BILL REQ. #: H-0944.3
| State of Washington | 58th Legislature | 2003 Regular Session |
Read first time 02/13/2003. Referred to Committee on Appropriations.
AN ACT Relating to the law enforcement officers' and fire fighters' retirement system, plan 1; adding new sections to chapter 41.26 RCW; adding a new section to chapter 44.44 RCW; adding a new section to chapter 41.45 RCW; creating new sections; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1
Members of the plan have no direct input into the management of
their retirement program. Forty-six other states currently have member
representation in their pension management. This act is intended to
give management of the retirement program to the people whose lives are
directly affected by it and who provide loyal and valiant service to
ensure the health, safety, and welfare of the citizens of the state of
Washington.
NEW SECTION. Sec. 2
(1) Establish a board of trustees responsible for the adoption of
actuarial standards to be applied to the plan;
(2) Provide for additional benefits for fire fighters and law
enforcement officers subject to the cost limitations provided for in
this act;
(3) Exercise fiduciary responsibility in the oversight of those
pension management functions assigned to the board;
(4) Provide effective monitoring of the plan by providing an annual
report to the legislature, to the members and beneficiaries of the
plan, and to the public;
(5) Establish contribution rates for employees and employers that
will guaranty viability of the plan, subject to the limitations
provided for in this act;
(6) Provide for an annual budget and to pay costs from the trust,
as part of the normal cost of the plan; and
(7) Enable the board of trustees to retain professional and
technical advisors as necessary for the fulfillment of their statutory
responsibilities.
NEW SECTION. Sec. 3
(1) "Member" or "beneficiary" means:
(a) Current law enforcement officers and fire fighters who are
contributing to the plan;
(b) Retired employees or their named beneficiaries who receive
benefits from the plan; and
(c) Separated vested members of the plan who are not currently
receiving benefits.
(2) "Plan" means the law enforcement officers' and fire fighters'
retirement system plan 1.
(3) "Actuary" means the actuary employed by the board of trustees.
(4) "State actuary" means the actuary employed by the department.
(5) "Board" means the board of trustees.
(6) "Board member" means a member of the board of trustees.
(7) "Department" means the department of retirement systems.
(8) "Minimum benefits" means those benefits provided for in this
chapter as of July 1, 2004.
(9) "Employer" means the same as under RCW 41.26.030(2)(a).
(10) "Enrolled actuary" means an actuary who is enrolled under the
employee retirement income security act of 1974 (Subtitle C of Title
III) and who is a member of the society of actuaries or the American
academy of actuaries.
(11) "Increased benefit" means a benefit in addition to the minimum
benefits.
(12) "Trust" means the assets of the plan.
(13) "Benefits" means the age or service or combination thereof
required for retirement, the level of service and disability retirement
benefits, survivorship benefits, payment options including a deferred
retirement option plan, average final compensation, postretirement
cost-of-living adjustments, including health care and the elements of
compensation. Benefits shall not include the classifications of
employment eligible to participate in the plan.
(14) "Actuarially sound" means the plan is sufficiently funded to
meet its projected liabilities and to defray the reasonable expenses of
its operation based upon commonly accepted, sound actuarial principles.
NEW SECTION. Sec. 4
(a) Of the initial appointments, one of the board members shall be
an active law enforcement officer who is a participant in the plan and
two appointees must be retired members of the plan. Beginning with the
first vacancy on or after January 1, 2008, all board appointments shall
be retired law enforcement officers who are members of the plan. The
law enforcement officer board members shall be appointed by the
governor from (i) a list provided by a recognized statewide
organization whose officers are elected by the members representing
state and local government police officers, deputies, and sheriffs and
excludes federal law enforcement officers, or (ii) a list of individual
members who submit their names for consideration for appointment.
(b) Of the initial appointments, one of the board members shall be
an active fire fighter who is a participant in the plan and two
appointees must be retired members of the plan. Beginning with the
first vacancy on or after January 1, 2008, all board appointments shall
be retired fire fighters who are members of the plan. The fire fighter
board member shall be appointed by the governor from (i) a list
provided by a recognized statewide organization whose officers are
elected by the members representing the interests of fire fighters, or
(ii) a list of individual members who submit their names for
consideration for appointment.
(c) Three of the board members shall be representatives of
employers and shall be appointed by the governor.
(d) One board member shall be a member of the house of
representatives who is appointed by the governor based on the
recommendation of the speaker of the house of representatives.
(e) One board member shall be a member of the senate who is
appointed by the governor based on the recommendation of the majority
leader of the senate.
(2) The initial law enforcement officer and fire fighter board
members shall serve terms of six, four, and two years, respectively.
Thereafter, law enforcement officer and fire fighter board members
serve terms of six years. The remaining board members serve terms of
four years. Board members may be reappointed to succeeding terms
without limitation. Board members shall serve until their successors
are appointed and seated.
(3) In the event of a vacancy on the board, the vacancy shall be
filled in the same manner as prescribed for an initial appointment.
However, after January 1, 2008, all appointees must be retired members
of the plan.
NEW SECTION. Sec. 5
(a) Adopt actuarial tables, assumptions, and cost methodologies in
consultation with an enrolled actuary retained by the board. The state
actuary shall provide assistance when the board requests. The actuary
retained by the board shall utilize the aggregate actuarial cost
method, or other recognized actuarial cost method based on a level
percentage of payroll, as that term is employed by the American academy
of actuaries. In determining the reasonableness of actuarial
valuations, assumptions, and cost methodologies, the actuary retained
by the board shall provide a copy of all such calculations to the state
actuary. If the two actuaries concur on the calculations,
contributions shall be made as set forth in the report of the board's
actuary. If the two actuaries cannot agree, they shall appoint a
third, independent, enrolled actuary who shall review the calculations
of the actuary retained by the board and the state actuary.
Thereafter, contributions shall be based on the methodology most
closely following that of the third actuary;
(b)(i) Provide for the design and implementation of increased
benefits for members and beneficiaries of the plan, subject to the
contribution limitations under section 6 of this act. An increased
benefit may not be approved by the board until an actuarial cost of the
benefit has been determined by the actuary and contribution rates
adjusted as may be required to maintain the plan on a sound actuarial
basis. Increased benefits as approved by the board shall be presented
to the legislature on January 1st of each year. The increased benefits
as approved by the board shall become effective within ninety days
unless a bill is enacted in the next ensuing session of the
legislature, by majority vote of each house of the legislature,
repealing the action of the board;
(ii) As an alternative to the procedure in (b)(i) of this
subsection, recommend to the legislature changes in the benefits for
members and beneficiaries, without regard to the cost limitations in
section 6(3) of this act. Benefits adopted in this manner shall have
the same contractual protections as the minimum benefits in the plan.
The recommendations of the board shall be presented to the legislature
on January 1st of each year. These measures shall take precedence over
all other measures in the legislature, except appropriations bills, and
shall be either enacted or rejected without change or amendment by the
legislature before the end of such regular session;
(c) Retain professional and technical advisors necessary for the
accomplishment of its duties. The cost of these services may be
withdrawn from the trust;
(d) Consult with the department for the purpose of improving
benefit administration and member services;
(e) Provide an annual report to the governor and the legislature
setting forth the actuarial funding status of the plan and making
recommendations for improvements in those aspects of retirement
administration directed by the legislature or administered by the
department;
(f) Establish uniform administrative rules and operating policies
in the manner prescribed by law;
(g) Engage administrative staff and acquire office space
independent of, or in conjunction with, the department. The department
shall provide funding from its budget for these purposes;
(h) The board shall publish on an annual basis a schedule of
increased benefits together with a summary of the minimum benefits as
established by the legislature which shall constitute the official plan
document; and
(i) Be the fiduciary of the plan and discharge the board's duties
solely in the interest of the members and beneficiaries of the plan.
(2) Meetings of the board of trustees shall be conducted as
follows:
(a) All board meetings are open to the public, preceded by timely
public notice;
(b) All actions of the board shall be taken in open public session,
except for those matters which may be considered in executive session
as provided by law;
(c) The board shall retain minutes of each meeting setting forth
the names of those board members present and absent, and their voting
record on any voted issue; and
(d) The board may establish, with the assistance of the appropriate
office of state government, an internet web site providing for
interactive communication with state government, members and
beneficiaries of the plan, and the public.
(3) A quorum of the board is six board members. All board actions
require six concurring votes.
(4) The decisions of the board shall be made in good faith and are
final, binding, and conclusive on all parties. The decisions of the
board shall be subject to judicial review as provided by law.
(5) A law enforcement officers' and fire fighters' retirement
system plan 1 expense fund is established for the purpose of defraying
the expenses of the board. The board shall cause an annual budget to
be prepared consistent with the requirements of chapter 43.88 RCW and
shall draw the funding for the budget from the investment income of the
trust. Board members shall be reimbursed for travel and education
expenses as provided in RCW 43.03.050 and 43.03.060. The board shall
make an annual report to the governor, legislature, and state auditor
setting forth a summary of the costs and expenditures of the plan for
the preceding year. The board shall also retain the services of an
independent, certified public accountant who shall annually audit the
expenses of the fund and whose report shall be included in the board's
annual report.
NEW SECTION. Sec. 6
(2) The minimum benefits shall constitute a contractual obligation
of the state and the contributing employers and may not be reduced
below the levels in effect on July 1, 2004. The state and the
contributing employers shall maintain the minimum benefits on a sound
actuarial basis in accordance with the actuarial standards adopted by
the board.
(3) Increased benefits created as provided for in section 5 of this
act are granted on a basis not to exceed the contributions provided for
in subsection (1) of this section. In the event that the cost of
maintaining the increased benefits on a sound actuarial basis exceeds
the aggregate contributions provided for in this section, the board may
submit to the affected members of the plan the option of paying the
increased costs or of having the increased benefits reduced to a level
sufficient to be maintained by the aggregate contributions. The
reduction of benefits in accordance with this section shall not be
deemed a violation of the contractual rights of the members, provided
that no reduction may result in benefits being lower than the level of
the minimum benefits.
(4) The board shall manage the trust in a manner that maintains
reasonable contributions and administrative costs. Providing
additional benefits to members and beneficiaries is the board's
priority.
NEW SECTION. Sec. 7 A new section is added to chapter 44.44 RCW
to read as follows:
The joint committee on pension policy has no authority over matters
under sections 1 through 6, 9, and 10 of this act.
NEW SECTION. Sec. 8 A new section is added to chapter 41.45 RCW
to read as follows:
The pension funding council has no authority over matters under
sections 1 through 6, 9, and 10 of this act.
NEW SECTION. Sec. 9
NEW SECTION. Sec. 10
NEW SECTION. Sec. 11
NEW SECTION. Sec. 12
NEW SECTION. Sec. 13
NEW SECTION. Sec. 14