BILL REQ. #:  S-2281.1 

Read first time .   Referred to .

     AN ACT Relating to payment of the unfunded actuarial accrued liability in plan 1 of the public employees' retirement system and plan 1 of the teachers' retirement system; adding new sections to chapter 41.45 RCW; creating a new section; providing effective dates; and declaring an emergency.

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

NEW SECTION.  Sec. 1   The legislature recognizes that returns on the investment of retirement plan assets are volatile, and market volatility is reflected in variations in the funded status of the state retirement plans over time. The legislature also recognizes that the long-term liability in the plans 1 of the public employees' retirement system and the teachers' retirement system remains independent from short-term investment returns in the market. The legislature seeks to avoid contribution rate volatility that may unfairly benefit or burden particular groups of taxpayers with disproportionate responsibilities for retiring the unfunded liability in the plans 1. Therefore, it is the intent of the legislature to provide for the systematic payment of the plans 1 unfunded liability in a manner that promotes contribution rate adequacy and stability for the affected systems over time.

NEW SECTION.  Sec. 2   A new section is added to chapter 41.45 RCW to read as follows:
     (1) There shall be no suspension of those portions of the basic state and employer contribution rates that are necessary to pay for the unfunded actuarial accrued liability for plan 1 of the public employees' retirement system for the following periods: From July 1, 2005, through June 30, 2009, for the public employees' retirement system; from July 1, 2006, through June 30, 2009, for the public safety employees' retirement system; and from September 1, 2005, through August 31, 2009, for the school employees' retirement system.
     (2) There shall be no suspension of those portions of the basic state and employer contribution rates that are necessary to pay for the unfunded actuarial accrued liability for plan 1 of the teachers' retirement system for the period beginning September 1, 2005, and ending August 31, 2009.

NEW SECTION.  Sec. 3   A new section is added to chapter 41.45 RCW to read as follows:
     (1) Beginning July 1, 2009, a minimum 2.75 percent contribution is established as part of the basic state and employer contribution rate for the public employees' retirement system, to be used for the sole purpose of amortizing the unfunded actuarial accrued liability in the public employees' retirement system plan 1. This minimum contribution rate shall remain effective until the actuarial value of assets equals one hundred twenty-five percent of the actuarial accrued liability or June 30, 2024, whichever comes first.
     (2) Beginning July 1, 2009, a minimum 2.75 percent contribution is established as part of the basic state and employer contribution rate for the public safety employees' retirement system, to be used for the sole purpose of amortizing the unfunded actuarial accrued liability in the public employees' retirement system plan 1. This minimum contribution rate shall remain effective until the actuarial value of assets equals one hundred twenty-five percent of the actuarial accrued liability for the public employees' retirement system plan 1 or June 30, 2024, whichever comes first.
     (3) Beginning September 1, 2009, a minimum 2.75 percent contribution is established as part of the basic state and employer contribution rate for the school employees' retirement system, to be used for the sole purpose of amortizing the unfunded actuarial accrued liability in the public employees' retirement system plan 1. This minimum contribution rate shall remain effective until the actuarial value of assets equals one hundred twenty-five percent of the actuarial accrued liability for the public employees' retirement system plan 1 or June 30, 2024, whichever comes first.
     (4) Beginning September 1, 2009, a minimum 5.75 percent contribution is established as part of the basic state and employer contribution rate for the teachers' retirement system, to be used for the sole purpose of amortizing the unfunded actuarial accrued liability in the teachers' retirement system plan 1. This minimum contribution rate shall remain effective until the actuarial value of assets equals one hundred twenty-five percent of the actuarial accrued liability for the teachers' retirement system plan 1 or June 30, 2024, whichever comes first.
     (5) The minimum contribution rates for amortizing the unfunded liability in the plans 1 may exceed, but shall not drop below those specified in this section. Upon completion of each biennial actuarial valuation, the state actuary shall review the appropriateness of the minimum contribution rates and recommend to the legislature any adjustments as may be needed due to material changes in benefits or actuarial assumptions, methods, or experience.

NEW SECTION.  Sec. 4   Sections 1 and 2 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect July 1, 2005.

NEW SECTION.  Sec. 5   Section 3 of this act takes effect July 1, 2009.