Week 1 – First Special Session
April 24-30, 2011

The Governor convened a special session of the legislature on April 26th. Special sessions last for 30 days but the House and Senate can adjourn before that time if their business is concluded. The purpose of this special session is to enact the 2011-2013 biennial budget.

WACOPS top priority through the regular session of the legislature was to protect the LEOFF 2 pension fund. This remains our top priority and there are still bills being seriously considered that will affect contribution rates and the funding in the LEOFF 2 pension Plan.

HB 2068 cuts contribution rates at the state, local, and member level. WACOPS strongly opposes this legislation and we need you to continue contacting your state Senators and Representatives. Follow this: Find your legislator link to find the email and phone number for your legislators. Please continue sending emails and calling even if you have already done so.

HB 2097 merges the LEOFF 1 and LEOFF 2 pension systems. This bill was originally proposed as an alternative to HB 2068. Your WACOPS lobbyists have reviewed the language of the bill, the Actuary’s Risk Analysis and the Fiscal Note on the bill. Steve Nelson, Executive Director of the LEOFF 2 Board, briefed the Executive Board on the details of the legislation yesterday. The general consensus of the board members, with the exception of Ken Crowder, is that HB 2097 is a viable alternative to HB 2068.

Law enforcement associations are split on this piece of legislation with FOP supporting and COMPAS opposing. We also have heard concerns from LEOFF 1 and LEOFF 2 members. Your concerns can be relieved by reviewing the facts of the legislation. WACOPS has not taken an official position but we will have to soon.

Because of the many rumors and misconceptions about both of these bills, we have prepared the attached fact sheets. Please feel free to share this information. And as always, you can direct questions and comments to us.

• Reduces the State portion of the LEOFF 2 contribution rate to 2.96% for the 2011-2013 biennium. This is a one-time $15 million reduction in funding.
• Merges the LEOFF 1 and LEOFF 2 retirement funds into a single LEOFF fund. The merger does not change the amount of assets or liabilities of either plans.
• The state is currently responsible for 100% of LEOFF Plan 1 liabilities. They would become the shared responsibility of LEOFF members , employers, and the State on a 50/30/20 basis.
  (Editor's Note:  This of course means that LEOFF 2 members could see their contributions raised to pay the pensions of retired LEOFF 1.  In fact the State Actuary is forcasting a significant chance that LEOFF 2 permiums could rise to exceed 10%.)
• Assets currently available only to fund liabilities in each specific plan would become available to fund liabilities in either plan.
  (Editor's Note: This means that LEOFF 1 assests could be used to fund enhancements in LEOFF 2 benefits. Both Steve Nelson the LEOFF 2 Board Director and Matt Smith the state Actuary agree on this.)
• Savings achieved by the merger over the next 25 years are projected to be:
  
  State: $28.3 million
  Local Government: $21.4 million
  LEOFF 2 members: $34.7 million
  (Editor's Note: These are costs associated with 2068 so they really would not be savings because the costs would not be incurred.  This is a very misleading claim and is jus plain wrong.)

HOW IT AFFECTS LEOFF 1 MEMBERS:

• Does not change current benefits
  (Editor's Note:  This is not clear.  There is a significant concern that this would reduce benefits and eliminate local disability boards.  There is nothing in the legislation that clarifies this.) 
• Retired and Active member contribution rate remains at 0.00%
  (Editor's Note:  Only until the board elects to impose contributions rates because under this law the board would have that ability.)
• Future benefit improvements remain subject to legislative approval.
  (Editor's Note: I have never quite understood what they are talking about with this point.  Evidently they think it is important but I can't see that it changes anything from what it has always been.) 
• Governance changes from the Select Committee on Pension Policy to the LEOFF Board.
  (Editor's Note: This is really a bad thing for LEOFF 1 members.  There is only one retired position on the board and the nomination of members to the board is vested solely in LEOFF 2 organizations.  There is little likelyhood of LEOFF 1 ever getting representation and if they did what kind of voice would that one person have against the other 10 on the board.  This is a bad thing for LEOFF 1.) 

HB 2068 

• Reduces the LEOFF Plan 2 contribution rates of the state, local governments, and LEOFF 2 members. The state will save $15 million dollars with this proposal in the 2011-2013 biennium. Because of the pension contribution funding formula, 50-30-20%, this will cost the fund $75 million now.
• The contribution rates in HB 2068 were not recommended by the State Actuary. The rates for LEOFF 2 are adopted by the LEOFF Board. After careful study of all actuarial reports, they rejected these lower rates because of the long term fiscal consequences of underfunding.
• The fiscal note on HB 2068 shows that the 25-year impact of achieving this $15 million savings is a cost to the stakeholders of $104.4 million. These losses will result in record high contribution rates for all parties.
  Cost of HB 2068 breakdown:
  State - $21.7 million
  Local Government: $30.5 million
  LEOFF 2 members: $52.2 million