Governor Proposes Gain-Sharing Changes

The Select Committee on Pension Policy (SCPP)—made up of legislators, employer representatives, and representatives of active and retired employees—studies pension issues and makes policy recommendations to the Legislature. At their meeting on December 12, the SCPP failed to recommend legislation to address the liability associated with future pension gain-sharing benefits, apparently waiting to see what course of action the Governor Gregoire would advance in her 2007 budget proposal.

The Governor’s proposed budget for the 2007-09 biennium, which was released on December 19, provides for one final gain-sharing distribution, which would take place in 2008. Instead of further gain-sharing payments, Plan 1 members would receive an additional $0.05 increase in their Uniform COLA Amount, and Plan 3 members would be eligible to use their defined contributions to purchase a two percent benefit formula. The gain-sharing revisions impact Plans 1 and 3 of the retirement systems for public employees, teachers, and school employees.

On December 1, the AWC Board of Directors identified repeal of PERS gain-sharing after one additional disbursement as one of AWC’s top ten legislative priorities for 2007. The Governor’s proposal appears to be in line with AWC’s position, and we appreciate her willingness to address the issue directly.

The specific details of the Governor’s proposal—including the cost savings and the impact on employer contribution rates—have not been released yet. We expect the Office of the State Actuary to prepare a fiscal note soon. And, of course, the merits of the proposal will be debated in the House and Senate fiscal committees during the 2007 legislative session. AWC will provide updates on the status of the gain-sharing benefit in its weekly Legislative Bulletins during the session.

 
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