SENATE BILL REPORT

SSB 6600

BYSenate Committee on Ways & Means (originally sponsored by Senators Gaspard and McDonald; by request of Economic and Revenue Forecast Council)

Modifying contribution rates to the state retirement systems.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 1, 1990; February 5, 1990

Majority Report:     That Substitute Senate Bill No. 6600 be substituted therefor, and the substitute bill do pass.

     Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Cantu, Fleming, Hayner, Johnson, Lee, Moore, Newhouse, Niemi, Owen, Saling, Talmadge, Williams, Wojahn.

Senate Staff:Michael Groesch (786-7715)

                February 28, 1990

AS PASSED SENATE, FEBRUARY 9, 1990

BACKGROUND:

The basic state contribution rate for the Law Enforcement Officers' and Fire Fighters Retirement System (LEOFF), and the basic employer contribution rate for the Public Employees' Retirement System (PERS), the Teachers Retirement System (TRS), and the Washington State Patrol Retirement System (WSPRS) were established by law in 1989 and required to be utilized in the Governor's proposed budget and the final appropriations act. The rates set in statute are 7.10 percent for PERS, 12.60 percent for TRS, 16.88 percent for LEOFF, and 21.47 percent for WSPRS. These rates take effect September 1, 1990 and apply to both Plan I and Plan II membership.

Supplemental rates for additional benefits are provided through legislation, and supplemental rates have been added to accommodate COLA provisions adopted in 1989.

The Economic and Revenue Forecast Council adopts the economic assumptions (i.e., interest rates and inflation) used by the State Actuary in conducting valuation studies of the state retirement systems.  Beginning September 1, 1989, and every six years thereafter, the State Actuary submits to the council information regarding the experience and financial condition of each of the state retirement systems.  After review of this information, the council has recommended to the Legislature revisions to amortize the unfunded liabilities of LEOFF, PERS, TRS, and WSPRS by the year 2024 and to continue fully funding the Plan II portions of LEOFF, PERS, and TRS.

SUMMARY:

The basic contribution rates for the state retirement systems are adjusted to reflect the recommendations of the Economic Forecast Council.  The rates are 7.47 percent for PERS, 12.60 percent for TRS, 16.44 percent for LEOFF, and 15.53 percent for WSPRS.

The supplemental rate adjustments, added to amortize the cost of the 1989 session COLAs, are included in the rates.

Appropriation:  none

Revenue:   none

Fiscal Note:    available

Effective Date:July 1, 1991

Senate Committee - Testified:   No one