Retirement & Health Benefits – March 28, 2025

As the session moves toward Sine Die, now is the time for both houses to coordinate and negotiate their differing budgets and bills that have made it past both houses.

 Brief Summary of Selected Bills and/or Issues Still in Play

Note, both House and Senate budgets will be released 3/24 so the status of much of what is covered below may be clarified by inclusion or exclusion within any budget.

Re: Pensions

TRS/PERS Plans 1 are the only two plans of fifteen offered by the state that do not receive cost of living increases (COLA) each year. So, each year, retirees ‘beg’ for consideration for a COLA. This year, there is an opportunity to end this
continual ask. It starts with the fact that another closed plan, LEOFF 1, has a surplus of close to $3 Billion. How best to use those excess dollars? Apply to COLA and unfunded liability (Senate) or put it into General Fund for unspecified uses? (House)

There is a real difference between the House and the Senate leadership in how to deal with this surplus in LEOFF 1 and the need for a COLA in TRS/PERS Plans 1. The struggle appears to be between SSB 5085, HB 2034, ESSB 5357 and HB 1467. (See below) This issue will be part of budget negotiations. The good news is that all of them save state and local/school district
dollars by reducing rates and decreasing or eliminating the surcharge related to the unfunded liability. The bad news is that although there are short-term savings, there are projected long term costs in increased rates in the future.

As an aside, LEOFF 1 has 6,154 members, with average pension of $64,956 versus PERS 1 with 39,306 members @ $29,052 average and TRS 1 with 28,556 members @ $29,664 average pension.

1. SSB 5085: Merges the assets, liabilities, and membership of Law Enforcement Officers’ and Firefighters’ Retirement System Plan 1, Public Employees’ Retirement System Plan 1 (PERS Plan 1), and the Teachers’ Retirement System Plan 1 (TRS Plan 1). It creates an annual cost-of-living adjustment to the retirement benefits of retirees in the PERS Plan 1 and TRS Plan 1, of up to 3 percent. Eliminates the remaining unfunded actuarial accrued liability and benefit improvement rates. The bill saves the state over $600 million in GF dollars and city/local governments over $400 million. There is strong opposition from firefighters who argue that this proposal is illegal and besides, the money belongs to them. The bill must seek approval from the IRS which implies uncertainty as to legality. Cities and counties would like to see the excess used to help them cover the insurance costs for these retirees. The bill passed the Senate 28-21 and has been moved to House Appropriations which held a public hearing 3/13/25.
2. ESSB 5357: Reduces employer normal cost contribution rates for the Public Employees’ Retirement System (PERS), the Teachers’ Retirement System (TRS), the School Employees’ Retirement System (SERS), and the Washington State Patrol Retirement System for fiscal year/school year 2026. Reduces the Plan 2 member contribution rates for PERS, TRS, and SERS for fiscal year/school year 2026. It passed Senate 48-0-1 and will have a public hearing 3/20 before House Appropriations.
3. HB 5478: Concerning benefits authorized to be offered by the public employees’ benefits board. This bill would allow HCA to the following employee-paid, voluntary benefit plans: 39 (a) Emergency transportation; (b) Identity protection © Legal aid; (d) Long-term care insurance; (e) Noncommercial personal automobile insurance; (f) Personal homeowner’s or renter’s insurance; (g) Pet insurance; (h) Specified disease or illness-triggered fixed payment insurance, hospital confinement fixed payment insurance, (i) Travel insurance. It passed the Senate 48-0-1 and has been referred to House Appropriations for public hearing 3/20 and Executive Session on 3/24.
4. SSB 5738: Permits individuals retired from the public employees’ retirement system, the teachers’ retirement system, the school employees’ retirement system, and the public safety employees’ retirement system additional opportunities to work for up to 1,040 hours per year while in receipt of pension benefits in non-administrative positions. In addition, someone who enters service in a second-class school district as either a district superintendent or an in-school administrator shall continue to receive pension payments while engaged in such service until the retiree has rendered service for more than 1,040 hours in a school year. This bill will sunset 1/1/2030. This bill passed the Senate 41-7. It had a public hearing on 3/19 in Appropriations. Note: HB 1936 (see Below) which sunsets in 2027. Which bill will cross the finish line?
5. SB 5793: Concerning employer contributions and incentives for public and school employee health benefit plans. This bill was introduced 3/21 and was part of the Senate slew of bills dealing with revenues and expenditures related to the upcoming release of the Senate budget. As stated in the bill, “One significant cost driver is the employer contribution rate for employee health care benefits, which currently exceeds the average benefits package offered in comparable sectors… The legislature intends to eliminate the smart health program and set the employer contribution rates for employee health care benefits for the 21 2027-2029 fiscal biennium… For the 2027-2029 fiscal biennium, the dollar amount expended on behalf of each employee for health care benefits will be set by the legislature in the omnibus operating appropriations act. Bargaining agreements reached for the 2027-2029 fiscal biennium shall not include employer health care contributions, wellness, or flexible spending account contributions, or any other provisions related to employee health care expenses.” Currently, according to the collective bargaining agreement the state pays 85% of the insurance premium; the employee 15%. It is rumored that the state would change the percentage to 80/20. WEA is opposed to this cancellation of a portion of the CB agreement. It has been sent to Ways and Means awaiting the hearing date.
6. HB 1474: Providing a benefit increase to certain retirees of the public employees’ retirement system plan 1 and the teachers’ retirement system plan. This bill provides a one-time 3 percent increase to the retirement benefits of retirees in the Public Employees’ Retirement System and the Teachers’ Retirement System Plan 1, up to $110 per month. This bill is in Rules. It is a bill that WSSRA and its members view as a fallback option should SSB 5085 (above) not be successful in the House. Likely NTIB.
7. HB 1936: Extending the expiration of certain school employee postretirement employment restrictions to 2027. Until January 1, 2027, retirees from the Teachers’ Retirement System are permitted to collect retirement benefits for the first 1,040 hours per calendar year when either: (1) are employed in a non-administrative position; or (2) having retired before January 1, 2022, are employed in a second-class school district as a district superintendent or an in-school administrator position. The bill passed the House 97-0-1 and has been assigned to Senate Ways and Means.
8. HB 2034: Concerning termination and restatement of plan 1 of the law enforcement officers’ and firefighters’ retirement system.