SENATE BILL REPORT

SB 5347

BYSenators Bottiger, Johnson, Vognild, Gaspard, von Reichbauer, Bender, Pullen, Talmadge and Conner

Revising LEOFF II.

Senate Committee on Ways and Means

Senate Hearing Date(s):February 24, 1987; February 26, 1987; March 9, 1987

Majority Report:  That Substitute Senate Bill NO. 5347 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Gaspard, Vice Chairman; Bauer, Fleming, Kreidler, Moore, Rasmussen, Rinehart, Saling, Talmadge, Vognild, Warnke, Williams.

Minority Report:  Do not pass.

      Signed by Senators Bluechel, Cantu, Craswell, Hayner, Lee, McDonald.

Senate Staff:Charles Langen (786-7715)

                  March 10, 1987

AS REPORTED BY COMMITTEE ON WAYS & MEANS, MARCH 9, 1987

BACKGROUND:

In 1977, the Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF), as well as the Public Employees' Retirement System (PERS) and Teachers' Retirement System (TRS), was divided into two tiers, or two separate retirement systems, with Tier (or Plan) I consisting of those first employed prior to October 1, 1977, and Tier (or Plan) II consisting of those first employed on or after October 1, 1977.  The retirement policy adopted in statute for the Tier II (or Plan II) systems contained, in part, the following positions:

      1. The normal retirement age (the earliest age at which the full benefit of the system is to be received) is 58 within LEOFF, and 65 within PERS and TRS.  An early retirement benefit is optionally provided if the member has completed 20 years of service and attained age 50 in LEOFF, or age 55 in PERS or TRS, where the retirement benefit which the member has earned to that time is actuarially reduced from age 58 for LEOFF or age 65 for PERS and TRS.

      2. The average final compensation (AFC) used in the calculation of the service retirement benefit within LEOFF, PERS and TRS is calculated as the average of the 60 highest consecutive months of service.

      3. The costs attributed to the retirement systems by the State Actuary for Tier II of LEOFF, PERS and TRS are shared equally with the employee and the employer.  In LEOFF, the employer's 50.0 percent is divided, with the state contributing 20.0 percent and the employer 30.0 percent.

Within Tier I of LEOFF, if a member is physically or mentally disabled and unable to perform his or her duty for a period of at least six months, a disability leave is granted.  Up to the end of the six month period, the member is returned to duty if found no longer disabled.  If, however, at the end of the six month leave period the member is found to be no longer disabled by the board, there is not a requirement to restore the member to duty.  If the local disability board determines the member remains unable to perform duties, the member is awarded a disability retirement, subject to the approval of the Department of Retirement Systems (DRS).  Subsequent to entering disability retirement the member is restored to duty if no longer disabled.

SUMMARY:

The normal retirement age for LEOFF Tier II is reduced from age 58 to age 54 and the provisions for the early retirement benefit is repealed.

The AFC is revised to be the average of the highest 24 consecutive months.

The employer is to contribute an additional 5.0 percent of total compensation.

If the member who has been granted a six-month disability leave is determined to no longer be disabled at the completion of this period, the member shall be restored to duty.

Fiscal Note:      available

EFFECT OF PROPOSED SUBSTITUTE:

The 5.0 percent increase in cost as a result of the revisions of retirement age and the definition of AFC is to be paid by an additional 2.0 percent premium tax on all fire, burglary or theft, homeowner multiple peril and commercial multiple peril insurance contracts written by authorized insurers.  The tax is to be immediately deposited in the LEOFF retirement fund.  If the amount deposited is not sufficient to cover the 5.0 percent of basic salary, the employee shall pay the difference between the premium tax collected and the required 5.0 percent of basic salary.

Senate Committee - Testified: Ken Snider, Spokane Fire Department; Charles Marsh, Washington Association of Law Enforcement Officers; Howard Vietzke, Council of Firefighters; Robert Hollister, Director, Department of Retirement Systems; Dick Warbuck, Seattle Firefighters; Foster Cronyn; Kent Swisher, Association of Washington Cities; Jim Metcalf, Washington Association of Counties