WACOPS Legislative Report
Week 15
April 17-23

The regular session of the 2011 legislature will adjourn April 24th. Because a 2011-2013 biennial budget has not been passed, the Governor intends to call a special session beginning April 26th.

The intent of the special session is to pass the budget and the bills needed to implement that budget. HB 2068 and 2071 are on that list. These are the bills that cut your (LEOFF II) contribution rates and skip the first contractual payment to the Local Law Enforcement Officers’ and Firefighters’ Retirement Systems Benefits Improvement Account. We strongly oppose these bills and encourage you to continue contacting your state Senators and Representatives asking for their opposition. The thing we have heard over and over again is that everyone has to share in the pain of the budget cuts. Our argument is that law enforcement officers are already being affected by budget cuts at the local level. If you have specific facts about budget cuts your department has taken, please share these with the legislators. They are not aware of the layoffs, furloughs, benefits cuts, salary freezes, etc. and need to be informed.

A few facts to remember about these bills:

HB 2068:

• This $15 million cut by the State has a $75 million impact to the system
• According to the fiscal note... after the $75 million in skipped payments are repaid, LEOFF 2 members will have to pay an additional $52 million over the next 25 years. Employers and the State will also have to make combined payments of over $52 million.
• Failure to fully fund LEOFF Plan 2 not only violates the voter approved initiative 790, it will result in unprecedented high pension contributions for members, employers and the state.

HB 2071:

• This bill skips the first contractual payment into the Local Law Enforcement Officers’ and Firefighters’ Retirement Systems Benefits Improvement Account.

HB 2097:

Another bill that is getting a lot of attention and that will be considered in the special session is HB 2097. This bill merges the LEOFF 1 and LEOFF 2 pension systems. The legislation was sponsored by House Majority Leader Pat Sullivan and 36 other members of the House as an alternate proposal to cutting your contribution rates. WACOPS has not taken a position on this bill but we strongly support and appreciate the efforts of the sponsoring legislators who are trying to find alternatives to HB 2068. We received our first briefing on the fiscal note and risk analysis today and will continue to study the bill. The full text of the bill and the actuary’s fiscal note can be found at this link: HB 2097 There are misconceptions about the bill and we will keep you as informed as we can about it’s progress.

Facts about HB 2097:

• Merges LEOFF 2 assets and liabilities with LEOFF 1 assets and liabilities. Both LEOFF Plans have very similar liabilities and fund balances.
  
  (LEOFF1.Net Editor's Note: This statement is partially incorrect.  That is because LEOFF 1 is a closed system and LEOFF 2 is an open system.  Hence LEOFF 1 assets and liabilities are set while LEOFF 2 is an open system and the liabilities and assets are therefore dynamic.)
  
  
• The pay-go risk in LEOFF 1 is reduced from 39 to 0.1 percent. 
  
  (LEOFF1.Net Editor's Note: LEOFF 2 assumes this risk instead of the state.  That means working LEOFF 2 members would have their contribution rates raised to pay for LEOFF 1 retirement benefits.)
  
  
• Maintains current LEOFF 1 benefits for LEOFF 1 members and current LEOFF 2 benefits for LEOFF 2 members. 
  
  (This claim is not clear in the language of the bill.  It is one of the areas of contention between supports and dissenters.)
  
  
• LEOFF 1 members would become eligible for participation on, and gain governance of their plan by the renamed “LEOFF” Board.
  
  (This claim is correct in theory but due to the way board members are selected and the political climate between the two systems LEOFF 1 would have no effective representation on the board.)
  
  
• The LEOFF Board, not the Select Committee on Pension Policy, would adopt actuarial assumptions and be responsible for studying LEOFF 1 benefit issues and recommending legislation.
  
  (This is correct, but LEOFF 1 groups have no argument with the Select Committee and generally believe they have done an adequate job.)
  
  
• Any future benefit enhancements for LEOFF 1 or 2 would require Legislative approval, which is the same as today.