S-4645

AN ACT Relating to payment of medical benefits provided under chapter 41.26 RCW to law enforcement officers' and fire fighters' retirement system plan 1 retirees; amending RCW 41.26.080; and creating new sections.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that the medical services provided to retirees of the law enforcement officers' and fire fighters' retirement system plan 1 under chapter 41.26 RCW include nursing home care and catastrophic medical care, including organ transplants.

The legislature also finds that many years of high state appropriations to the law enforcement officers' and fire fighters' retirement system plan 1 trust fund, combined with years of high investment return and low inflation, have greatly improved the funding status of the fund.

It is reasonable, in light of the strong funding position of the law enforcement officers' and fire fighters' retirement system plan 1 fund, to provide partial funding of law enforcement officers' and fire fighters' retirement system plan 1 retiree extraordinary medical expenses, such as nursing home care, from the law enforcement officers' and fire fighters' retirement system plan 1 fund.

The purpose of this act is to: (1) Declare legislative intent that not less than fifty million dollars of surplus assets in the Washington law enforcement officers' and fire fighters' retirement system plan 1 retirement fund be used, if possible, for payment of extraordinary medical expenses for certain retirees of the law enforcement officers' and fire fighters' retirement system plan 1; and (2) provide for a review by the joint committee on pension policy, with input from a law enforcement officers' and fire fighters' retirement system advisory workgroup, of possible long-term options for funding a portion of the law enforcement officers' and fire fighters' retirement system plan 1 medical expenses from the law enforcement officers' and fire fighters' retirement system plan 1 trust fund.

NEW SECTION. Sec. 2. For the purposes of this act, retiree expenses for nursing home services that qualify as medical services under RCW 41.26.030(22), and expenses incurred in excess of twenty-five thousand dollars in a twelve-month period for an individual retiree's hospital care, shall qualify as extraordinary medical expenses.

It is the intent of the legislature that statutory guidelines for the payment of certain extraordinary medical expenses be adopted in the 2001 legislative session, taking into consideration the recommendations of the report required by section 3 of this act. It is also the intent of the legislature that such expenditures be authorized only if the actuarial valuation study of the law enforcement officers' and fire fighters' retirement system plan 1 assets and liabilities as of December 31, 1999, indicates that the system has not less than five hundred million dollars in surplus assets.

NEW SECTION. Sec. 3. The joint committee on pension policy shall provide for a study, through the office of the state actuary during the 2000 interim, of the options for providing partial funding of law enforcement officers' and fire fighters' retirement system plan 1 retiree medical expenses from the surplus assets of the law enforcement officers' and fire fighters' retirement system plan 1 fund. The study shall include a report by the office of the state actuary on local government liabilities, as required by the 1999-2001 operating budget, and a review of legal issues, federal tax compliance issues, variations in local government benefits and funding mechanisms, and other relevant issues.

In conducting the study the joint committee shall solicit information and advice from a law enforcement officers' and fire fighters' retirement system employer and member advisory workgroup which shall consist of not less than twelve representatives of both the employers and members as follows: Two representatives each for the association of Washington cities, the Washington fire commissioners' association, and the Washington state association of counties; and three representatives each for the Washington council of police and sheriffs and the Washington state council of fire fighters. The joint committee may make additional appointments to the workgroup. The office of the state actuary may provide administrative support for the study.

The joint committee shall submit its report and recommendations to the legislature no later than December 15, 2000.

Sec. 4. RCW 41.26.080 and 1991 c 35 s 17 are each amended to read as follows:

(1) Except as set forth under subsection (2) of this section, the total liability of the plan 1 system shall be funded as follows:

((~~(1)~~)) (a) Every plan 1 member shall have deducted from each payroll a sum equal to six percent of his or her basic salary for each pay period.

((~~(2)~~)) (b) Every employer shall contribute monthly a sum equal to six percent of the basic salary of each plan 1 employee who is a member of this retirement system. The employer shall transmit the employee and employer contributions with a copy of the payroll to the retirement system monthly.

((~~(3)~~)) (c) The remaining liabilities of the plan 1 system shall be funded as provided in chapter 41.45 RCW.

((~~(4)~~)) (d) Every member shall be deemed to consent and agree to the contribution made and provided for herein, and shall receipt in full for his or her salary or compensation. Payment less said contributions shall be a complete discharge of all claims and demands whatsoever for the services rendered by such person during the period covered by such payments, except his or her claim to the benefits to which he or she may be entitled under the provisions of this chapter.

(2) No employer or member contribution is required after June 30, 2000, unless the most recent valuation study for law enforcement officers' and fire fighters' retirement system plan 1 indicates the plan has unfunded liabilities.