SENATE BILL REPORT

SHB 53

BYHouse Committee on Ways & Means/Appropriations (originally sponsored by Representatives H. Sommers, Grimm, B. Williams, Silver, Brekke and Winsley)

Modifying retirement provisions for higher education personnel.

House Committe on Ways & Means/Appropriations

Senate Committee on Ways & Means

Senate Hearing Date(s):

Senate Staff:Charles Langen (786-7715)

AS OF JANUARY 15, 1988

BACKGROUND:

Teachers Insurance and Annuities Association and the College Retirement Equities Fund (TIAA/CREF) is a nationwide private retirement system available to college and university faculty to enable them to continue in the same system if they move to schools in different states.  Washington guarantees a specific level of benefits, similar to the Public Employees Retirement System I (PERS I) benefits for retirees, and pays "supplementation" if the investment performance of TIAA/CREF does not provide a benefit equal to the PERS I benefit.  No other state provides a similar supplementation to its TIAA/CREF faculty.  Supplementation was not revised in 1977 to reflect a change from PERS I to PERS II benefits for new hires.

The supplementation benefit is calculated only at the time of retirement even though the benefit under TIAA/CREF may fluctuate with the stock market.  One result of this is that a person who retires when the stock market is low receives a state-funded supplementation benefit even if the performance of the stock market later increases the TIAA/CREF benefit received by that person.

SUMMARY:

Supplementation pension benefits are eliminated for new faculty hires after the effective date of this act.  The new faculty have three options in deciding which retirement system they will participate:  1)  Teachers Insurance and Annuities Association and the College Retirement Equities Fund (TIAA/CREF) with no supplementation, 2)  Teachers Retirement System (TRS) if the employee was previously a member of TRS, and 3)  Public Employees Retirement System (PERS).

New faculty must give written notice of the option selected or they will be enrolled in PERS II if otherwise eligible.  New faculty with prior services in PERS I who fail to give written notice of a selection will be enrolled in PERS I.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Effective Date:The bill contains an emergency clause and takes effect immediately.