HOUSE BILL REPORT

SB 5380

As Amended by the House

BYSenators Gaspard, Saling, Warnke, von Reichbauer, Vognild, Johnson, Bottiger, Conner, Bauer, Stratton, Nelson, Newhouse and Rasmussen

Providing cost-of-living adjustment of retirement benefits.

House Committe on Ways & Means

Majority Report:  Do pass with amendments.  (31)

      Signed by Representatives Grimm, Chair; Bristow, Vice Chair; Allen, Appelwick, Basich, Belcher, Braddock, Brekke, Ebersole, Fuhrman, Grant, Hine, Holland, Locke, Madsen, McLean, McMullen, Nealey, Niemi, Peery, Rust, Sayan, Schoon, Silver, L. Smith, H. Sommers, Sprenkle, Taylor, Valle, B. Williams and Winsley.

House Staff:Randy Acker (786-7153)

AS PASSED HOUSE APRIL 14, 1987

BACKGROUND:

Retirees in Public Employees' Retirement System (PERS) I and Teachers' Retirement System (TRS) I do not receive automatic annual cost-of-living adjustments (COLAs).  The legislature has periodically granted COLAs to retirees in these and other systems.  Prior to 1986, the costs of these COLAs were usually not covered through an appropriation nor were they anticipated in the recommended contribution rates developed by the State Actuary.  As a result they added to the accrued unfunded pension liability.  In 1986 the legislature added a provision to law requiring that the omnibus biennial operating appropriations act include an appropriation for the full amount that will be paid out during the biennium under any future COLA.

All PERS I and TRS I retirees receive at least a minimum pension benefit.  PERS I retirees received increases in the minimum in 1979 and 1986.  TRS I retirees received increases in 1973, 1976, 1977, 1979, and 1986.  In 1986 the minimum benefit was increased in both PERS I and TRS I from $10 to $13 per month for each year of service.  The actuary's recommended state contribution rate for the 87-89 biennium includes increases of .11 percent and .15 percent for PERS and TRS, respectively to account for this benefit increase.

SUMMARY:

Effective July 1, 1987 the minimum pension benefit for the Public Employees' Retirement System Plan I (PERS I) and the Teachers' Retirement System Plan I (TRS I) retirees is increased from $13.00 to $13.50.  Effective July 1, 1988 the minimum benefit is annually adjusted up to 3 percent based on the change in the Consumer Price Index (Seattle) from one year to the next.  $6.9 million is appropriated from the General Fund.

Appropriation:    $6.9 million from the General Fund ($3.7 to Teachers' Retirement Fund and $3.2 million to Public Employees' Retirement Fund.

Fiscal Note:      Requested April 2, 1987.

Effective Date:The bill takes effect July 1, 1987.

House Committee ‑ Testified For:    Neldalyn Simmons and Mary Sparling, Washington State Retired Teachers Association; Dick Bever, Retired Public Employees; Karen Davis, Washington Education Association.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Those who retired prior to 1974 badly need an increase in their pension benefit.  Retired teachers have not received the COLAs that retirees in other systems have so they particularly need an increase.  Retired Public Employees support the bill but are extremely disappointed that there is no money in the budget for COLAs and that pensions are funded at only 76 percent of the actuary's recommendation.

House Committee - Testimony Against:      None Presented.