Z-1174.1 _______________________________________________
SENATE BILL 6374
_______________________________________________
State of Washington 57th Legislature 2002 Regular Session
By Senators Jacobsen, Winsley, Regala, Carlson and Fraser; by request of Joint Committee on Pension Policy
Read first time 01/16/2002. Referred to Committee on Ways & Means.
AN ACT Relating to correcting errors and oversights in certain retirement system statutes; amending RCW 28A.405.900, 41.45.010, 41.45.050, 41.35.700, 41.35.510, and 41.50.790; reenacting and amending RCW 41.45.020; reenacting RCW 41.45.060; and repealing 2001 2nd sp.s. c 10 s 12.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1. RCW 28A.405.900 and 2001 2nd sp.s. c 10 s 2 are each amended to read as follows:
Certificated employees
subject to the provisions of RCW 28A.310.250, ((28A.405.010 through
28A.405.240, 28A.405.400 through 28A.405.410, 28A.415.250, and 28A.405.900))
28A.405.100, 28A.405.210, and 28A.405.220 shall not include those
certificated employees hired to replace certificated employees who have been
granted sabbatical, regular, or other leave by school districts, and shall not
include retirees hired for postretirement employment under the provisions of
chapter 10, Laws of 2001 2nd sp. sess.
It is not the intention of the legislature that this section apply to any regularly hired certificated employee or that the legal or constitutional rights of such employee be limited, abridged, or abrogated.
Sec. 2. RCW 41.45.060 and 2001 2nd sp.s. c 11 s 10 and 2001 c 329 s 10 are each reenacted to read as follows:
(1) The state actuary shall provide actuarial valuation results based on the economic assumptions and asset value smoothing technique included in RCW 41.45.035 or adopted by the council under RCW 41.45.030 or 41.45.035.
(2) Not later than September 30, 2002, and every two years thereafter, consistent with the economic assumptions and asset value smoothing technique included in RCW 41.45.035 or adopted under RCW 41.45.030 or 41.45.035, the council shall adopt and may make changes to:
(a) A basic state contribution rate for the law enforcement officers' and fire fighters' retirement system;
(b) Basic employer contribution rates for the public employees' retirement system, the teachers' retirement system, and the Washington state patrol retirement system to be used in the ensuing biennial period; and
(c) A basic employer contribution rate for the school employees' retirement system for funding both that system and the public employees' retirement system plan 1.
The contribution rates adopted by the council shall be subject to revision by the legislature.
(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 1, the teachers' retirement system plan 1, and the law enforcement officers' and fire fighters' retirement system plan 1 not later than June 30, 2024, except as provided in subsection (5) of this section;
(b) To also continue to fully fund the public employees' retirement system plans 2 and 3, the teachers' retirement system plans 2 and 3, the school employees' retirement system plans 2 and 3, and the law enforcement officers' and fire fighters' retirement system plan 2 in accordance with RCW 41.45.061, 41.45.067, and this section; and
(c) For the law enforcement officers' and fire fighters' system plan 2 the rate charged to employers, except as provided in RCW 41.26.450, shall be thirty percent of the cost of the retirement system and the rate charged to the state shall be twenty percent of the cost of the retirement system.
(4) The aggregate actuarial cost method shall be used to calculate a combined plan 2 and 3 employer contribution rate and a Washington state patrol retirement system 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. The rates shall be effective for the ensuing biennial period, subject to any legislative modifications.
(6) The director of the department of retirement systems shall collect the rates established in RCW 41.45.053 through June 30, 2003. Thereafter, the director shall collect those rates adopted by the council. The rates established in RCW 41.45.053, or by the council, shall be subject to revision by the council.
Sec. 3. RCW 41.45.010 and 2001 2nd sp.s. c 11 s 2 are each amended to read as follows:
It is the intent of the
legislature to provide a dependable and systematic process for funding the
benefits provided to members and retirees of the public employees' retirement
system, chapter 41.40 RCW; the teachers' retirement system, chapter 41.32 RCW;
the law enforcement officers' and fire fighters' retirement systems, chapter((s))
41.26 ((and 41.26A)) RCW; the school employees' retirement system,
chapter 41.35 RCW; and the Washington state patrol retirement system, chapter
43.43 RCW.
The legislature finds
that the funding status of the state retirement systems has improved
dramatically since 1989. Because of the big reduction in unfunded pension
liabilities, it is now prudent to adjust the long-term economic assumptions
that are used in the actuarial studies conducted by the state actuary. The
legislature finds that it is reasonable to increase the salary growth assumption
in light of Initiative Measure No. 732, to increase the investment return
assumption in light of the asset allocation policies and historical returns of
the state investment board, and to reestablish June 30, 2024, as the target
date to achieve full funding of all liabilities in the public employees'
retirement system plan 1 ((and)), the teachers' retirement system
plan 1, and the law enforcement officers' and fire fighters' retirement
system plan 1.
The funding process established by this chapter is intended to achieve the following goals:
(1) To continue to fully fund the public employees' retirement system plans 2 and 3, the teachers' retirement system plans 2 and 3, the school employees' retirement system plans 2 and 3, and the law enforcement officers' and fire fighters' retirement system plan 2 as provided by law;
(2) To fully amortize
the total costs of the public employees' retirement system plan 1 ((and)),
the teachers' retirement system plan 1, and the law enforcement officers'
and fire fighters' retirement system plan 1, not later than June 30, 2024;
(3) ((To ensure the
actuarial funding of the restated law enforcement officers' and fire fighters'
retirement system defined benefit plan, and provide for additional state
funding if unfunded liabilities accrue in the future;
(4))) To establish predictable long-term employer
contribution rates which will remain a relatively constant proportion of the
future state budgets; and
(((5))) (4)
To fund, to the extent feasible, benefit increases for plan 1 members and all
benefits for plan 2 and 3 members over the working lives of those members so
that the cost of those benefits are paid by the taxpayers who receive the
benefit of those members' service.
Sec. 4. RCW 41.45.020 and 2001 2nd sp.s. c 11 s 4 and 2001 2nd sp.s. c 11 s 3 are each reenacted and 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 pension funding council created in RCW 41.45.100.
(2) "Department" means the department of retirement systems.
(3) "Law enforcement officers' and fire fighters' retirement system plan 1" and "law enforcement officers' and fire fighters' retirement system plan 2" means the benefits and funding provisions under chapter 41.26 RCW.
(4) (("Restated
law enforcement officers' and fire fighters' retirement system defined benefit
plan" means the benefits and funding provisions under chapter 41.26A RCW.
(5))) "Public employees' retirement system plan
1," "public employees' retirement system plan 2," and
"public employees' retirement system plan 3" mean the benefits and
funding provisions under chapter 41.40 RCW.
(((6))) (5)
"Teachers' retirement system plan 1," "teachers' retirement
system plan 2," and "teachers' retirement system plan 3" mean
the benefits and funding provisions under chapter 41.32 RCW.
(((7))) (6)
"School employees' retirement system plan 2" and "school
employees' retirement system plan 3" mean the benefits and funding
provisions under chapter 41.35 RCW.
(((8))) (7)
"Washington state patrol retirement system" means the retirement
benefits provided under chapter 43.43 RCW.
(((9))) (8)
"Unfunded liability" means the unfunded actuarial accrued liability
of a retirement system.
(((10))) (9)
"Actuary" or "state actuary" means the state actuary
employed under chapter 44.44 RCW.
(((11))) (10)
"State retirement systems" means the retirement systems listed in RCW
41.50.030.
(((12))) (11)
"Classified employee" means a member of the Washington school
employees' retirement system plan 2 or plan 3 as defined in RCW 41.35.010.
(((13))) (12)
"Teacher" means a member of the teachers' retirement system as
defined in RCW 41.32.010(15).
Sec. 5. RCW 41.45.050 and 2001 2nd sp.s. c 11 s 8 are each amended to read as follows:
(1) Employers of members of the public employees' retirement system, the teachers' retirement system, the school employees' retirement system, and the Washington state patrol retirement system shall make contributions to those systems based on the rates established in RCW 41.45.060, 41.45.053, and 41.45.070.
(2) The state shall make contributions to the law enforcement officers' and fire fighters' retirement system plan 2 based on the rates established in RCW 41.45.060, 41.45.053, and 41.45.070. The state treasurer shall transfer the required contributions each month on the basis of salary data provided by the department.
(3) ((The state
shall ensure the systematic actuarial funding of the restated law enforcement
officers' and fire fighters' retirement system defined benefit plan in the
manner provided by chapter 41.26A RCW.
(4))) The department shall bill employers, and the
state shall make contributions to the law enforcement officers' and fire
fighters' retirement system plan 2, using the combined rates established in RCW
41.45.060, 41.45.053, and 41.45.070 regardless of the level of appropriation
provided in the biennial budget. Any member of an affected retirement system
may, by mandamus or other appropriate proceeding, require the transfer and
payment of funds as directed in this section.
(((5))) (4)
The contributions received for the public employees' retirement system shall be
allocated between the public employees' retirement system plan 1 fund and the
public employees' retirement system combined plan 2 and plan 3 fund as
follows: The contributions necessary to fully fund the public employees'
retirement system combined plan 2 and plan 3 employer contribution shall first
be deposited in the public employees' retirement system combined plan 2 and
plan 3 fund. All remaining public employees' retirement system employer
contributions shall be deposited in the public employees' retirement system
plan 1 fund.
(((6))) (5)
The contributions received for the teachers' retirement system shall be
allocated between the plan 1 fund and the combined plan 2 and plan 3 fund as
follows: The contributions necessary to fully fund the combined plan 2 and plan
3 employer contribution shall first be deposited in the combined plan 2 and
plan 3 fund. All remaining teachers' retirement system employer contributions
shall be deposited in the plan 1 fund.
(((7))) (6)
The contributions received for the school employees' retirement system shall be
allocated between the public employees' retirement system plan 1 fund and the
school employees' retirement system combined plan 2 and plan 3 fund as
follows: The contributions necessary to fully fund the combined plan 2 and
plan 3 employer contribution shall first be deposited in the combined plan 2
and plan 3 fund. All remaining school employees' retirement system employer
contributions shall be deposited in the public employees' retirement system
plan 1 fund.
(((8))) (7)
The contributions received for the law enforcement officers' and fire fighters'
retirement system plan 2 shall be deposited in the law enforcement officers'
and fire fighters' retirement system plan 2 fund.
Sec. 6. RCW 41.35.700 and 1998 c 341 s 211 are each amended to read as follows:
(1) Any member who
elects to transfer to plan 3 and has eligible unrestored withdrawn
contributions in plan 2, may restore such contributions under the provisions of
RCW ((41.40.750)) 41.35.500 with interest as determined by the
department. The restored plan 2 service credit will be automatically
transferred to plan 3. Restoration payments will be transferred to the member
account in plan 3. If the member fails to meet the time limitations of RCW ((41.40.750))
41.35.500, they may restore such contributions under the provisions of
RCW 41.50.165(2). The restored plan 2 service credit will be automatically
transferred to plan 3. One-half of the restoration payments under RCW
41.50.165(2) plus interest shall be allocated to the member's account.
(2) Any member who
elects to transfer to plan 3 may purchase plan 2 service credit under RCW ((41.40.750))
41.35.500. Purchased plan 2 service credit will be automatically
transferred to plan 3. Contributions on behalf of the employer paid by the
employee shall be allocated to the defined benefit portion of plan 3 and shall
not be refundable when paid to the fund described in RCW 41.50.075(4).
Contributions on behalf of the employee shall be allocated to the member
account. If the member fails to meet the time limitations of RCW ((41.40.750))
41.35.500, they may subsequently restore such contributions under the
provisions of RCW 41.50.165(2). Purchased plan 2 service credit will be
automatically transferred to plan 3. One-half of the payments under RCW
41.50.165(2), plus interest, shall be allocated to the member's account.
Sec. 7. RCW 41.35.510 and 1998 c 341 s 114 are each amended to read as follows:
(1) Every plan 2 member employed by an employer in an eligible position has the option to make an irrevocable transfer to plan 3.
(2) All service credit in plan 2 shall be transferred to the defined benefit portion of plan 3.
(3) Any plan 2 member who wishes to transfer to plan 3 after February 28, 2001, may transfer during the month of January in any following year, provided that the member earns service credit for that month.
(4) The accumulated
contributions in plan 2, less fifty percent of any contributions made pursuant
to RCW 41.50.165(2) shall be transferred to the member's account in the defined
contribution portion established in chapter 41.34 RCW, pursuant to procedures
developed by the department and subject to RCW 41.34.090. Contributions made
pursuant to RCW 41.50.165(2) that are not transferred to the member's account
shall be transferred to the fund created in RCW 41.50.075(((2))) (4),
except that interest earned on all such contributions shall be transferred to
the member's account.
(5) The legislature reserves the right to discontinue the right to transfer under this section.
(6) Anyone previously retired from plan 2 is prohibited from transferring to plan 3.
Sec. 8. RCW 41.50.790 and 1998 c 341 s 514 are each amended to read as follows:
(1) The department
shall designate an obligee as a survivor beneficiary of a member under RCW
2.10.146, 41.26.460, 41.32.530, 41.32.785, 41.32.851, 41.35.220,
41.40.188, ((or)) 41.40.660, or 41.40.845 if the department has
been served by registered or certified mail with a dissolution order as defined
in RCW 41.50.500 at least thirty days prior to the member's retirement. The
department's duty to comply with the dissolution order arises only if the order
contains a provision that states in substantially the following form:
When . . . . . . (the obligor) applies for retirement the department shall designate . . . . . . (the obligee) as survivor beneficiary with a . . . . . . survivor benefit.
The survivor benefit designated in the dissolution order must be consistent with the survivor benefit options authorized by statute or administrative rule.
(2) The obligee's entitlement to a survivor benefit pursuant to a dissolution order filed with the department in compliance with subsection (1) of this section shall cease upon the death of the obligee.
(3)(a) A subsequent dissolution order may order the department to divide a survivor benefit between a survivor beneficiary and an alternate payee. In order to divide a survivor benefit between more than one payee, the dissolution order must:
(i) Be ordered by a court of competent jurisdiction following notice to the survivor beneficiary;
(ii) Contain a provision that complies with subsection (1) of this section designating the survivor beneficiary;
(iii) Contain a provision clearly identifying the alternate payee or payees; and
(iv) Specify the proportional division of the benefit between the survivor beneficiary and the alternate payee or payees.
(b) The department will calculate actuarial adjustment for the court-ordered survivor benefit based upon the life of the survivor beneficiary.
(c) If the survivor beneficiary dies, the department shall terminate the benefit. If the alternate payee predeceases the survivor beneficiary, all entitlement of the alternate payee to a benefit ceases and the entire benefit will revert to the survivor beneficiary.
(d) For purposes of this section, "survivor beneficiary" means:
(i) The obligee designated in the provision of dissolution filed in compliance with subsection (1) of this section; or
(ii) In the event of more than one dissolution order, the obligee named in the first decree of dissolution received by the department.
(e) For purposes of this section, "alternate payee" means a person, other than the survivor beneficiary, who is granted a percentage of a survivor benefit pursuant to a dissolution order.
(4) The department shall under no circumstances be held liable for not designating an obligee as a survivor beneficiary under subsection (1) of this section if the dissolution order or amendment thereto is not served on the department by registered or certified mail at least thirty days prior to the member's retirement.
(5) If a dissolution order directing designation of a survivor beneficiary has been previously filed with the department in compliance with this section, no additional obligation shall arise on the part of the department upon filing of a subsequent dissolution order unless the subsequent dissolution order:
(a) Specifically amends or supersedes the dissolution order already on file with the department; and
(b) Is filed with the department by registered or certified mail at least thirty days prior to the member's retirement.
(6) The department shall designate a court-ordered survivor beneficiary pursuant to a dissolution order filed with the department before June 6, 1996, only if the order:
(a) Specifically directs the member or department to make such selection;
(b) Specifies the survivor option to be selected; and
(c) The member retires after June 6, 1996.
NEW SECTION. Sec. 9. 2001 2nd sp.s. c 10 s 12 is repealed.
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