SENATE BILL REPORT

SB 5508

BYSenators Kreidler, Johnson, Rinehart, Bauer, Hansen, Warnke, Patterson, Wojahn, Benitz, Saling, Lee, Moore and Garrett

Revising teachers' retirement allowance adjustments.

Senate Committee on Ways & Means

Senate Hearing Date(s):

Senate Staff:Charles Langen (786-7715)

AS OF FEBRUARY 4, 1987

BACKGROUND:

The Teachers' Retirement System (TRS) provides a minimum benefit for retirees which was revised in 1986 from $10 per month per year of service to $13 per month per year of service.

TRS has a provision for a post-retirement adjustment which is dependent upon an increase in the Consumer Price Index (CPI) and the "excess of the growth in the assets of the system over that required for meeting the actuarial liabilities of the system at that time."  This excess was to be determined solely by the Retirement Board.  Upon advice of the Office of the Attorney General, this provision was never operative because the employer's contribution rate increased in the same year the adjustment was to be effective.  This was determined to be proof that there was insufficient growth in the system.

SUMMARY:

The minimum benefit is adjusted upward from $13 per month per year of service to $20 per month per year of service, effective July 1, 1987.  On July 1, 1988, the minimum benefit is again adjusted upward to $28 per month per year of service.

A cost of living adjustment, based on the CPI for the Seattle area, is provided annually to those persons who have been retired for at least five years and have at least 20 years of credited service.  The adjustment can be no more than 3.0 percent upward or downward.

Fiscal Note:      requested

Effective Date:July 1, 1987