BILL REQ. #:  Z-0500.2 

Read first time 02/08/11.   Referred to Committee on Ways & Means.

     BE IT RESOLVED, BY THE SENATE AND HOUSE OF REPRESENTATIVES OF THE STATE OF WASHINGTON, IN LEGISLATIVE SESSION ASSEMBLED:
     THAT, At the next general election to be held in this state the secretary of state shall submit to the qualified voters of the state for their approval and ratification, or rejection, an amendment to the Constitution of the state of Washington by adding a new article to read as follows:

     Article ..., section 1. To ensure more fiscal discipline in budgeting and to improve intergenerational equity for taxpayers, minimum standards shall apply to public pension plans administered by the state of Washington. Retirement benefits provided under these plans should, to the maximum extent possible, be funded over the working lives of plan members so that employer costs are paid by the taxpayers who receive the benefit of those members' service.
     This article applies to any defined benefit component of a public employee retirement plan administered by the state of Washington, except, as of the effective date of this section, the judges retirement fund, judicial retirement system, law enforcement officers' and firefighters' retirement system plan 1, and the volunteer firefighters' and reserve officers' relief and pension fund.

     Article ..., section 2. For each state-administered pension plan that is open to new entrants, annual contributions paid into the plan must be in amounts sufficient to fund at least eighty percent of the expected long-term annual cost of benefits under the plan, calculated as normal cost under the entry age normal actuarial cost method. These annual contributions shall remain in effect so long as the present value of fully projected benefits exceeds the actuarial value of assets for that plan as of the most recently published actuarial rate-setting valuation.

     Article ..., section 3. Beginning July 1, 2015, annual employer contributions made to plan 1 of the public employees' retirement system must be in amounts totaling no less than 5.25 percent of the salaries of all active members of the public employees' retirement system, public safety employees' retirement system, school employees' retirement system, and any newly created retirement plan for public employees that were previously covered under the public employees' retirement system.
     Beginning September 1, 2015, annual employer contributions made to plan 1 of the teachers' retirement system must be in amounts totaling no less than 8.00 percent of the salaries of all active members of the teachers' retirement system, and any newly created retirement plan for teachers that were previously covered under the teachers' retirement system.
     These annual employer contributions shall be used for the sole purpose of amortizing the unfunded actuarial accrued liability of the plan, and they exclude any amounts required to fund new benefit improvements that become law after the effective date of this section. These annual employer contributions shall remain in effect until the actuarial value of assets in the plan equals at least one hundred percent of the actuarial accrued liability.

     Article ..., section 4. The legislature shall adopt policies to reasonably ensure that once the unfunded actuarial accrued liability in a closed plan is fully funded, it will not reemerge. In addition, the legislature shall adopt policies that reasonably prevent the emergence of an unfunded actuarial accrued liability in any open plan, or in any plan that is closed to new entrants after the effective date of this section.

     Article ..., section 5. Legislative changes to actuarial methods or economic assumptions that result in lower expected long-term annual pension costs take effect two years following the date of enactment or at the beginning of the next fiscal biennium, whichever is later.

     BE IT FURTHER RESOLVED, That this amendment is a single amendment within the meaning of Article XXIII, section 1 of the state Constitution.
     The legislature finds that the changes contained in this amendment constitute a single integrated plan for managing risks in funding pensions for members and beneficiaries of the state-administered pension plans. If this amendment is held to be separate amendments, this joint resolution is void in its entirety and is of no further force and effect.

     BE IT FURTHER RESOLVED, That the secretary of state shall cause notice of the foregoing constitutional amendment to be published at least four times during the four weeks next preceding the election in every legal newspaper in the state.

     BE IT FURTHER RESOLVED, That, pursuant to RCW 29A.36.020, the statement of subject and concise description for the ballot title shall read: The legislature has passed a constitutional amendment on requiring fiscal discipline in funding public pensions. This amendment will lower costs for taxpayers and increase financial security by requiring government to use actuarial principles to fund public pensions, thus maximizing investment returns to pay for its unavoidable contractual obligations. Should this constitutional amendment be:
     Approved . . . . .
     Rejected . . . . .