BILL REQ. #:  S-5036.1 

Read first time 02/09/2006.   Referred to Committee on Ways & Means.

     AN ACT Relating to creating unfunded liabilities stabilization accounts within the public employees' retirement system plan 1 and teachers' retirement system plan 1 funds and making appropriations into the accounts; amending RCW 41.50.075 and 41.50.075; adding a new section to chapter 41.45 RCW; creating new sections; making appropriations; providing an effective date; and providing an expiration date.

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

Sec. 1   RCW 41.50.075 and 2000 c 247 s 601 are each amended to read as follows:
     (1) Two funds are hereby created and established in the state treasury to be known as the Washington law enforcement officers' and fire fighters' system plan 1 retirement fund, and the Washington law enforcement officers' and fire fighters' system plan 2 retirement fund which shall consist of all moneys paid into them in accordance with the provisions of this chapter and chapter 41.26 RCW, whether such moneys take the form of cash, securities, or other assets. The plan 1 fund shall consist of all moneys paid to finance the benefits provided to members of the law enforcement officers' and fire fighters' retirement system plan 1, and the plan 2 fund shall consist of all moneys paid to finance the benefits provided to members of the law enforcement officers' and fire fighters' retirement system plan 2.
     (2)(a) All of the assets of the Washington state teachers' retirement system shall be credited according to the purposes for which they are held, to two funds to be maintained in the state treasury, namely, the teachers' retirement system plan 1 fund and the teachers' retirement system combined plan 2 and 3 fund. The plan 1 fund shall consist of all moneys paid to finance the benefits provided to members of the Washington state teachers' retirement system plan 1, and the combined plan 2 and 3 fund shall consist of all moneys paid to finance the benefits provided to members of the Washington state teachers' retirement system plan 2 and 3.
     (b) Within the teachers' retirement system plan 1 fund an unfunded liability stabilization account is hereby established. Expenditures from the account may be used only for the payment of unfunded liabilities of the teachers' retirement system plan 1 and may not be used to pay for any new benefit or for any benefit increase that takes effect after July 1, 2005. An increase that is provided in accordance with a formula that is in existence on July 1, 2005, is not considered an increase for this purpose.
     (3)(a) There is hereby established in the state treasury two separate funds, namely the public employees' retirement system plan 1 fund and the public employees' retirement system combined plan 2 and plan 3 fund. The plan 1 fund shall consist of all moneys paid to finance the benefits provided to members of the public employees' retirement system plan 1, and the combined plan 2 and plan 3 fund shall consist of all moneys paid to finance the benefits provided to members of the public employees' retirement system plans 2 and 3.
     (b) Within the public employees' retirement system plan 1 fund an unfunded liability stabilization account is hereby established. Expenditures from the account may be used only for the payment of unfunded liabilities of the public employees' retirement system plan 1 and may not be used to pay for any new benefit or for any benefit increase that takes effect after July 1, 2005. An increase that is provided in accordance with a formula that is in existence on July 1, 2005, is not considered an increase for this purpose.
     (4) There is hereby established in the state treasury the school employees' retirement system combined plan 2 and 3 fund. The combined plan 2 and 3 fund shall consist of all moneys paid to finance the benefits provided to members of the school employees' retirement system plan 2 and plan 3.

Sec. 2   RCW 41.50.075 and 2004 c 242 s 44 are each amended to read as follows:
     (1) Two funds are hereby created and established in the state treasury to be known as the Washington law enforcement officers' and fire fighters' system plan 1 retirement fund, and the Washington law enforcement officers' and fire fighters' system plan 2 retirement fund which shall consist of all moneys paid into them in accordance with the provisions of this chapter and chapter 41.26 RCW, whether such moneys take the form of cash, securities, or other assets. The plan 1 fund shall consist of all moneys paid to finance the benefits provided to members of the law enforcement officers' and fire fighters' retirement system plan 1, and the plan 2 fund shall consist of all moneys paid to finance the benefits provided to members of the law enforcement officers' and fire fighters' retirement system plan 2.
     (2)(a) All of the assets of the Washington state teachers' retirement system shall be credited according to the purposes for which they are held, to two funds to be maintained in the state treasury, namely, the teachers' retirement system plan 1 fund and the teachers' retirement system combined plan 2 and 3 fund. The plan 1 fund shall consist of all moneys paid to finance the benefits provided to members of the Washington state teachers' retirement system plan 1, and the combined plan 2 and 3 fund shall consist of all moneys paid to finance the benefits provided to members of the Washington state teachers' retirement system plan 2 and 3.
     (b) Within the teachers' retirement system plan 1 fund an unfunded liability stabilization account is hereby established. Expenditures from the account may be used only for the payment of unfunded liabilities of the teachers' retirement system plan 1 and may not be used to pay for any new benefit or for any benefit increase that takes effect after July 1, 2005. An increase that is provided in accordance with a formula that is in existence on July 1, 2005, is not considered an increase for this purpose.
     (3)(a) There is hereby established in the state treasury two separate funds, namely the public employees' retirement system plan 1 fund and the public employees' retirement system combined plan 2 and plan 3 fund. The plan 1 fund shall consist of all moneys paid to finance the benefits provided to members of the public employees' retirement system plan 1, and the combined plan 2 and plan 3 fund shall consist of all moneys paid to finance the benefits provided to members of the public employees' retirement system plans 2 and 3.
     (b) Within the public employees' retirement system plan 1 fund an unfunded liability stabilization account is hereby established. Expenditures from the account may be used only for the payment of unfunded liabilities of the public employees' retirement system plan 1 and may not be used to pay for any new benefit or for any benefit increase that takes effect after July 1, 2005. An increase that is provided in accordance with a formula that is in existence on July 1, 2005, is not considered an increase for this purpose.
     (4) There is hereby established in the state treasury the school employees' retirement system combined plan 2 and 3 fund. The combined plan 2 and 3 fund shall consist of all moneys paid to finance the benefits provided to members of the school employees' retirement system plan 2 and plan 3.
     (5) There is hereby established in the state treasury the public safety employees' retirement system plan 2 fund. The plan 2 fund shall consist of all moneys paid to finance the benefits provided to members of the public safety employees' retirement system plan 2.

NEW SECTION.  Sec. 3   (1) The sum of two hundred fifteen million four hundred thousand dollars is appropriated for the fiscal year ending June 30, 2007, from the general fund to the unfunded liability stabilization account within the public employees' retirement system plan 1 fund, under RCW 41.50.075, for the purposes of this act.
     (2) Of the amount appropriated in subsection (1) of this section, seventy-six million seven hundred thousand dollars shall be expended by the state treasurer as soon as practicable into the commingled trust fund. It is the intent of the legislature that this amount shall constitute and satisfy the actuarially required general fund state payment for the unfunded actuarial accrued liability in plan 1 of the public employees' retirement system for the 2005-2007 biennium, including the payment that was suspended in the first year of the biennium.
     (3) The remainder of the appropriation in this section shall remain in the public employees' retirement system plan 1 stabilization account until further transfers are authorized, and shall be solely used for the purpose of satisfying the general fund state payment for the unfunded actuarial accrued liability in plan 1 of the public employees' retirement system during the 2007-2009 biennium. The state investment board shall invest such funds in accordance with RCW 43.33A.140, while exercising care to minimize the risk of the loss of principal.

NEW SECTION.  Sec. 4   (1) The sum of two hundred ninety-one million five hundred thousand dollars is appropriated for the fiscal year ending June 30, 2007, from the general fund to the unfunded liability stabilization account within the teachers' retirement system plan 1 fund, under RCW 41.50.075, for the purposes of this act.
     (2) Of the amount appropriated in subsection (1) of this section, one hundred three million eight hundred thousand dollars shall be expended by the state treasurer as soon as practicable into the commingled trust fund. It is the intent of the legislature that this amount shall constitute and satisfy the actuarially required general fund state payment for the unfunded actuarial accrued liability in plan 1 of the teachers' retirement system for the 2005-2007 biennium, including the payment that was suspended in the first year of the biennium.
     (3) The remainder of the appropriation in this section shall remain in the teachers' retirement system plan 1 stabilization account until further transfers are authorized, and shall be solely used for the purpose of satisfying the general fund state payment for the unfunded actuarial accrued liability in plan 1 of the teachers' retirement system during the 2007-2009 biennium. The state investment board shall invest such funds in accordance with RCW 43.33A.140, while exercising care to minimize the risk of the loss of principal.

NEW SECTION.  Sec. 5   A new section is added to chapter 41.45 RCW to read as follows:
     For the period beginning July 1, 2006, and ending June 30, 2007, a 3.44 percent contribution rate is established as part of the local employer contribution rate for the public employees' retirement system and 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.

NEW SECTION.  Sec. 6   Section 2 of this act takes effect July 1, 2006.

NEW SECTION.  Sec. 7   Section 1 of this act expires July 1, 2006.