HOUSE BILL REPORT

                 SHB 1430

                    As Passed Legislature

Title:  An act relating to exempting employers with qualified retirement plans from additional contributions.

Brief Description:  Exempting certain employers from additional retirement contributions.

Sponsors:  By House Committee on Appropriations  (originally sponsored by Representatives Carlson, Sehlin, Cooke, Sommers, Dellwo and Basich; by request of Joint Committee on Pension Policy).

Brief History:

  Committee Activity:

Appropriations:  2/23/95, 2/28/95 [DPS].

Floor Activity:

     Passed House:  3/9/95, 96-0.

Senate Amended.

House Concurred.

Passed Legislature.

HOUSE COMMITTEE ON APPROPRIATIONS

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  Signed by 30 members:  Representatives Silver, Chairman; Clements, Vice Chairman; Huff, Vice Chairman; Pelesky, Vice Chairman; Sommers, Ranking Minority Member; Valle, Assistant Ranking Minority Member; Basich; Beeksma; Brumsickle; Carlson; Chappell; Cooke; Crouse; Dellwo; Foreman; Grant; Hargrove; Hickel; Jacobsen; Lambert; Lisk; McMorris; Poulsen; Reams; Rust; Sehlin; Sheahan; Talcott; Thibaudeau and Wolfe.

Staff:  Dan Chang (786-7191).

Background:   Under the Public Employees' Retirement System (PERS), both the employer and the employee make contributions to the system; the contributions are based on a percentage of the employee's salary.  Approximately 1,100 political subdivisions do not participate in PERS.

Under the current law, employers who do not belong to the PERS system but wish to join must pay both the employer's and employee's contributions for the period dating back to the employee's date of hire.  These back contributions are required even if employees were covered under a private retirement plan for all or part of the prior service period. 

Summary of Bill:  The substitute bill allows employers joining PERS for the first time to choose one of the following options:

1)Service credit can be purchased from the date of the employer's admission to PERS;

2)Retroactive service credit from the date of the employee's date of hire can be purchased by paying back contributions plus interest when feasible through one of the following methods; 

  A)all back contributions paid by the employer;

  B)all back contributions paid by both employer and employee.  The proportion of payments can be decided by the employer and employee and participation is optional;

  C)all back contributions paid by the employee but participation is optional.

Former employees who are current PERS members may purchase past service credit by paying both employer and employee contributions plus interest.

Appropriation:  None.

Fiscal Note:  Available.

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

Testimony For:   King County District 39 and its 29 employees support this bill.  They are a small group of maintenance employees who, until recently, belonged to a union retirement plan.  In order to access the PERS system, past contributions would need to be funded in PERS, even though contributions had been made to the union plan.  HB 1430 will allow these employees access to PERS without double-funding past retirement benefits.  The employees and the district support this bill to provide access to PERS.

Testimony Against:  None.

Testified:  Jim Hamilton, King County Fire Protection District 39.