HB 1467
In CommitteeHouse
Actuarial pension funding
Concerning actuarial funding of pension systems.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill updates Washington State’s pension funding rules to reflect updated actuarial assumptions and unfunded liabilities, extending amortization periods for Plan 1 liabilities and benefit improvements from 10 to 15 years, and setting specific contribution rates for the 2025–2026 biennium across all major public retirement systems. It aims to stabilize long-term employer and member contribution rates while improving funding sustainability.
- Revises the state’s pension funding goals to include fully funding Plan 2 and 3 benefits, amortizing Plan 1 unfunded liabilities over a rolling 15-year period (instead of 10 years), and spreading benefit improvement costs over 15 years.
- Sets specific employer contribution rates for the 2025–2026 biennium: e.g., 7.91% for the public employees’ retirement system (with 2.05% dedicated to paying down Plan 1 liabilities), 9.05% for the teachers’ retirement system, and 16.35% for the Washington state patrol retirement system.
- Sets specific member contribution rates for Plan 2 and Plan 3 members: e.g., 5.86% for public employees (Plan 2), 7.95% for teachers (Plan 2), and 8.75% for state patrol members.
- Requires that employer contributions for amortizing unfunded liabilities and benefit improvements be collected *in addition to* base rates and are not subject to minimum/maximum rate caps.
- Phases in updated actuarial assumptions (e.g., long-term rate of return) gradually to avoid sudden rate spikes, beginning July 1, 2025.
- Extends the amortization period for benefit improvements and unfunded liabilities from ten years to fifteen years for Plan 1 systems (public employees and teachers), aiming to reduce contribution volatility.
Who is affected
- State and local government employers — State and local government employers (e.g., cities, counties, schools, universities) will pay higher or adjusted contribution rates beginning in 2025–2026 to fund pension obligations, with specific rates set for each retirement system.
- Public employees and retirees — Current and future public employees (e.g., teachers, police, firefighters, school staff, state patrol) will see changes in their required contributions and benefit structures, especially for Plan 1 members whose unfunded liabilities are being amortized over longer periods.
- State and local government budgets — State and local government budgets will be affected by increased required employer contributions, though the bill aims to stabilize those costs over time through predictable, long-term rates.
- Public retirement systems — Retirement systems (e.g., PEBB Plan 1 & 2, TRS, SERS, LEOFF, PSERS, WSPPRS) will follow updated funding rules and contribution rates to improve long-term financial sustainability.
Pro/Con Analysis
Potential Benefits (5)
Phasing in updated actuarial assumptions gradually (starting July 1, 2025) and extending amortization periods reduces contribution volatility, protecting public employees’ retirement benefits from sudden rate spikes—this enhances long-term benefit security for teachers, police, firefighters, and other frontline workers who rely on predictable pension funding.
Public SafetyPeopleRef: Sec. 1(3), (4); Sec. 2(6)(b), (c), (d); Sec. 2(7)(b), (c), (d); Sec. 2(8)(b), (c), (d); Sec. 4: Extends amortization to 15 years and sets fixed rates for 2025–26By establishing fixed, predictable member contribution rates for the 2025–26 biennium, the bill helps public employees plan their household budgets and avoid unexpected payroll deductions—this stability benefits working families and retirees who depend on predictable income streams.
Business & EmploymentPeopleRef: Sec. 4(7), (8), (9), (10), (12): Sets member contribution rates (e.g., 5.86% SERS Plan 2, 7.95% TRS Plan 2, 8.75% WSPPRS)The bill’s explicit goal of fully funding Plan 2 and 3 benefits over members’ working lives—combined with longer amortization periods—strengthens the long-term viability of retirement systems, reducing the risk of future benefit cuts or tax hikes to cover shortfalls, which benefits all public employees and the communities they serve.
Public SafetyPeopleRef: Sec. 1(1), (2), (6): Goals to fully fund Plans 2/3 and extend amortization periods to improve sustainabilityMandating timely notification of contribution rates and setting fixed rates for the 2025–26 biennium improves budget predictability for state and local governments, allowing them to better plan personnel and service delivery—this reduces the risk of last-minute fiscal crises or emergency appropriations.
Local GovernmentLean peopleRef: Sec. 2(10): Council must notify OFM and DRS of adopted rates; Sec. 4: Sets specific biennial rates, making future budgeting more transparentThe bill ensures that costs of past benefit improvements are funded through dedicated employer contributions rather than general fund subsidies, reinforcing the principle that pension benefits should be paid for by the taxpayers who benefit from public service—this improves intergenerational equity and fiscal accountability.
Public SafetyLean peopleRef: Sec. 2(6)(d), (7)(d), (8)(d): Requires supplemental rates for 2018–2025 benefit improvements to be collected starting September 1, 2025
Potential Concerns (5)
Extending amortization periods for Plan 1 unfunded liabilities from 10 to 15 years reduces near-term contribution volatility but locks in higher long-term employer contributions—state and local governments (e.g., school districts, cities) will face sustained budget pressure over the next decade as they absorb fixed amortization payments (e.g., 2.05% of payroll for SERS employers) regardless of economic conditions or revenue fluctuations.
Local GovernmentLean industryRef: Sec. 1(3) & Sec. 2(6)(b), (c), (d); Sec. 2(7)(b), (c), (d); Sec. 2(8)(b), (c), (d); Sec. 4(1), (3), (4)The bill creates stark disparities in contribution rates across retirement systems—e.g., WSPPRS employers pay 16.35% while LEOFF-1 employers pay 0%—which distorts labor market incentives and may discourage hiring in high-cost systems (e.g., state patrol) while artificially lowering the apparent cost of public employment in other systems, potentially inflating demand for those positions.
Business & EmploymentIndustryRef: Sec. 4(5), (11): Sets employer and member contribution rates at zero percent for LEOFF-1, while Sec. 4(6), (12) sets high rates for WSPPRS (16.35% employer, 8.75% member); Sec. 4(2), (5), (7), (9), (10) show wide variation across systemsThe bill retroactively locks in amortization of past benefit improvements (e.g., 2018–2025) over a fixed 15-year schedule, removing future legislative flexibility to adjust rates in response to economic downturns—this reduces local government budget autonomy and increases risk of service cuts or tax increases to meet pension obligations.
Local GovernmentIndustryRef: Sec. 2(6)(d), (7)(d), (8)(d): Requires employers to pay additional supplemental rates for benefit improvements effective 2018–2025, starting September 1, 2025; Sec. 4(1), (3), (4): Includes fixed amortization percentages (2.05%, 1.1%) that are not adjustable based on future fiscal conditionsFixed contribution rates—especially high ones like 16.35% for WSPPRS—may reduce public employers’ ability to compete for talent in tight labor markets, potentially leading to staffing shortages in critical services (e.g., public safety), and may discourage local governments from expanding workforce despite rising demand for services.
Business & EmploymentLean industryRef: Sec. 4(1), (3), (4), (6): Sets fixed biennial rates (e.g., 7.91% SERS, 9.05% TRS, 16.35% WSPPRS) without indexing to wage growth or inflation; Sec. 2(5): Uses modified entry-age normal method for Plan 1, which can overstate liabilities during low-wage-growth periodsThe bill’s 2025–26 rate schedule (e.g., 0% for LEOFF-1 employers) directly contradicts the legislature’s own statutory goal of full amortization by June 30, 2024, signaling a lack of fiscal discipline and increasing the risk of underfunding for first responders, which could erode retirement security and public confidence in the system.
Public SafetyLean industryRef: Sec. 1(2): Goal to “fully amortize the total costs of the law enforcement officers' and firefighters' retirement system plan 1 not later than June 30, 2024”—but Sec. 4(5) sets employer rate at 0% for LEOFF-1 in 2025–26, contradicting the statutory deadline
Who Is Most Affected
State and local government employers (e.g., school districts, cities, counties) will face higher and less flexible budget obligations—especially those in SERS, TRS, and SERS-adjacent systems—reducing discretion over spending for education, infrastructure, and public safety.
Current and future public employees—especially teachers, police, and state patrol—gain benefit security from stable, predictable contributions and reduced rate volatility, but may see slower wage growth if employers reduce hiring to offset pension costs.
State and local government budgets will benefit from improved long-term predictability but face sustained pressure from fixed amortization payments, potentially leading to trade-offs with K–12 education, social services, or capital projects.
Retirement systems gain improved funding discipline and reduced actuarial risk, but the bill’s contradictions (e.g., 0% LEOFF-1 employer rate vs. statutory amortization deadline) may undermine long-term credibility and require future legislative corrections.