AN
ACT Relating to funding of the state retirement systems; amending RCW
41.45.020, 41.45.030, 41.45.060, and 41.45.090; and adding new sections to
chapter 41.45 RCW.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
41.45.020 and 1995 c 239 s 306 are each amended to read as follows:
As
used in this chapter, the following terms have the meanings indicated unless
the context clearly requires otherwise.
(1)
"Council" means the ((economic and revenue forecast)) pension
funding council created in ((RCW 82.33.010)) section 2 of this
act.
(2)
"Department" means the department of retirement systems.
(3)
"Law enforcement officers' and fire fighters' retirement system plan
I" and "law enforcement officers' and fire fighters' retirement
system plan II" mean the benefits and funding provisions under chapter
41.26 RCW.
(4)
"Public employees' retirement system plan I" and "public
employees' retirement system plan II" mean the benefits and funding
provisions under chapter 41.40 RCW.
(5)
"Teachers' retirement system plan I," "teachers' retirement
system plan II," and "teachers' retirement system plan III" mean
the benefits and funding provisions under chapter 41.32 RCW.
(6)
"Washington state patrol retirement system" means the retirement
benefits provided under chapter 43.43 RCW.
(7)
"Unfunded liability" means the unfunded actuarial accrued liability
of a retirement system.
(8)
"Actuary" or "state actuary" means the state actuary
employed under chapter 44.44 RCW.
(9)
"State retirement systems" means the retirement systems listed in RCW
41.50.030.
(10)
"Work group" means the pension funding work group created in section
4 of this act.
NEW
SECTION. Sec. 2. A
new section is added to chapter 41.45 RCW to read as follows:
(1)
The pension funding council is hereby created. The council consists of the:
(a)
Director of the department of retirement systems;
(b) Director of the office of financial management;
(c)
Chair and ranking minority member of the house of representatives
appropriations committee; and
(d)
Chair and ranking minority member of the senate ways and means committee.
The
council may select officers as the members deem necessary.
(2)
The pension funding council shall adopt changes to economic assumptions and
contribution rates by an affirmative vote of at least four members.
NEW
SECTION. Sec. 3. A
new section is added to chapter 41.45 RCW to read as follows:
The
pension funding council shall solicit and administer a biennial actuarial audit
of the actuarial valuations used for rate-setting purposes. This audit will be
conducted concurrent with the actuarial valuation performed by the state
actuary. At least once in each six-year period, the pension funding council
shall solicit and administer an actuarial audit of the results of the
experience study required in RCW 41.45.090.
NEW
SECTION. Sec. 4. A
new section is added to chapter 41.45 RCW to read as follows:
(1)
A pension funding work group is hereby created. The work group shall consist
of one staff member selected by the executive head or chairperson of each of
the following agencies or committees:
(a)
Department of retirement systems;
(b)
Office of financial management;
(c)
State investment board;
(d)
Ways and means committee of the senate;
(e)
Appropriations committee of the house of representatives; and
(f) Economic and revenue forecast council.
(2)
The state actuary shall make available to the work group information related to
economic assumptions and contribution rates.
(3)
The pension funding work group shall provide support to the pension funding
council. Meetings of the pension funding work group may be called by any
member of the group for the purpose of assisting the pension funding council,
reviewing actuarial valuations of the state retirement systems, reviewing
economic assumptions, or for any other purpose which may assist the pension
funding council.
(4)
Recommendations from both affected employee and employer groups will be
actively sought during the work group process. The work group shall conduct an
open public meeting on these recommendations.
Sec.
5. RCW
41.45.030 and 1995 c 233 s 1 are each amended to read as follows:
(1)
((Beginning September 1, 1995, and every two years thereafter, the state
actuary shall submit to the council information regarding the experience and
financial condition of each state retirement system. The council shall review
this and such other information as it may require.
(2)
By December 31, 1995, and every two years thereafter,)) The
council, by affirmative vote of ((five)) four councilmembers,
shall adopt changes to the following long-term economic assumptions:
(a)
Growth in system membership;
(b)
Growth in salaries, exclusive of merit or longevity increases;
(c)
Growth in inflation; and
(d)
Investment rate of return.
(2)
The council shall work with the ((department of retirement systems,)) pension
funding work group and the state actuary((, and the executive director
of the state investment board,)) and shall consider long-term historical
averages, in developing the economic assumptions.
(3)
The assumptions adopted by the council shall be used by the state actuary in
conducting all actuarial studies of the state retirement systems.
Sec.
6. RCW
41.45.060 and 1995 c 239 s 309 are each amended to read as follows:
(1)
The state actuary shall provide actuarial valuation results based on the
assumptions adopted under RCW 41.45.030.
(2)
Not later than September 30, ((1996)) 1998, and every two years
thereafter, consistent with the assumptions adopted under RCW 41.45.030, the
council shall adopt ((both)) changes to: (a) A basic state
contribution rate for the law enforcement officers' and fire fighters'
retirement system; and (b) basic employer contribution rates for the public
employees' retirement system plan I, the teachers' retirement system plan I,
and the Washington state patrol retirement system to be used in the ensuing
biennial period.
(3)
The employer and state contribution rates adopted by the council shall be the
level percentages of pay that are needed:
(a)
To fully amortize the total costs of the public employees' retirement system
plan I, the teachers' retirement system plan I, the law enforcement officers'
and fire fighters' retirement system plan I, and the unfunded liability of the
Washington state patrol retirement system not later than June 30, 2024; and
(b)
To also continue to fully fund the public employees' retirement system plan II,
the teachers' retirement system plans II and III, and the law enforcement
officers' and fire fighters' retirement system plan II in accordance with RCW
41.40.650, 41.26.450, and this section.
(4)
The aggregate actuarial cost method shall be used to calculate a combined plan
II and III employer contribution rate.
(5)
The council shall immediately notify the directors of the office of financial
management and department of retirement systems of the state and employer
contribution rates adopted.
(6)
The director of the department of retirement systems shall collect those rates
adopted by the council.
Sec.
7. RCW
41.45.090 and 1989 c 273 s 9 are each amended to read as follows:
The
department shall collect and keep in convenient form such data as shall be
necessary for an actuarial valuation of the assets and liabilities of the state
retirement systems, and for making an actuarial investigation into the
mortality, service, compensation, and other experience of the members and
beneficiaries of those systems. The department and state actuary shall enter
into a memorandum of understanding regarding the specific data the department
will collect, when it will be collected, and how it will be maintained. The
department shall notify the state actuary of any changes it makes, or intends
to make, in the collection and maintenance of such data.
At least once in each six-year period, the state actuary shall
conduct an actuarial ((investigation)) experience study of the
mortality, service, compensation and other experience of the members and
beneficiaries of each state retirement system, and into the financial condition
of each system. The results of each investigation shall be filed with the
department, the office of financial management, ((and)) the budget
writing committees of the Washington house of representatives and senate,
and the pension funding council. Upon the basis of such actuarial
investigation the department shall adopt such tables, schedules, factors, and
regulations as are deemed necessary in the light of the findings of the actuary
for the proper operation of the state retirement systems.
