With the crash of the market and the default of some major financial institutions, it is appropriate to look at the impact of these incidents on the pension system.In short, the pension remains healthy and has a substantial surplus.The latest CTF balance figures are for September.They show the LEOFF 1 system holding approximately 5.4 billion dollars in assets.That is a major downturn from the first of the year but it still leaves the system with $1.2 billion of surplus – about the same amount it was at eight years ago when all the fuss about LEOFF 1 first started.

Beyond that, the system uses an accounting practice called smoothing.That smoothing is on an eight-year cycle.That means there remain significant unrecognized gains that have not been incorporated into the valuation.

Today I met with Sandy Matheson, the Director of the Department of Retirement Services.She said, “The defined benefit plans will not be impacted.”In fact, the state is obligated to pay our pensions even if the trust fund should disappear.

The Medical Benefits committee continues to meet.Thus far, we have identified the number of active and retired LEOFF 1 people to the point of how many each city, county and fire district manages.Additionally we have good numbers of those also covered by prior acts like RCW 21.20 and RCW 41.18. Matt Smith the State Actuary has provided good information about liabilities.The cities and counties have provided extensive information on their taxing and other revenue sources.All of this data is being compiled into a fact book that will be available in about a month.

We have learned that some cities have done a poor job in planning to meet their LEOFF 1 medical costs but that almost all now have some sort of insurance plan to protect them from catastrophic loss.We also can confirm that most major cities, including Seattle, are very sound and have done a more than adequate job of meeting and planning for these obligations.For the smaller jurisdictions, the uncertainty of long-term care costs creates the most concern.

Once the committee completes the fact-finding portion of the study we will more towards seeking a solution to the concerns of those jurisdictions that are underfunded.At this point, it appears there is a general understanding that the surplus is not an available option.

In my judgment, the greatest threat to our pension is the implementation of an IRS 401(h) account into the pension system.If that occurs the state could then access the surplus for medical benefits.My concern is that this is the type of legislation that could be slipped into some bill or budget document outside of the normal legislative process.Hence, we must remain alert to what happens in Olympia this session.

The second area of concern is the continued quest by some parties to combine pension boards or to create a statewide pension board.The fact-finding portion of this study suggests this may not be legally possible.However, we can expect further pressure in this area as the number of LEOFF 1 members dwindle.Already some counties have only two LEOFF 1 members active or retired.Those counties would like to abandon their pension boards or merge with others.We can anticipate having to deal with this issue in the coming years.I remain convinced that our continuing good medical care is dependent on having our own Seattle Police Pension Board.

Joe Fischnaller reported today that the problems with the City of Moses Lake and the Port of Moses Lake have been resolved.The Port is now paying the medical bills as approved by the local disability board and the City is accepting that responsibility as well.Credit should be given to the excellent skill of Joe in dealing with these issues and the Coalition for providing $10,000 to support a lawsuit against Moses Lake.Similar problems are being resolved in a few other problem jurisdictions.We need to credit the successful efforts in the Snohomish County case with providing the strong case law that has caused these reluctant jurisdictions to see the light.

We continue to experience problems with the Coalition leadership.They have taken recent actions to deny or restrict RSPOA access to Coalition minutes and other business records even though we are entitled to those records by the bylaws and state law.A proposal is currently pending to amend the bylaws to restrict that access even more.At one point, Mark Curtis stated that I must travel to Chehalis to view copies of the minutes and that I could not make copies.It appears the attorney that represents the Coalition as their business agent knows better and has agreed to send me those copies.

Another proposed bylaws change would add a sixth at-large board member.We are concerned about this for two reasons.First it dilutes our vote within the Coalition.Second, these at-large board members do not represent anyone but themselves.They are not responsible to the direction of any other board or organization membership.This works to the detriment of all members of the RSPOA.

We are continuing to work within the Coalition to address areas of concern.It is our hope that the president, Bob Monize, and vice president, Mark Curtis, will eventually recognize that the RSPOA is not only a charter member but that our members are the major source of donations that have provided the Coalition funding.