Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

Local Government & Housing Committee

HB 2750

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.

Background:

Public utility districts (PUDs) are authorized to distribute and generate electricity, provide water and sewer services, and provide wholesale telecommunications services. Most PUDs operate on a countywide basis and have jurisdictional boundaries that are coextensive with the applicable county, but PUDs may encompass a smaller jurisdiction.

There are 28 operating PUDs in Washington. Twenty three of the state's PUDs provide electrical services, while 19 provide water or wastewater services, and 13 provide wholesale broadband telecommunications services. Public utility districts are governed by a board of either three or five elected commissioners.

Statutes governing PUDs include specific provisions for employee benefits, insurance, and other employment issues. For example, a qualifying PUD whose employees or officials are not members of the state retirement system may contract for individual annuity contracts, retirement income policies, or group annuity contracts for the purpose of providing a retirement plan or paying all or part of the associated premiums.

Public utility districts are granted general authority to participate in the deferred compensation plan of the Department of Retirement Services, subject to federal and state requirements.

Summary of Bill:

Public utility districts engaged in the operation of electric or water utilities are granted express authority to establish, maintain, and make contributions to a deferred compensation plan or supplemental savings retirement plan for the benefit of eligible employees and officials. "Contributions," for purposes of this establishment authority, includes contributions on behalf of an eligible employee equal to the amount by which the employee agrees to a reduction in salary or wages, and also includes contributions made by the PUD separate from amounts otherwise intended as salary or wages. Employees who are covered under a deferred compensation plan or a supplemental savings plan of a PUD are eligible for simultaneous membership and participation in any pension system for public employees.

Provisions governing contributions to deferred compensation and supplemental savings retirement plans are specified. For example, contributions must be deposited in designated accounts, held in trust, or remitted to an insurer. Additionally, contributions may be deposited or invested in a credit union, savings and loan association, bank, mutual savings bank, purchase life insurance, shares of an investment company, or fixed or variable annuity contracts from any insurance or investment company licensed to contract business in Washington.

To the extent a deferred compensation or supplemental savings retirement plan is an individual account plan, a term defined in the legislation, participants in the plan may be permitted to self-direct the investment of assets allocated to their account through the selection of investment options authorized under the plan. An employee, official, or commissioner of the PUD, however, is not liable for any loss or deficiency resulting from participant investments.