SENATE BILL REPORT
SB 5176
This analysis was prepared by non-partisan legislative staff for the use of legislative members in
their deliberations. This analysis is not a part of the legislation nor does it constitute a
statement of legislative intent.
As Reported By Senate Committee On:
Ways & Means, January 30, 2007
Title: An act relating to the portability of public retirement benefits.
Brief Description: Addressing the portability of public retirement benefits.
Sponsors: Senators Pridemore, Schoesler, Fairley, Rockefeller, Keiser, McAuliffe, Jacobsen, Franklin, Berkey, Rasmussen and Fraser; by request of Select Committee on Pension Policy and LEOFF Plan 2 Retirement Board.
Brief History:
Committee Activity: Ways & Means: 1/18/07, 1/30/07 [DP].
SENATE COMMITTEE ON WAYS & MEANS
Majority Report: Do pass.Signed by Senators Prentice, Chair; Fraser, Vice Chair, Capital Budget Chair; Pridemore, Vice Chair, Operating Budget; Zarelli, Ranking Minority Member; Brandland, Carrell, Fairley, Hatfield, Hewitt, Hobbs, Honeyford, Keiser, Kohl-Welles, Oemig, Parlette, Rasmussen, Regala, Roach, Rockefeller, Schoesler and Tom.
Staff: Erik Sund (786-7454)
Background: If a member of one of the retirement systems administered by the state or by one
of the First Class cities leaves eligible employment for that plan and subsequently enters
employment covered by another such retirement system, then he or she is eligible for dual
membership. The plans eligible for dual membership include the Public Employees' Retirement
System (PERS) Plans 1, 2, and 3; the Teachers' Retirement System (TRS) Plans 1, 2, and 3; the
School Employees' Retirement System (SERS) Plans 1, 2, and 3; the Law Enforcement Officers
and Fire Fighters' Retirement System (LEOFF) Plan 2; the Washington State Patrol Retirement
Systems (WSPRS) Plans 1 and 2; the Public Safety Employees' Retirement System (PSERS); the
Statewide City Employees' Retirement System (SCERS); and the retirement systems of the cities
of Seattle, Spokane, and Tacoma. LEOFF Plan 1, the Judges' Retirement System, and the Judicial
Retirement System are not included in the portability statutes that govern dual membership. The
Legislature has reserved the right to amend or repeal the portability statutes.
Dual members may combine service credit earned in all eligible systems for the purpose of
determining eligibility for retirement and for other benefits. They may also use their highest base
salary from an eligible system in order to calculate their benefit in another system. "Base salary"
in this context does not include overtime payments or lump sum payments such as for the cash
out of leave or severance pay. Some of the elements excluded from base salary for the purpose
of calculating dual members' benefits are allowable for the purpose of calculating benefits in
some of the eligible plans.
Currently, all dual members are subject to a maximum benefit rule. Under this rule, the sum of
the retirement allowances that a dual member receives may not exceed the largest amount that he
or she would receive if all service had been rendered in any one system. When a dual member's
combined allowance exceeds the limit, the allowances from each system are reduced on a
proportional basis according to years of service.
LEOFF 2, PERS 3, TRS 3, and SERS 3 all provide indexing of a term-vested benefit for members
with at least 20 years of service credit. Under this provision, the retirement allowance of a
member who separates from service is increased by 3 percent per year until he or she chooses to
collect the allowance. Under current law, dual members belonging to LEOFF 2 are not able to
combine their LEOFF 2 service with service in another system in order to qualify for an indexed
benefit.
Summary of Bill: Dual members, except for those belonging for WSPRS, are allowed to include
in their base salary previously excluded forms of payment, such as overtime, as long as the type
of payment in question is reportable under both of the retirement systems to which the member
belongs.
The maximum benefit rule is not applied to dual members who have both (a) fewer than 15 years
of service in a plan with a benefit cap (such as PERS 1 or TRS 1); and (b) service in a plan with
no benefit cap (such as PERS 2 or LEOFF 2).
Dual members belonging to LEOFF 2 may combine years of service in both plans for the purpose
of qualifying for the indexing of a term-vested benefit.
Appropriation: None.
Fiscal Note: Requested on January 12, 2007.
Committee/Commission/Task Force Created: No.
Effective Date: The bill contains an emergency clause and takes effect on July 1, 2007.
Staff Summary of Public Testimony: PRO: The current laws discriminate against hourly employees that are members of more than one retirement system by excluding overtime pay from their base salaries. This bill would provide equitable treatment both for employees who are paid by the hour and for salaried employees.
Persons Testifying: PRO: Amber Lewis, Washington Federation of State Employees; Steve Nelson, LEOFF Plan 2 Retirement Board; Pat Thompson, Washington State Council of County and City Employees.