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.
