HOUSE BILL REPORT

HB 2925

BYRepresentatives Wang, Holland, Locke and Hine; by request of Economic and Revenue Forecast Council

Modifying contribution rates to the state retirement systems.

House Committe on Appropriations

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (26)

      Signed by Representatives Locke, Chair; Grant, Vice Chair; Silver, Ranking Republican Member; Youngsman, Assistant Ranking Republican Member; Appelwick, Belcher, Bowman, Braddock, Brekke, Dorn, Doty, Ebersole, Hine, Inslee, May, McLean, Nealey, Padden, Peery, Rust, Sayan, Spanel, Sprenkle, Valle, Wang and Wineberry.

House Staff:Randy Acker (786-7153)

AS REPORTED BY COMMITTEE ON APPROPRIATIONS FEBRUARY 3, 1990

BACKGROUND:

The Office of the State Actuary performs what are known as actuarial valuations.  These valuations are required for the Law Enforcement Officer's and Fire Fighter's Retirement System (LEOFF), Public Employees Retirement System (PERS), Teachers Retirement System (TRS), and Washington State Patrol Retirement System (WSPRS).  Part of conducting these valuations requires making economic assumptions concerning future interest rates and inflation.  The valuations form the basis for determining the contributions required to fully fund the systems.

In 1989, legislation was enacted to begin paying off the unfunded liability of the state's major retirement systems by 2024.  Contribution rates were established in statute which must be used in the governor's request budget and the appropriations act.  These rates, expressed as a percentage of the total salary of the system's membership, are as follows: LEOFF 16.88 percent; PERS 7.1 percent; TRS 12.6 percent; and WSPRS 21.47 percent.

Under the 1989 legislation, the Economic and Revenue Forecast Council is required to adopt the economic assumptions used by the state actuary in conducting valuation studies of the state retirement systems.  Beginning September 1, 1989, and every six years thereafter, the council is to recommend, to the Legislature, any revisions to the employer rates necessary to amortize the unfunded liabilities by 2024 and to fully fund Plan II of PERS, TRS, and LEOFF.

SUMMARY:

SUBSTITUTE BILL:  Beginning September 1, 1991, new basic state contribution rates are adopted as follows:  Law Enforcement Officer's and Fire Fighter's Retirement System, 16.44 percent; Public Employees Retirement System (PERS), 7.47 percent; and Washington State Patrol Retirement System, 15.53 percent.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The effective date for the new rates is changed from July 1, 1991, to September 1, 1991.  The rate for PERS is adjusted to reflect the rate recommended by the Economic and Revenue Forecast Council as of February 3, 1990.

Fiscal Note:      Available.

Effective Date:The bill takes effect on September 1, 1991.

House Committee ‑ Testified For:    No one.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    None.

House Committee - Testimony Against:      None.