SENATE BILL REPORT

SB 5801

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As Reported by Senate Committee On:

Ways & Means, February 26, 2019

Title: An act relating to teachers' postretirement employment options.

Brief Description: Concerning teachers' postretirement employment options.

Sponsors: Senators Wellman, Rivers, Darneille and Kuderer.

Committee Activity: Ways & Means: 2/20/19, 2/26/19 [DPS, DNP, w/oRec].

Brief Summary of First Substitute Bill

Expands postretirement employment options for teachers that took early retirement to return to work.

SENATE COMMITTEE ON WAYS & MEANS

Majority Report: That Substitute Senate Bill No. 5801 be substituted therefor, and the substitute bill do pass.

Signed by Senators Rolfes, Chair; Frockt, Vice Chair, Operating, Capital Lead; Mullet, Capital Budget Cabinet; Billig, Carlyle, Conway, Darneille, Hasegawa, Hunt, Keiser, Liias, Palumbo, Pedersen and Van De Wege.

Minority Report: Do not pass.

Signed by Senators Braun, Ranking Member; Honeyford, Assistant Ranking Member, Capital; Bailey, Becker, Schoesler and Wagoner.

Minority Report: That it be referred without recommendation.

Signed by Senators Brown, Assistant Ranking Member, Operating; Warnick and Wilson, L..

Staff: Amanda Cecil (786-7460)

Background: The normal retirement age for members of Plans 2 and 3 of the Teachers Retirement System (TRS) is age sixty-five. TRS Plan 2 members with 20 years of service and TRS Plan 3 members with 10 years of service can retire as early as age fifty-five. Benefits paid to persons who retire early from TRS Plans 2 or 3 with less than 30 years of service are calculated using early retirement factors that provide a full actuarial reduction based on the number of years between the retirement age and age sixty-five. For example, there is a 27 percent reduction of benefits for retirement at age sixty-two, and a 41 percent reduction of benefits for retirement at age sixty.

Two early retirement factor options are available to TRS Plan 2 and 3 members who retire with 30 or more years of service. One of the options was created in 2000 and reduces benefits by 3 percent for each year in the period between the retirement age and age sixty-five. For example, there is a 9 percent reduction of benefits for retirement at age sixty-two, and a 15 percent reduction of benefits for retirement at age sixty. The other option that provides smaller benefit reductions was implemented in 2008 as a replacement for gain-sharing benefits. Under the 2008 early retirement factors, TRS Plan 2 and 3 members with 30 years of service may retire at age sixty-two with no reduction of benefits, and at age sixty with a 5 percent reduction.

State law does not prohibit persons who retire from TRS Plans 2 or 3 from returning to work, but it does limit when a retiree may work and continue receiving pension benefits. In general, benefits are suspended when a TRS retiree works more than 867 hours in a year in a position included in TRS or another state retirement plan. However, benefits are suspended immediately if a TRS Plan 2 or 3 retiree who retired using the 2008 early retirement factors returns to work in any kind of position with a state retirement plan prior to age sixty-five.

Legislation passed in 2016, allows retired teachers who retired under an early retirement option to return to work prior to reaching age sixty-five exclusively as substitute teachers for up to 867 hours per school year without suspension of their retirement benefits until August 1, 2020.

Summary of Bill (First Substitute): Until June 30, 2023, in addition to returning to work as a substitute teacher, a retired teacher who retired under an early retirement option may be employed as an athletic coach, a mentors to teachers, an adviser to students in teacher preparation programs, or a counselor for up to 867 hours per school year without suspension of pension benefits.

EFFECT OF CHANGES MADE BY WAYS & MEANS COMMITTEE (First Substitute):

Aligns dates so that the expansion under the bill is effective until June 30, 2023.

Appropriation: None.

Fiscal Note: Available.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony on Original Bill: The committee recommended a different version of the bill than what was heard. PRO: This bill is a limited approach to help address the teacher shortage. It should be expanded from the current list to also allow bus drivers and other non-instructional positions.

CON: This bill should be expanded to include the other job types and retirement systems the say that SB 5430 does and should use the DRS approved wording.

OTHER: This bill should be amended to clarify that in order to come back as a counselor you must have worked as a counselor before retiring.

Persons Testifying: PRO: Senator Lisa Wellman, Prime Sponsor; Nancy Chamberlain, Washington State PTA; Julie Salvi, Washington Education Association. CON: Fred Yancey, Washington State School Retirees' Association and Washington Association of School Administrators and Association of Washington Principals. OTHER: Amy Brackenbury, Washington School Counselors Association.

Persons Signed In To Testify But Not Testifying: No one.