municipal criminal justice

22  assistance account, the municipal sales and use tax equalization

23  account, the natural resources deposit account, the perpetual

24  surveillance and maintenance account, the public employees'

25  retirement system plan 1 account, the public employees' retirement

26  system combined plan 2 and plan 3 account, the Puyallup tribal

27  settlement account, the resource management cost account, the site

28  closure account, the special wildlife account, the state

29  employees' insurance account, the state employees' insurance

30  reserve account, the state investment board expense account, the

31  state investment board commingled trust fund accounts, the

32  supplemental pension account, the teachers' retirement system plan

33  1 account, the teachers' retirement system combined plan 2 and

34  plan 3 account, the tobacco prevention and control account, the

35  tobacco settlement account, the transportation infrastructure

36  account, the tuition recovery trust fund, the University of

37  Washington bond retirement fund, the University of Washington

38  building account, the volunteer fire fighters' and reserve

SB 5191                        p. 18

_1  officers' relief and pension principal fund, the volunteer fire

_2  fighters' and reserve officers' administrative fund, the

_3  Washington judicial retirement system account, the Washington law

_4  enforcement officers' and fire fighters' system plan 1 retirement

_5  account, the Washington law enforcement officers' and fire

_6  fighters' system plan 2 retirement account, the Washington school

_7  employees' retirement system combined plan 2 and 3 account, the

_8  Washington state health insurance pool account, the Washington

_9  state patrol retirement account, the Washington State University

10  building account, the Washington State University bond retirement

11  fund, the water pollution control revolving fund, and the Western

12  Washington University capital projects account.  Earnings derived

13  from investing balances of the agricultural permanent fund, the

14  normal school permanent fund, the permanent common school fund,

15  the scientific permanent fund, and the state university permanent

16  fund shall be allocated to their respective beneficiary accounts.

17  All earnings to be distributed under this subsection (4)(a) shall

18  first be reduced by the allocation to the state treasurer's

19  service fund pursuant to RCW 43.08.190.

20      (b) The following accounts and funds shall receive eighty

21  percent of their proportionate share of earnings based upon each

22  account's or fund's average daily balance for the period:  The

23  aeronautics account, the aircraft search and rescue account, the

24  county arterial preservation account, the department of licensing

25  services account, the essential rail assistance account, the ferry

26  bond retirement fund, the grade crossing protective fund, the high

27  capacity transportation account, the highway bond retirement fund,

28  the highway safety account, the motor vehicle fund, the motorcycle

29  safety education account, the pilotage account, the public

30  transportation systems account, the Puget Sound capital

31  construction account, the Puget Sound ferry operations account,

32  the recreational vehicle account, the rural arterial trust

33  account, the safety and education account, the special category C

34  account, the state patrol highway account, the transportation

35  equipment fund, the transportation fund, the transportation

36  improvement account, the transportation improvement board bond

37  retirement account, and the urban arterial trust account.

38      (5) In conformance with Article II, section 37 of the state

                               p. 19                       SB 5191

_1  Constitution, no treasury accounts or funds shall be allocated

_2  earnings without the specific affirmative directive of this

_3  section.

     

_4      Sec. 21.  RCW 43.79A.040 and 2000 c 79 s 45 are each amended to read

_5  as follows:

_6      (1) Money in the treasurer's trust fund may be deposited,

_7  invested, and reinvested by the state treasurer in accordance with

_8  RCW 43.84.080 in the same manner and to the same extent as if the

_9  money were in the state treasury.

10      (2) All income received from investment of the treasurer's

11  trust fund shall be set aside in an account in the treasury trust

12  fund to be known as the investment income account.

13      (3) The investment income account may be utilized for the

14  payment of purchased banking services on behalf of treasurer's

15  trust funds including, but not limited to, depository,

16  safekeeping, and disbursement functions for the state treasurer or

17  affected state agencies.  The investment income account is subject

18  in all respects to chapter 43.88 RCW, but no appropriation is

19  required for payments to financial institutions.  Payments shall

20  occur prior to distribution of earnings set forth in subsection

21  (4) of this section.

22      (4)(a) Monthly, the state treasurer shall distribute the

23  earnings credited to the investment income account to the state

24  general fund except under (b) and (c) of this subsection.

25      (b) The following accounts and funds shall receive their

26  proportionate share of earnings based upon each account's or

27  fund's average daily balance for the period:  The Washington

28  advanced college tuition payment program account, the agricultural

29  local fund, the American Indian scholarship endowment fund, the

30  basic health plan self-insurance reserve account, the Washington

31  international exchange scholarship endowment fund, the

32  developmental disabilities endowment trust fund, the energy

33  account, the fair fund, the game farm alternative account, the

34  grain inspection revolving fund, the juvenile accountability

35  incentive account, the law enforcement officers' and fire

36  fighters' plan 1 risk pool account, the rural rehabilitation

37  account, the stadium and exhibition center account, the youth

SB 5191                        p. 20

_1  athletic facility ((grant)) account, the self-insurance revolving

_2  fund, the sulfur dioxide abatement account, and the children's

_3  trust fund.  However, the earnings to be distributed shall first be

_4  reduced by the allocation to the state treasurer's service fund

_5  pursuant to RCW 43.08.190.

_6      (c) The following accounts and funds shall receive eighty

_7  percent of their proportionate share of earnings based upon each

_8  account's or fund's average daily balance for the period:  The

_9  advanced right of way revolving fund, the advanced environmental

10  mitigation revolving account, the federal narcotics asset

11  forfeitures account, the high occupancy vehicle account, the local

12  rail service assistance account, and the miscellaneous

13  transportation programs account.

14      (5) In conformance with Article II, section 37 of the state

15  Constitution, no trust accounts or funds shall be allocated

16  earnings without the specific affirmative directive of this

17  section.

   

18                PERTAINING TO OFFICE OF THE STATE ACTUARY

     

19     Sec. 22.  RCW 44.44.040 and 1987 c 25 s 3 are each amended to read

20  as follows:

21      The office of the state actuary shall have the following powers

22  and duties:

23      (1) Perform all actuarial services for the department of

24  retirement systems, including all studies required by law, the

25  state board for volunteer fire fighters and reserve officers, and

26  the law enforcement officers' and fire fighters' risk pool

27  executive board. Reimbursement for such services shall be made to

28  the state actuary pursuant to the provisions of RCW 39.34.130 as

29  now or hereafter amended.

30      (2) Advise the legislature and the governor regarding pension

31  benefit provisions, and funding policies and investment policies

32  of the state investment board.

33      (3) Consult with the legislature and the governor concerning

34  determination of actuarial assumptions used by the department of

35  retirement systems.

36      (4) Prepare a report, to be known as the actuarial fiscal note,

                               p. 21                       SB 5191

_1  on each pension bill introduced in the legislature which briefly

_2  explains the financial impact of the bill.  The actuarial fiscal

_3  note shall include:  (a) The statutorily required contribution for

_4  the biennium and the following twenty-five years; (b) the biennial

_5  cost of the increased benefits if these exceed the required

_6  contribution; and (c) any change in the present value of the

_7  unfunded accrued benefits.  An actuarial fiscal note shall also be

_8  prepared for all amendments which are offered in committee or on

_9  the floor of the house of representatives or the senate to any

10  pension bill.  However, a majority of the members present may

11  suspend the requirement for an actuarial fiscal note for

12  amendments offered on the floor of the house of representatives or

13  the senate.

14      (5) Provide such actuarial services to the legislature as may

15  be requested from time to time.

16      (6) Provide staff and assistance to the committee established

17  under ((RCW 46.44.050)) RCW 44.44.050.

18      (7) Provide assistance as required under sections 5 and 8 of

19  this act.

   

20          PERTAINING TO LOCAL GOVERNMENT INSURANCE TRANSACTIONS

     

21     Sec. 23.  RCW 48.62.031 and 1991 sp.s. c 30 s 3 are each amended to

22  read as follows:

23      (1) The governing body of a local government entity may

24  individually self-insure, may join or form a self-insurance

25  program together with other entities, and may jointly purchase

26  insurance or reinsurance with other entities for property and

27  liability risks, and health and welfare benefits only as permitted

28  under this chapter.  In addition, the entity or entities may

29  contract for or hire personnel to provide risk management, claims,

30  and administrative services in accordance with this chapter.

31      (2) The governing body of a local government entity

32  individually may join or form a risk assumption program together

33  with other entities, and may jointly purchase insurance or

34  reinsurance with other entities for health and welfare benefits

35  only as permitted under this chapter.  In addition, the entity or

SB 5191                        p. 22

_1  entities may contract for or hire personnel to provide risk

_2  management, claims, and administrative services in accordance with

_3  this chapter.

_4      (3) The agreement to form a joint self-insurance or risk

_5  assumption program shall be made under chapter 39.34 RCW.

_6      (((3))) (4) Every individual and joint self-insurance program

_7  and a health and welfare risk assumption program is subject to

_8  audit by the state auditor.

_9      (((4))) (5) If provided for in the agreement or contract

10  established under chapter 39.34 RCW, a joint self-insurance or

11  risk assumption program may, in conformance with this chapter:

12      (a) Contract or otherwise provide for risk management and loss

13  control services;

14      (b) Contract or otherwise provide legal counsel for the defense

15  of claims and other legal services;

16      (c) Consult with the state insurance commissioner and the state

17  risk manager;

18      (d) Jointly purchase insurance and reinsurance coverage in such

19  form and amount as the program's participants agree by contract;

20  and

21      (e) Possess any other powers and perform all other functions

22  reasonably necessary to carry out the purposes of this chapter.

23      (((5))) (6) A local government entity or a health and welfare

24  risk assumption program that has decided to assume a risk of loss

25  must have available for inspection by the state auditor a written

26  report indicating the class of risk or risks the governing body of

27  the entity has decided to assume.

28      (((6))) (7) Every joint self-insurance or risk assumption

29  program governed by this chapter shall appoint the risk manager as

30  its attorney to receive service of, and upon whom shall be served,

31  all legal process issued against it in this state upon causes of

32  action arising in this state.

33      (a) Service upon the risk manager as attorney shall constitute

34  service upon the program.  Service upon joint insurance programs

35  subject to chapter 30, Laws of 1991 1st sp. sess. can be had only

36  by service upon the risk manager.  At the time of service, the

37  plaintiff shall pay to the risk manager a fee to be set by the

38  risk manager, taxable as costs in the action.

                               p. 23                       SB 5191

 

_1      (b) With the initial filing for approval with the risk manager,

_2  each joint self-insurance program shall designate by name and

_3  address the person to whom the risk manager shall forward legal

_4  process so served upon him or her.  The joint self-insurance program

_5  may change such person by filing a new designation.

_6      (c) The appointment of the risk manager as attorney shall be

_7  irrevocable, shall bind any successor in interest or to the assets

_8  or liabilities of the joint self-insurance program, and shall

_9  remain in effect as long as there is in force in this state any

10  contract made by the joint self-insurance program or liabilities

11  or duties arising therefrom.

12      (d) The risk manager shall keep a record of the day and hour of

13  service upon him or her of all legal process.  A copy of the

14  process, by registered mail with return receipt requested, shall

15  be sent by the risk manager, to the person designated for the

16  purpose by the joint self-insurance or risk assumption program in

17  its most recent such designation filed with the risk manager.  No

18  proceedings shall be had against the joint self-insurance or risk

19  assumption program, and the program shall not be required to

20  appear, plead, or answer, until the expiration of forty days after

21  the date of service upon the risk manager.

     

22      Sec. 24.  RCW 48.62.051 and 1991 sp.s. c 30 s 5 are each amended

23  to read as follows:

24      (1) The health and welfare advisory board is created consisting

25  of the insurance commissioner and the state risk manager, or their

26  designees, as ex officio members and six members appointed by the

27  governor on the basis of their experience and knowledge pertaining

28  to local government self-insured health and welfare benefits

29  programs.  The board shall include one city management

30  representative; one county management representative; two

31  management representatives from local government self-insured

32  health and welfare programs; and two representatives of statewide

33  employee organizations representing local government employees.

34      (2) The board shall assist the state risk manager in:

35      (a) Adopting rules governing the operation and management of

36  both individual and joint self-insured health and welfare benefits

SB 5191                        p. 24

_1  programs and the law enforcement officers' and fire fighters'

_2  medical benefits risk pool;

_3      (b) Reviewing and approving the creation of both individual and

_4  joint self-insured health and welfare benefits programs;

_5      (c) Reviewing annual reports filed by health and welfare

_6  benefits programs and in recommending that corrective action be

_7  taken by the programs when necessary; and

_8      (d) Responding to concerns of the state auditor related to the

_9  management and operation of health and welfare benefits programs.

10      (3) The board shall annually elect a chair and a vice-chair

11  from its members.  The board shall meet at least quarterly at such

12  times as the state risk manager may fix.  The board members who are

13  appointed shall serve without compensation from the state but

14  shall suffer no loss because of absence from their regular

15  employment.  Members of the board who are not public employees shall

16  be compensated in accordance with RCW 43.03.240.

17      (4) A majority of the board constitutes a quorum for the

18  transaction of business.

19      (5) The board shall keep public records of its proceedings.

   

20                      NECESSARY FOR IMPLEMENTATION

     

21     NEW SECTION.  Sec. 25.  Part headings used in this act are not

22  any part of the law.

     

23      NEW SECTION.  Sec. 26.  (1) Sections 1 through 19 and 21 through

24  24 of this act are necessary for the immediate preservation of the

25  public peace, health, or safety, or support of the state

26  government and its existing public institutions, and take effect

27  July 1, 2001.

28      (2) Section 20 of this act takes effect March 1, 2002.

29      (3) Section 19 of this act expires March 1, 2002.

 

‑‑‑ END ‑‑‑

                               p. 25                       SB 5191