Skip to main content
Evergreen Ledger

ESSB 5357

Signed

Senate

Actuarial pension funding

Concerning actuarial funding of pension systems.

How does a bill become law?
  1. Introduced: The bill is filed and assigned a number.
  2. Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
  3. Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
  4. Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
  5. Governor: The Governor reviews the bill and decides whether to sign or veto it.
  6. Signed: The bill has been signed into law.
Introduced: February 26, 2025
Last Action: May 20, 2025
Status: C 381 L 25
View Bill Text (HTML) (opens in new tab)View Bill Text (PDF) (opens in new tab)

AI Analysis

This analysis was generated by AI and may contain errors. It is not legal advice. Always refer to the official bill text for authoritative information.
People & CommunitiesPeople-leaningCorporate & Wealthy Interests

This bill updates pension funding rules and sets specific contribution rates for the 2025–2026 biennium to improve long-term stability of Washington’s public employee retirement systems. It extends amortization periods for unfunded liabilities and benefit improvements from 10 to 15 years, adjusts contribution rates for all major systems, and clarifies how costs are allocated among employers and members.

  • Revises the state’s pension funding goals to emphasize full funding of Plan 2 and 3 benefits, amortizing unfunded liabilities over a rolling 15-year (not 10-year) period, and spreading the cost of benefit improvements over 15 years.
  • Sets specific employer and member contribution rates for the 2025–2026 biennium for all major retirement systems (e.g., PERS, TRS, LEFF, PSERS, SEERS, WSPPRS), including 2.05% of PERS employer contributions dedicated solely to amortizing PERS Plan 1 unfunded liabilities.
  • Requires that employer contribution rates include separate components for normal cost, amortization of unfunded liabilities, and amortization of benefit improvements—each calculated using projected salary and membership growth.
  • Changes the amortization period for benefit improvements and automatic postretirement adjustments from 10 years to 15 years, effective for improvements adopted after June 30, 2009.
  • Clarifies that certain benefit increases (e.g., from Laws of 1998, 2006, 2007) are exempt from supplemental contribution rates, and sets a September 1, 2025, start date for collecting remaining costs of 2018–2025 benefit improvements.

Who is affected

  • State and local government employers — State and local government employers (e.g., cities, counties, schools, universities) will pay updated contribution rates starting in 2025–2026 to help fund public employee pensions, with specific rates for each retirement system.
  • Active public employees and members of retirement systems — Active public employees, teachers, school employees, public safety employees, and law enforcement officers will contribute a portion of their pay toward pensions, with updated rates taking effect in 2025–2026.
  • Retirees and survivors — Retirees and survivors of the affected retirement systems may see changes in how benefit improvements and postretirement adjustments are funded, though current retirees are protected in some cases from new supplemental rates.
  • State of Washington (fiscal operations) — The state budget will be affected by updated employer contribution rates, especially for systems like the Washington state patrol and law enforcement/firefighters (Plan 1), and by the requirement to amortize unfunded liabilities over fixed periods.
Effective: 2025-07-01Fiscal impact: The bill updates contribution rates for multiple retirement systems for the 2025–2026 biennium, with employer rates ranging from 0% (for LEFF Plan 1 and LEFF Plan 1 members) to 16.35% (for Washington State Patrol), and member rates from 0% to 7.95%. It also establishes fixed 15-year amortization periods for unfunded liabilities and benefit improvements, which may increase near-term state and employer costs but aim to improve long-term funding stability.
Model: Intel/Qwen3-Coder-Next-int4-AutoRoundGenerated: Mar 19, 2026 at 8:52 PM

Pro/Con Analysis

Stronger case for benefits

Potential Benefits (5)

  • The bill strengthens long-term pension funding stability by extending amortization periods for unfunded liabilities from 10 to 15 years, reducing contribution rate volatility and improving the actuarial soundness of retirement systems—benefiting current and future retirees and active public employees who rely on predictable pension benefits.

    Public SafetyPeopleRef: Sec. 1(3), Sec. 2(6)(b), Sec. 2(7)(b), Sec. 2(8)(b), Sec. 4(1), Sec. 4(4), Sec. 4(6)

  • By requiring full amortization of unfunded liabilities over 15 years and separating normal cost, liability amortization, and benefit improvement components, the bill enhances long-term sustainability of pensions—protecting retirees and active workers from sudden benefit cuts or contribution spikes due to underfunding.

    retirement securityPeopleRef: Sec. 1(1), Sec. 1(5), Sec. 2(6)(c), Sec. 2(7)(c), Sec. 2(8)(c), Sec. 2(9), Sec. 4(1), Sec. 4(4), Sec. 4(6), Sec. 4(7), Sec. 4(8), Sec. 4(9), Sec. 4(10), Sec. 4(11), Sec. 4(12)

  • Improved pension funding stability reduces the risk of future benefit reductions for public employees, many of whom rely on pensions as a primary retirement income source; this supports financial security in retirement and reduces future reliance on public health programs (e.g., Medicaid) for low-income retirees.

    HealthcarePeopleRef: Sec. 2(6)(d), Sec. 2(7)(d), Sec. 2(8)(d), Sec. 4(1), Sec. 4(4), Sec. 4(5), Sec. 4(6), Sec. 4(7), Sec. 4(8), Sec. 4(9), Sec. 4(10), Sec. 4(11), Sec. 4(12)

  • Predictable, phased-in contribution rates may improve employer budgeting and reduce turnover among public employees—supporting continuity in education, public safety, and human services, which benefits local economies and service-dependent communities.

    Business & EmploymentLean peopleRef: Sec. 1(1), Sec. 1(5), Sec. 2(6)(c), Sec. 2(7)(c), Sec. 2(8)(c), Sec. 2(9), Sec. 4(1), Sec. 4(4), Sec. 4(6), Sec. 4(7), Sec. 4(8), Sec. 4(9), Sec. 4(10), Sec. 4(11), Sec. 4(12)

  • Stabilizing pension funding may help retain experienced educators and school staff, supporting consistent instruction and student outcomes—especially valuable in high-need districts where teacher turnover is costly and disruptive.

    EducationLean peopleRef: Sec. 1(1), Sec. 1(5), Sec. 2(6)(c), Sec. 2(7)(c), Sec. 2(8)(c), Sec. 2(9), Sec. 4(1), Sec. 4(4), Sec. 4(6), Sec. 4(7), Sec. 4(8), Sec. 4(9), Sec. 4(10), Sec. 4(11), Sec. 4(12)
Potential Concerns (5)

  • The bill increases employer contribution rates for many local governments (e.g., school districts, counties, cities) starting in 2025–2026, with rates ranging from 7.91% (PERS) to 9.29% (SEERS), diverting funds from local education, public safety, and infrastructure budgets—though the state absorbs some costs (e.g., LEFF Plan 1 at 0%), most local employers face higher outlays without proportional state reimbursement.

    Local GovernmentPeopleRef: Sec. 2(6)(d), Sec. 2(7)(d), Sec. 2(8)(d), Sec. 4(1), Sec. 4(4), Sec. 4(5), Sec. 4(6), Sec. 4(7), Sec. 4(8), Sec. 4(9), Sec. 4(10), Sec. 4(11), Sec. 4(12)

  • Public employers—many of which are the largest employers in their regions—will face higher payroll costs, potentially leading to hiring freezes, reduced hours, or increased local taxes to cover pension obligations, especially in constrained municipal budgets.

    Business & EmploymentPeopleRef: Sec. 2(6)(d), Sec. 2(7)(d), Sec. 2(8)(d), Sec. 4(1), Sec. 4(4), Sec. 4(5), Sec. 4(6), Sec. 4(7), Sec. 4(8), Sec. 4(9), Sec. 4(10), Sec. 4(11), Sec. 4(12)

  • While public safety employees (e.g., police, firefighters) are protected from supplemental rates for past benefit improvements, the bill does not reduce their own contribution rates (e.g., 8.75% for WSP), and rising costs may strain agency budgets, potentially limiting recruitment or training capacity in cash-constrained jurisdictions.

    Public SafetyLean peopleRef: Sec. 2(6)(d), Sec. 2(7)(d), Sec. 2(8)(d), Sec. 4(1), Sec. 4(4), Sec. 4(5), Sec. 4(6), Sec. 4(7), Sec. 4(8), Sec. 4(9), Sec. 4(10), Sec. 4(11), Sec. 4(12)

  • Increased local government pension costs may pressure property tax levies—especially in small or rural jurisdictions—reducing funds available for code enforcement, affordable housing programs, or housing assistance, indirectly affecting housing stability for low- and middle-income residents.

    HousingLean peopleRef: Sec. 2(6)(d), Sec. 2(7)(d), Sec. 2(8)(d), Sec. 4(1), Sec. 4(4), Sec. 4(5), Sec. 4(6), Sec. 4(7), Sec. 4(8), Sec. 4(9), Sec. 4(10), Sec. 4(11), Sec. 4(12)

  • School districts (as part of SEERS and PERS) face higher employer contributions (e.g., 9.29% for SEERS), which may reduce funds available for teacher salaries, classroom resources, or student support services—particularly impactful in districts already under financial strain.

    EducationLean peopleRef: Sec. 2(6)(d), Sec. 2(7)(d), Sec. 2(8)(d), Sec. 4(1), Sec. 4(4), Sec. 4(5), Sec. 4(6), Sec. 4(7), Sec. 4(8), Sec. 4(9), Sec. 4(10), Sec. 4(11), Sec. 4(12)

Who Is Most Affected

State and local government employersNegative Impact

Local governments (e.g., school districts, counties, cities) will face higher employer pension contributions (e.g., 7.91%–9.29%), straining already tight budgets and potentially reducing funds for education, public safety, and infrastructure—though the state absorbs LEFF Plan 1 costs at 0%.

Active public employees and members of retirement systemsMixed Impact

Active public employees (teachers, police, firefighters, etc.) will see slightly higher member contribution rates (e.g., 5.86%–8.75%), reducing take-home pay—but gain long-term security from a more stable pension system, with no reduction in accrued benefits.

Retirees and survivorsPositive Impact

Retirees and survivors benefit from improved funding stability and protection from supplemental rates for past benefit improvements; however, if future underfunding occurs, they remain at risk of benefit reductions—though current retirees are shielded from new rates.

State of Washington (fiscal operations)Mixed Impact

The state budget benefits from clearer, long-term funding obligations and reduced risk of emergency bailouts, but also faces higher costs for systems like WSP (16.35% employer rate), and may need to increase general fund support if local revenues decline.