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SB5085 • 2026
Concerning three of Washington state's closed retirement plans.
This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.
Using official source text because the generated explanation was unavailable or could not be confirmed against the official bill text.
Closed retirement plans
1st substitute bill substituted.
Closed retirement plans
AN ACT Relating to three of Washington state's closed retirement 1 plans; amending RCW 41.50.030, 41.50.075, 41.50.110, 41.32.4992, 2 41.40.1987, 41.45.010, 41.45.020, 41.45.035, 41.45.050, 41.45.060, 3 41.45.070, 41.45.150, 41.45.200, 41.45.203, 41.45.207, 6.15.020, 4 41.04.440, 41.04.445, 41.04.450, 41.04.803, 41.05.320, 41.24.400, 5 41.50.080, 41.50.235, 41.50.255, 41.50.500, 41.54.010, and 41.54.040; 6 reenacting and amending RCW 43.84.092 and 43.84.092; adding a new 7 section to chapter 41.50 RCW; adding new sections to chapter 41.32 8 RCW; adding new sections to chapter 41.40 RCW; adding a new section 9 to chapter 41.26 RCW; adding a new section to chapter 41.35 RCW; 10 adding a new section to chapter 41.37 RCW; adding a new chapter to 11 Title 41 RCW; creating new sections; providing effective dates; 12 providing a contingent effective date; providing an expiration date; 13 providing a contingent expiration date; and declaring an emergency.14 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:15 NEW SECTION. Sec. 101. (1) The legislature finds that the 16 funding for three of its closed retirement plans has become lopsided.17 (2) The legislature further finds that: 18 (a) In 1969, the state merged local police and fire retirement 19 plans because too many of those plans were insolvent, or soon to be 20 insolvent. An estimate conducted by the legislature that year 21 S-0314.1 SENATE BILL 5085 State of Washington 69th Legislature 2025 Regular Session By Senator Robinson Prefiled 12/19/24. Read first time 01/13/25. Referred to Committee on Ways & Means. p. 1 SB 5085 concluded the combined systems were underfunded by around 1 $400,000,000. 2 (b) Despite being merged into the law enforcement officers' and 3 firefighters' retirement system (later designated as plan 1 of that 4 system), within seven years the legislature determined that the 5 funding structure for the merged plan was also unsustainable, and 6 closed the plan to new members on September 30, 1977.7 (c) Though the members and employers each paid a fixed six 8 percent of each employee's pay, the total amount was insufficient to 9 pay the cost of benefits for plan members, and the state paid the 10 remainder of the cost. At its highest level, the state paid more than 11 eight times the nonstate employer and member contributions combined 12 in one year alone. Over time, this contributed to the plan having 13 more assets than is required to fund the members' benefits, and the 14 legislature allowed the members and employers to stop making 15 contributions to the plan beginning June 30, 2000.16 (d) As of June 30, 2023, the law enforcement officers' and 17 firefighters' retirement system plan 1 is 149 percent funded despite 18 including benefits like a fully indexed cost-of-living adjustment. In 19 fact, the plan is so well funded that in 2022, the legislature 20 granted all benefit recipients a one-time lump sum payment equal to 21 $100 per service credit month, with a minimum of $20,000 for any 22 members who retired with a line of duty disability.23 (e) The history of the teachers' retirement system plan 1 and the 24 public employees' retirement system plan 1 may look similar at first 25 because in most years members and employers each paid a fixed six 26 percent of each employee's pay (with a reduction to the employer 27 rates circa 2002-2007), and this amount was insufficient to pay the 28 liabilities of the plan. However, unlike the law enforcement 29 officers' and firefighters' retirement system plan 1, these plans 30 have had unfunded liabilities for decades. Beginning in 1989, the 31 legislature created an additional contribution rate (colloquially 32 called the "UAAL Rate") directly aimed at paying off this deficit, 33 and bringing both plans up to full funding. This additional 34 contribution rate has been paid exclusively by the employers and the 35 state. 36 (f) As of June 30, 2023, the teachers' retirement system plan 1 37 is 86 percent funded, and the public employees' retirement system 38 plan 1 is 80 percent funded. Neither plan provides an ongoing cost-39 of-living adjustment unless an individual's benefits are small enough 40 p. 2 SB 5085 to qualify for minimum benefit increases. The legislature further 1 finds that, so long as member benefits are protected, it is an 2 appropriate use of law enforcement officers' and firefighters' 3 retirement system plan 1 excess funds (particularly state funds and 4 investment returns resulting from those funds) to improve the funded 5 status of the teachers' retirement system plan 1 and the public 6 employees' retirement system plan 1 via a plan merger. To quote the 7 state supreme court, "[A] defined benefit plan entitles the members 8 to a predetermined distribution upon retirement and to an actuarially 9 sound plan to ensure that the plan is adequately funded to meet those 10 distribution requirements. It does not entitle them to any use of the 11 contributions other than to ensure the above entitlements are met." 12 Retired Pub. Emples. Council of Wash. v. Charles , 148 Wn.2d 602, 616; 13 quoting Koster v. City of Davenport, 183 F.3d 762, 767.14 (3) The legislature also finds that a merger would be beneficial 15 to the law enforcement officers' and firefighters' retirement system 16 plan 1 since that plan has no practical funding source. More 17 specifically, current law calls for no contributions to the plan so 18 long as the plan is fully funded. However, if the plan drops below 19 full funding, current law calls for contributions based on a fixed 20 six percent of active employee pay, and there are only seven active 21 employees remaining in the system as of June 30, 2023. This means 22 that in the case of sufficiently unfavorable economic conditions, an 23 unfunded liability could appear in that plan with no method of paying 24 it off except to rely on pay-as-you-go payments from the general 25 fund. 26 (4) Thus, the legislature finds that a merger of these three 27 plans would: 28 (a) Immediately improve the funded status of both the public 29 employees' retirement system plan 1 and the teachers' retirement 30 system plan 1; 31 (b) Provide an ongoing funding source for the law enforcement 32 officers' and firefighters' retirement system plan 1 in case an 33 unfunded actuarial accrued liability emerges in the future, while 34 simultaneously exempting employers of law enforcement officers' and 35 firefighters' retirement system plan 1 members from any future 36 contributions to the plan; and 37 (c) Increase parity in cost-of-living adjustment policy across 38 the closed plans 1 by providing the members of the public employees' 39 p. 3 SB 5085 retirement system plan 1 and the teachers' retirement system plan 1 1 with new and ongoing cost-of-living adjustments. 2 NEW SECTION. Sec. 102. The legislature intends to immediately 3 improve the funded status of the teachers' retirement system plan 1 4 and the public employees' retirement system plan 1 while reiterating 5 its commitment to the on-going funding required to secure benefits 6 promised to members of the law enforcement officers' and 7 firefighters' retirement system plan 1. The legislature intends to 8 accomplish this goal by merging the assets, liabilities, and 9 membership of the three plans. The resulting merged plan will have 10 three tiers of benefits representing each of the plans being merged.11 The legislature further intends that this merger, as well as any 12 administrative changes necessary to implement the merger, be 13 accomplished in a way that does not negatively impact benefits 14 provided. 15 To fully ensure the protection of benefits, the legislature 16 intends for the following to be accomplished by this act:17 (1) Members of the law enforcement officers' and firefighters' 18 retirement system plan 1 tier of the merged plan will receive the 19 same benefits from the merged plan as they would have received from 20 their current plan. 21 (2) Members of the teachers' retirement system plan 1 tier of the 22 merged plan will receive the same benefits from the merged plan as 23 they would have received from their current plan. The cost-of-living 24 adjustments in sections 401 and 403 of this act are intended as an 25 additional benefit improvement granted on top of existing benefits, 26 and are not intended as a trade-off for any other impact to benefits.27 (3) Members of the public employees' retirement system plan 1 28 tier of the merged plan will receive the same benefits from the 29 merged plan as they would have received from their current plan. The 30 cost-of-living adjustments in sections 402 and 404 of this act are 31 intended as an additional benefit improvement granted on top of 32 existing benefits, and are not intended as a trade-off for any other 33 impact to benefits. 34 (4) The merger of these three plans will be administered in a way 35 that is consistent with plan qualification requirements in the 36 federal internal revenue code. 37 p. 4 SB 5085 NEW SECTION. Sec. 201. (1) The assets, liabilities, and 1 membership of the law enforcement officers' and firefighters' 2 retirement system plan 1, the teachers' retirement system plan 1, and 3 the public employees' retirement system plan 1, are hereby merged 4 into a new plan to be called the legacy retirement system.5 (2)(a) All liabilities of the teachers' retirement system plan 1 6 as defined in chapter 41.32 RCW and as funded pursuant to chapter 7 41.45 RCW, are hereby made liabilities of the legacy retirement 8 system. 9 (b) All benefits payable to the teachers' retirement system plan 10 1 members and beneficiaries pursuant to chapter 41.32 RCW shall be 11 administered as a separate tier of membership and benefits within the 12 legacy retirement system, and all associated benefits are to be paid 13 from the legacy retirement system account established in RCW 14 41.50.075(6). 15 (3)(a) Except as provided in (b) of this subsection, all 16 liabilities of the law enforcement officers' and firefighters' 17 retirement system plan 1, as defined in chapter 41.26 RCW and as 18 funded pursuant to chapter 41.45 RCW, are hereby made liabilities of 19 the legacy retirement system. 20 (b) All medical benefit liabilities for the law enforcement 21 officers' and firefighters' retirement system plan 1 provided 22 pursuant to RCW 41.26.150 remain liabilities of employers, as defined 23 in RCW 41.26.030(14)(a). 24 (c) All benefits, including survivor benefits, payable to members 25 of the law enforcement officers' and firefighters' retirement system 26 plan 1 pursuant to chapter 41.26 RCW, shall be administered as a 27 separate tier of membership and benefits within the legacy retirement 28 system, and all associated benefits are to be paid from the legacy 29 retirement system account established in RCW 41.50.075(6).30 (4)(a) All liabilities of the public employees' retirement system 31 plan 1 as defined in chapter 41.40 RCW and as funded pursuant to 32 chapter 41.45 RCW are hereby made liabilities of the legacy 33 retirement system. 34 (b) All benefits payable to the public employees' retirement 35 system plan 1 members and beneficiaries pursuant to chapter 41.40 36 RCW, shall be administered as a separate tier of membership and 37 benefits within the legacy retirement system, and all associated 38 benefits are to be paid from the legacy retirement system account 39 established in RCW 41.50.075(6). 40 p. 5 SB 5085 (5) All assets of the teachers' retirement system plan 1, the 1 public employees' retirement system plan 1, and the law enforcement 2 officers' and firefighters' retirement system plan 1 are merged as 3 described in RCW 41.50.075. 4 NEW SECTION. Sec. 202. The legacy retirement system consists of 5 three benefit tiers:6 (1) The law enforcement officers' and firefighters' retirement 7 system plan 1 tier consisting of benefits and funding provisions as 8 provided in chapters 41.26 and 41.45 RCW; 9 (2) The teachers' retirement system plan 1 tier consisting of 10 benefits and funding provisions as provided in chapters 41.32 and 11 41.45 RCW; and 12 (3) The public employees' retirement system plan 1 tier 13 consisting of benefits and funding provisions as provided in chapters 14 41.40 and 41.45 RCW. 15 NEW SECTION. Sec. 203. The merger of retirement plans by 16 chapter . . ., Laws of 2025 (this act) does not impact the disability 17 boards established in RCW 41.26.110 or any official action of those 18 boards.19 NEW SECTION. Sec. 204. Except as described in sections 401 and 20 404 of this act, chapter . . ., Laws of 2025 (this act) does not 21 alter any benefit incurred under the sections amended or repealed in 22 chapter . . ., Laws of 2025 (this act) or under any rule or order 23 adopted under those sections. If any substantive impacts to benefits 24 occur, it is unintentional, and chapter . . ., Laws of 2025 (this 25 act) should be construed to avoid such impacts.26 NEW SECTION. Sec. 301. A new section is added to chapter 41.50 27 RCW to read as follows: 28 (1) The director is instructed to administer chapter . . ., Laws 29 of 2025 (this act) in such a way that it does not negatively impact 30 benefits for members and eligible survivors of those plans. 31 Specifically, each member of each of these plans is entitled to 32 receive benefits immediately on the effective date of the merger that 33 are at least equal to the benefits the member would have been 34 entitled to receive immediately before the merger in accordance with 35 p. 6 SB 5085 plan terms. The director may conduct rule making for this purpose as 1 provided in RCW 41.50.050. 2 (2) The director must submit a request for a determination letter 3 from the internal revenue service indicating the qualified status of 4 the merged plan that results from the merger in section 201 of this 5 act. 6 (3) The director must submit a request for a private letter 7 ruling from the internal revenue service indicating there are no tax 8 consequences to any plan members from the merger in section 201 of 9 this act. 10 Sec. 302. RCW 41.50.030 and 2011 1st sp.s. c 47 s 20 are each 11 amended to read as follows: 12 (1) As soon as possible but not more than one hundred and eighty 13 days after March 19, 1976, there is transferred to the department of 14 retirement systems, except as otherwise provided in this chapter, all 15 powers, duties, and functions of: 16 (a) The Washington public employees' retirement system;17 (b) The Washington state teachers' retirement system;18 (c) The Washington law enforcement officers' and firefighters' 19 retirement system; 20 (d) The Washington state patrol retirement system;21 (e) The Washington judicial retirement system; and22 (f) The state treasurer with respect to the administration of the 23 judges' retirement fund imposed pursuant to chapter 2.12 RCW.24 (2) On July 1, 1996, there is transferred to the department all 25 powers, duties, and functions of the deferred compensation committee.26 (3) The department shall administer chapter 41.34 RCW.27 (4) The department shall administer the Washington school 28 employees' retirement system created under chapter 41.35 RCW.29 (5) The department shall administer the Washington public safety 30 employees' retirement system created under chapter 41.37 RCW.31 (6) The department shall administer the collection of employer 32 contributions and initial prefunding of the higher education 33 retirement plan supplemental benefits, also referred to as the 34 annuity or retirement income plans created under chapter 28B.10 RCW.35 (7) The department shall administer the legacy retirement system 36 created under section 201 of this act.37 p. 7 SB 5085 Sec. 303. RCW 41.50.075 and 2020 c 103 s 5 are each amended to 1 read as follows: 2 (1) ((Two funds are hereby created and established in the state 3 treasury to be known as the Washington law enforcement officers' and 4 firefighters' system plan 1 retirement fund, and the )) (a) The 5 Washington law enforcement officers' and firefighters' system plan 2 6 retirement fund ((which)) shall consist of all moneys paid ((into 7 them)) in accordance with the provisions of this chapter and chapter 8 41.26 RCW, whether such moneys take the form of cash, securities, or 9 other assets. The ((plan 1 fund shall consist of all moneys paid to 10 finance the benefits provided to members of the law enforcement 11 officers' and firefighters' retirement system plan 1, and the )) plan 12 2 fund shall consist of all moneys paid to finance the benefits 13 provided to members of the law enforcement officers' and 14 firefighters' retirement system plan ((2)). 15 (b) The Washington law enforcement officers' and firefighters' 16 system plan 1 retirement fund is hereby closed, and the assets 17 transferred to the new legacy retirement system account established 18 under subsection (6) of this section.19 (2)(a) All of the assets of the Washington state teachers' 20 retirement system plans 2 and 3 shall be credited according to the 21 purposes for which they are held, to ((two funds to be maintained in 22 the state treasury, namely, the teachers' retirement system plan 1 23 fund and)) the teachers' retirement system combined plan 2 and 3 fund 24 to be maintained by the state treasury . The ((plan 1 fund shall 25 consist of all moneys paid to finance the benefits provided to 26 members of the Washington state teachers' retirement system plan 1, 27 and the)) combined plan 2 and 3 fund shall consist of all moneys paid 28 to finance the benefits provided to members of the Washington state 29 teachers' retirement system plan 2 and 3. 30 (b) The teachers' retirement system plan 1 fund is hereby closed, 31 and the assets transferred to the new legacy retirement system 32 account established under subsection (6) of this section.33 (3)(a) There is hereby established in the state treasury ((two 34 separate funds, namely the public employees' retirement system plan 1 35 fund and )) the public employees' retirement system combined plan 2 36 and plan 3 fund. The ((plan 1 fund shall consist of all moneys paid 37 to finance the benefits provided to members of the public employees' 38 retirement system plan 1, and the )) combined plan 2 and plan 3 fund 39 p. 8 SB 5085 shall consist of all moneys paid to finance the benefits provided to 1 members of the public employees' retirement system plans 2 and 3.2 (b) The public employees' retirement system plan 1 fund is hereby 3 closed, and the assets transferred to the new legacy retirement 4 system account established under subsection (6) of this section.5 (4) There is hereby established in the state treasury the school 6 employees' retirement system combined plan 2 and 3 fund. The combined 7 plan 2 and 3 fund shall consist of all moneys paid to finance the 8 benefits provided to members of the school employees' retirement 9 system plan 2 and plan 3. 10 (5) There is hereby established in the state treasury the public 11 safety employees' retirement system plan 2 fund. The plan 2 fund 12 shall consist of all moneys paid to finance the benefits provided to 13 members of the public safety employees' retirement system plan 2.14 (6) There is hereby established in the state treasury the legacy 15 retirement system account. The legacy retirement system account shall 16 consist of all moneys paid to finance the benefits provided to 17 members of the teachers' retirement system plan 1, the public 18 employees' retirement system plan 1, and the law enforcement 19 officers' and firefighters' retirement system plan 1 tiers of the 20 legacy retirement system.21 (7)(a)(i) There is hereby established in the state treasury the 22 higher education retirement plan supplemental benefit fund. The 23 higher education retirement plan supplemental benefit fund shall 24 consist of all moneys paid to finance the benefits provided to 25 members of each of the higher education retirement plans.26 (ii) The fund in this subsection (((6))) (7) was originally 27 created under chapter 47, Laws of 2011 1st sp. sess. (Engrossed 28 Substitute House Bill No. 1981). 29 (b) The office of financial management must create individual 30 accounts for each institution of higher education within the higher 31 education retirement plan supplemental benefit fund. For fiscal year 32 2021, the office of financial management must transfer all the assets 33 of the higher education retirement plan supplemental benefit fund 34 into the individual accounts for each institution that will be used 35 to manage the accounting for each benefit plan. The higher education 36 retirement plan supplemental benefit fund will include all the 37 amounts in the individual accounts created in this subsection.38 p. 9 SB 5085 Sec. 304. RCW 41.50.110 and 2015 3rd sp.s. c 4 s 951 are each 1 amended to read as follows: 2 (1) Except as provided by RCW 41.50.255 and subsection (6) of 3 this section, all expenses of the administration of the department, 4 the expenses of administration of the retirement systems, and the 5 expenses of the administration of the office of the state actuary 6 created in chapters 2.10, 2.12, 28B.10, 41.26, 41.32, 41.40, 41.34, 7 41.35, 41.37, 41.--- RCW (the new chapter created in section 701 of 8 this act), 43.43, and 44.44 RCW shall be paid from the department of 9 retirement systems expense fund. 10 (2) In order to reimburse the department of retirement systems 11 expense fund on an equitable basis the department shall ascertain and 12 report to each employer, as defined in chapter 41.--- RCW (the new 13 chapter created in section 701 of this act) or RCW 28B.10.400, 14 41.26.030, 41.32.010, 41.35.010, 41.37.010, or 41.40.010, the sum 15 necessary to defray its proportional share of the entire expense of 16 the administration of the retirement system that the employer 17 participates in during the ensuing biennium or fiscal year whichever 18 may be required. Such sum is to be computed in an amount directly 19 proportional to the estimated entire expense of the administration as 20 the ratio of monthly salaries of the employer's members bears to the 21 total salaries of all members in the entire system. It shall then be 22 the duty of all such employers to include in their budgets or 23 otherwise provide the amounts so required. 24 (3) The department shall compute and bill each employer, as 25 defined in chapter 41.--- RCW (the new chapter created in section 701 26 of this act) or RCW 28B.10.400, 41.26.030, 41.32.010, 41.35.010, 27 41.37.010, or 41.40.010, at the end of each month for the amount due 28 for that month to the department of retirement systems expense fund 29 and the same shall be paid as are its other obligations. Such 30 computation as to each employer shall be made on a percentage rate of 31 salary established by the department. However, the department may at 32 its discretion establish a system of billing based upon calendar year 33 quarters in which event the said billing shall be at the end of each 34 such quarter. 35 (4) The director may adjust the expense fund contribution rate 36 for each system at any time when necessary to reflect unanticipated 37 costs or savings in administering the department. 38 (5) An employer who fails to submit timely and accurate reports 39 to the department may be assessed an additional fee related to the 40 p. 10 SB 5085 increased costs incurred by the department in processing the 1 deficient reports. Fees paid under this subsection shall be deposited 2 in the retirement system expense fund. 3 (a) Every six months the department shall determine the amount of 4 an employer's fee by reviewing the timeliness and accuracy of the 5 reports submitted by the employer in the preceding six months. If 6 those reports were not both timely and accurate the department may 7 prospectively assess an additional fee under this subsection.8 (b) An additional fee assessed by the department under this 9 subsection shall not exceed fifty percent of the standard fee.10 (c) The department shall adopt rules implementing this section.11 (6) Expenses other than those under RCW 41.34.060(4) shall be 12 paid pursuant to subsection (1) of this section. 13 (7) During the 2009-2011 and 2011-2013 fiscal biennia, the 14 legislature may transfer from the department of retirement systems' 15 expense fund to the state general fund such amounts as reflect the 16 excess fund balance of the fund. During the 2015-2017 fiscal 17 biennium, state contributions to the judicial retirement system may 18 be made in part by appropriations from the department of retirement 19 systems expense fund. 20 Sec. 401. RCW 41.32.4992 and 2024 c 255 s 1 are each amended to 21 read as follows: 22 (1) Beneficiaries who are receiving a monthly benefit from the 23 teachers' retirement system plan 1 on July 1, 2017, shall receive, 24 effective July 1, 2018, an increase to their monthly benefit of one 25 and one-half percent multiplied by the beneficiaries' monthly 26 benefit, not to exceed $62.50. 27 (2) Beneficiaries who are receiving a monthly benefit from the 28 teachers' retirement system plan 1 on July 1, 2019, shall receive, 29 effective July 1, 2020, an increase to their monthly benefit of three 30 percent multiplied by the beneficiaries' monthly benefit, not to 31 exceed $62.50. 32 (3) Beneficiaries who are receiving a monthly benefit from the 33 teachers' retirement system plan 1 on July 1, 2021, shall receive, 34 effective July 1, 2022, an increase to their monthly benefit of three 35 percent multiplied by the beneficiaries' monthly benefit, not to 36 exceed $110.00. 37 (4) Beneficiaries who are receiving a monthly benefit from the 38 teachers' retirement system plan 1 on July 1, 2022, shall receive, 39 p. 11 SB 5085 effective July 1, 2023, an increase to their monthly benefit of three 1 percent multiplied by the beneficiaries' monthly benefit, not to 2 exceed $110.00. 3 (5) Beneficiaries who are receiving a monthly benefit from the 4 teachers' retirement system plan 1 on July 1, 2023, shall receive, 5 effective July 1, 2024, an increase to their monthly benefit of three 6 percent multiplied by the beneficiaries' monthly benefit, not to 7 exceed $110.00. 8 (6) Beneficiaries who are receiving a monthly benefit from the 9 teachers' retirement system plan 1 on July 1, 2024, shall receive, 10 effective July 1, 2025, an increase to their monthly benefit of three 11 percent multiplied by the beneficiaries' monthly benefit.12 (7) This section does not apply to those receiving benefits 13 pursuant to RCW 41.32.489 or 41.32.540. 14 Sec. 402. RCW 41.40.1987 and 2024 c 255 s 2 are each amended to 15 read as follows: 16 (1) Beneficiaries who are receiving a monthly benefit from the 17 public employees' retirement system plan 1 on July 1, 2017, shall 18 receive, effective July 1, 2018, an increase to their monthly benefit 19 of one and one-half percent multiplied by the beneficiaries' monthly 20 benefit, not to exceed $62.50. 21 (2) Beneficiaries who are receiving a monthly benefit from the 22 public employees' retirement system plan 1 on July 1, 2019, shall 23 receive, effective July 1, 2020, an increase to their monthly benefit 24 of three percent multiplied by the beneficiaries' monthly benefit, 25 not to exceed $62.50. 26 (3) Beneficiaries who are receiving a monthly benefit from the 27 public employees' retirement system plan 1 on July 1, 2021, shall 28 receive, effective July 1, 2022, an increase to their monthly benefit 29 of three percent multiplied by the beneficiaries' monthly benefit, 30 not to exceed $110.00. 31 (4) Beneficiaries who are receiving a monthly benefit from the 32 public employees' retirement system plan 1 on July 1, 2022, shall 33 receive, effective July 1, 2023, an increase to their monthly benefit 34 of three percent multiplied by the beneficiaries' monthly benefit, 35 not to exceed $110.00. 36 (5) Beneficiaries who are receiving a monthly benefit from the 37 public employees' retirement system plan 1 on July 1, 2023, shall 38 receive, effective July 1, 2024, an increase to their monthly benefit 39 p. 12 SB 5085 of three percent multiplied by the beneficiaries' monthly benefit, 1 not to exceed $110.00. 2 (6) Beneficiaries who are receiving a monthly benefit from the 3 public employees' retirement system plan 1 on July 1, 2024, shall 4 receive, effective July 1, 2025, an increase to their monthly benefit 5 of three percent multiplied by the beneficiaries' monthly benefit.6 (7) This section does not apply to those receiving benefits 7 pursuant to RCW 41.40.1984. 8 NEW SECTION. Sec. 403. A new section is added to chapter 41.32 9 RCW to read as follows: 10 (1) Beginning July 1, 2026, and every year thereafter, the 11 department shall determine the following information for each plan 1 12 retired member or beneficiary whose retirement allowance has been in 13 effect for at least one year: 14 (a) The original dollar amount of the retirement allowance as of 15 June 30, 2026, or the effective date of retirement, whichever is 16 later; 17 (b) The index for the calendar year prior to July 1, 2025, or the 18 effective date of the retirement allowance, whichever is later, to be 19 known as "index A"; 20 (c) The index for the calendar year prior to the date of 21 determination, to be known as "index B"; and 22 (d) The ratio obtained when index B is divided by index A.23 (2) The value of the ratio obtained is the annual adjustment to 24 the original retirement allowance and must be applied beginning with 25 the July payment. In no event, however, may the annual adjustment:26 (a) Produce a retirement allowance which is lower than the 27 original retirement allowance; 28 (b) Exceed three percent in the initial annual adjustment; or29 (c) Differ from the previous year's annual adjustment by more 30 than three percent. 31 (3) For the purposes of this section, "index" means, for any 32 calendar year, that year's average consumer price index, Seattle-33 Tacoma-Bremerton, or urban wage earners and clerical workers, all 34 items, compiled by the bureau of labor statistics, United States 35 department of labor. 36 (4) This section does not apply to members or beneficiaries 37 receiving benefits pursuant to RCW 41.32.489 or 41.32.540.38 p. 13 SB 5085 NEW SECTION. Sec. 404. A new section is added to chapter 41.40 1 RCW to read as follows: 2 (1) Beginning July 1, 2026, and every year thereafter, the 3 department shall determine the following information for each plan 1 4 retired member or beneficiary whose retirement allowance has been in 5 effect for at least one year: 6 (a) The original dollar amount of the retirement allowance as of 7 June 30, 2026, or the effective date of retirement, whichever is 8 later; 9 (b) The index for the calendar year prior to July 1, 2025, or the 10 effective date of the retirement allowance, whichever is later, to be 11 known as "index A"; 12 (c) The index for the calendar year prior to the date of 13 determination, to be known as "index B"; and 14 (d) The ratio obtained when index B is divided by index A.15 (2) The value of the ratio obtained is the annual adjustment to 16 the original retirement allowance and must be applied beginning with 17 the July payment. In no event, however, may the annual adjustment:18 (a) Produce a retirement allowance which is lower than the 19 original retirement allowance; 20 (b) Exceed three percent in the initial annual adjustment; or21 (c) Differ from the previous year's annual adjustment by more 22 than three percent. 23 (3) For the purposes of this section, "index" means, for any 24 calendar year, that year's average consumer price index, Seattle-25 Tacoma-Bremerton for urban wage earners and clerical workers, all 26 items, compiled by the bureau of labor statistics, United States 27 department of labor. 28 (4) This section does not apply to members or beneficiaries 29 receiving benefits pursuant to RCW 41.40.1984. 30 Sec. 501. RCW 41.45.010 and 2009 c 561 s 1 are each amended to 31 read as follows: 32 It is the intent of the legislature to provide a dependable and 33 systematic process for funding the benefits provided to members and 34 retirees of the public employees' retirement system, chapter 41.40 35 RCW; the teachers' retirement system, chapter 41.32 RCW; the law 36 enforcement officers' and firefighters' retirement systems, chapter 37 41.26 RCW; the school employees' retirement system, chapter 41.35 38 RCW; the public safety employees' retirement system, chapter 41.37 39 p. 14 SB 5085 RCW; and the Washington state patrol retirement system, chapter 43.43 1 RCW. 2 The funding process established by this chapter is intended to 3 achieve the following goals: 4 (1) To fully fund the public employees' retirement system plans 2 5 and 3, the teachers' retirement system plans 2 and 3, the school 6 employees' retirement system plans 2 and 3, the public safety 7 employees' retirement system plan 2, and the law enforcement 8 officers' and firefighters' retirement system plan 2 as provided by 9 law; 10 (2) ((To fully amortize the total costs of the law enforcement 11 officers' and firefighters' retirement system plan 1, not later than 12 June 30, 2024;13 (3) To fully amortize the unfunded actuarial accrued liability in 14 the public employees' retirement system plan 1 and the teachers' 15 retirement system plan 1 within a rolling ten-year period, using 16 methods and assumptions that balance needs for increased benefit 17 security, decreased contribution rate volatility, and affordability 18 of pension contribution rates;19 (4))) To establish long-term employer contribution rates which 20 will remain a relatively predictable proportion of the future state 21 budgets; and 22 (((5))) (3) To fund, to the extent feasible, all benefits for 23 plan 2 and 3 members over the working lives of those members so that 24 the cost of those benefits are paid by the taxpayers who receive the 25 benefit of those members' service. 26 Sec. 502. RCW 41.45.020 and 2006 c 365 s 1 are each amended to 27 read as follows: 28 As used in this chapter, the following terms have the meanings 29 indicated unless the context clearly requires otherwise.30 (1) "Council" means the pension funding council created in RCW 31 41.45.100. 32 (2) "Department" means the department of retirement systems.33 (3) "Law enforcement officers' and firefighters' retirement 34 system plan 1" and "law enforcement officers' and firefighters' 35 retirement system plan 2" means the benefits and funding provisions 36 under chapter 41.26 RCW. 37 (4) "Public employees' retirement system plan 1," "public 38 employees' retirement system plan 2," and "public employees' 39 p. 15 SB 5085 retirement system plan 3" mean the benefits and funding provisions 1 under chapter 41.40 RCW. 2 (5) "Teachers' retirement system plan 1," "teachers' retirement 3 system plan 2," and "teachers' retirement system plan 3" mean the 4 benefits and funding provisions under chapter 41.32 RCW.5 (6) "School employees' retirement system plan 2" and "school 6 employees' retirement system plan 3" mean the benefits and funding 7 provisions under chapter 41.35 RCW. 8 (7) "Washington state patrol retirement system" means the 9 retirement benefits provided under chapter 43.43 RCW.10 (8) "Unfunded liability" means the unfunded actuarial accrued 11 liability of a retirement system. 12 (9) "Actuary" or "state actuary" means the state actuary employed 13 under chapter 44.44 RCW. 14 (10) "State retirement systems" means the retirement systems 15 listed in RCW 41.50.030. 16 (11) "Classified employee" means a member of the Washington 17 school employees' retirement system plan 2 or plan 3 as defined in 18 RCW 41.35.010. 19 (12) "Teacher" means a member of the teachers' retirement system 20 as defined in RCW 41.32.010(((15))). 21 (13) "Select committee" means the select committee on pension 22 policy created in RCW 41.04.276. 23 (14) "Actuarial value of assets" means the value of pension plan 24 investments and other property used by the actuary for the purpose of 25 an actuarial valuation. 26 (15) "Public safety employees' retirement system plan 2" means 27 the benefits and funding provisions established under chapter 41.37 28 RCW. 29 (16) "Normal cost" means the portion of the actuarial present 30 value of projected benefits and expenses that is allocated to a 31 period, typically twelve months, under the actuarial cost method.32 (17) "Legacy retirement system" means the benefits and funding 33 provisions under chapter 41.--- RCW (the new chapter created in 34 section 701 of this act).35 Sec. 503. RCW 41.45.035 and 2016 sp.s. c 36 s 922 are each 36 amended to read as follows: 37 p. 16 SB 5085 (1) Beginning July 1, 2001, the following long-term economic 1 assumptions shall be used by the state actuary for the purposes of 2 RCW 41.45.030: 3 (a) The growth in inflation assumption shall be 3.5 percent;4 (b) The growth in salaries assumption, exclusive of merit or 5 longevity increases, shall be 4.5 percent; 6 (c) The investment rate of return assumption shall be 8 percent;7 (d) The growth in system membership assumption shall be 1.25 8 percent for the public employees' retirement system, the public 9 safety employees' retirement system, the school employees' retirement 10 system, and the law enforcement officers' and firefighters' 11 retirement system. The assumption shall be .90 percent for the 12 teachers' retirement system; and 13 (e) From July 1, 2016, until July 1, 2017, the growth in system 14 membership for the teachers' retirement system shall be 1.25 percent. 15 It is the intent of the legislature to continue this growth rate 16 assumption in the 2017-2019 fiscal biennium. 17 (2) Beginning July 1, 2009, the growth in salaries assumption for 18 the public employees' retirement system, the public safety employees' 19 retirement system, the teachers' retirement system, the school 20 employees' retirement system, ((plan 1 of the law enforcement 21 officers' and firefighters' )) the legacy retirement system, and the 22 Washington state patrol retirement system, exclusive of merit or 23 longevity increases, shall be the sum of: 24 (a) The growth in inflation assumption in subsection (1)(a) of 25 this section; and 26 (b) The productivity growth assumption of 0.5 percent.27 (3) The following investment rate of return assumptions for the 28 public employees' retirement system, the public safety employees' 29 retirement system, the teachers' retirement system, the school 30 employees' retirement system, ((plan 1 of the law enforcement 31 officers' and firefighters' )) the legacy retirement system, and the 32 Washington state patrol retirement system, shall be used by the state 33 actuary for the purposes of RCW 41.45.030: 34 (a) Beginning July 1, 2013, the investment rate of return 35 assumption shall be 7.9 percent. 36 (b) Beginning July 1, 2015, the investment rate of return 37 assumption shall be 7.8 percent. 38 (c) Beginning July 1, 2017, the investment rate of return 39 assumption shall be 7.7 percent. 40 p. 17 SB 5085 (d) For valuation purposes, the state actuary shall only use the 1 assumptions in (a) through (c) of this subsection after the effective 2 date in (a) through (c) of this subsection. 3 (e) By June 1, 2017, the state actuary shall submit to the 4 council information regarding the experience and financial condition 5 of each state retirement system, and make recommendations regarding 6 the long-term investment rate of return assumptions set forth in this 7 subsection. The council shall review this and such other information 8 as it may require. 9 (4)(a) Beginning with actuarial studies done after July 1, 2003, 10 changes to plan asset values that vary from the long-term investment 11 rate of return assumption shall be recognized in the actuarial value 12 of assets over a period that varies up to eight years depending on 13 the magnitude of the deviation of each year's investment rate of 14 return relative to the long-term rate of return assumption. Beginning 15 with actuarial studies performed after July 1, 2004, the actuarial 16 value of assets shall not be greater than one hundred thirty percent 17 of the market value of assets as of the valuation date or less than 18 seventy percent of the market value of assets as of the valuation 19 date. Beginning April 1, 2004, the council, by affirmative vote of 20 four councilmembers, may adopt changes to this asset value smoothing 21 technique. Any changes adopted by the council shall be subject to 22 revision by the legislature. 23 (b) The state actuary shall periodically review the 24 appropriateness of the asset smoothing method in this section and 25 recommend changes to the council as necessary. Any changes adopted by 26 the council shall be subject to revision by the legislature.27 Sec. 504. RCW 41.45.050 and 2020 c 103 s 3 are each amended to 28 read as follows: 29 (1) Employers of members of the public employees' retirement 30 system, the teachers' retirement system, the school employees' 31 retirement system, the public safety employees' retirement system, 32 the Washington state patrol retirement system, and the higher 33 education retirement plans shall make contributions to those systems 34 and plans based on the rates established in RCW 41.45.060 and 35 41.45.070. 36 (2) The state shall make contributions to the law enforcement 37 officers' and firefighters' retirement system plan 2 based on the 38 rates established in RCW 41.45.060 and 41.45.070. The state treasurer 39 p. 18 SB 5085 shall transfer the required contributions each month on the basis of 1 salary data provided by the department. 2 (3) The department shall bill employers, and the state shall make 3 contributions to the law enforcement officers' and firefighters' 4 retirement system plan 2, using the combined rates established in RCW 5 41.45.060 and 41.45.070 regardless of the level of appropriation 6 provided in the biennial budget. Any member of an affected retirement 7 system may, by mandamus or other appropriate proceeding, require the 8 transfer and payment of funds as directed in this section.9 (4) The contributions received for the public employees' 10 retirement system shall be allocated between the former public 11 employees' retirement system plan 1 fund (now the legacy retirement 12 system account under section 201 of this act) and the public 13 employees' retirement system combined plan 2 and plan 3 fund as 14 follows: The contributions necessary to fully fund the public 15 employees' retirement system combined plan 2 and plan 3 employer 16 contribution shall first be deposited in the public employees' 17 retirement system combined plan 2 and plan 3 fund. All remaining 18 public employees' retirement system employer contributions shall be 19 deposited in the ((public employees' retirement system plan 1 fund )) 20 legacy retirement system account. 21 (5) The contributions received for the teachers' retirement 22 system shall be allocated between the former plan 1 fund and the 23 combined plan 2 and plan 3 fund as follows: The contributions 24 necessary to fully fund the combined plan 2 and plan 3 employer 25 contribution shall first be deposited in the combined plan 2 and plan 26 3 fund. All remaining teachers' retirement system employer 27 contributions shall be deposited in the ((plan 1 fund )) legacy 28 retirement system account. 29 (6) The contributions received for the school employees' 30 retirement system shall be allocated between the former public 31 employees' retirement system plan 1 fund (now the legacy retirement 32 system account under section 201 of this act) and the school 33 employees' retirement system combined plan 2 and plan 3 fund as 34 follows: The contributions necessary to fully fund the combined plan 35 2 and plan 3 employer contribution shall first be deposited in the 36 combined plan 2 and plan 3 fund. All remaining school employees' 37 retirement system employer contributions shall be deposited in the 38 ((public employees' retirement system plan 1 fund )) legacy retirement 39 system account. 40 p. 19 SB 5085 (7) The contributions received for the law enforcement officers' 1 and firefighters' retirement system plan 2 shall be deposited in the 2 law enforcement officers' and firefighters' retirement system plan 2 3 fund. 4 (8) The contributions received for the public safety employees' 5 retirement system shall be allocated between the former public 6 employees' retirement system plan 1 fund (now the legacy retirement 7 system account under section 201 of this act) and the public safety 8 employees' retirement system plan 2 fund as follows: The 9 contributions necessary to fully fund the plan 2 employer 10 contribution shall first be deposited in the plan 2 fund. All 11 remaining public safety employees' retirement system employer 12 contributions shall be deposited in the ((public employees' 13 retirement system plan 1 fund)) legacy retirement system account.14 (9) The contributions received for the higher education 15 retirement plan supplemental benefit fund shall be deposited in the 16 higher education retirement plan supplemental benefit fund and 17 amounts received from each institution accounted for separately and 18 shall only be used to make benefit payments to the beneficiaries of 19 that institution's plan. 20 Sec. 505. RCW 41.45.060 and 2020 c 103 s 4 are each amended to 21 read as follows: 22 (1) The state actuary shall provide preliminary actuarial 23 valuation results based on the economic assumptions and asset value 24 smoothing technique included in RCW 41.45.035 or adopted under RCW 25 41.45.030 or 41.45.035. 26 (2) Not later than July 31, 2008, and every two years thereafter, 27 consistent with the economic assumptions and asset value smoothing 28 technique included in RCW 41.45.035 or adopted under RCW 41.45.030 or 29 41.45.035, the council shall adopt and may make changes to:30 (a) ((A basic state contribution rate for the law enforcement 31 officers' and firefighters' retirement system plan 1;32 (b))) Basic employer contribution rates for the public employees' 33 retirement system, the teachers' retirement system, the school 34 employees' retirement system, the public safety employees' retirement 35 system, and the Washington state patrol retirement system; and36 (((c) Basic employer contribution rates for the school employees' 37 retirement system and the public safety employees' retirement system 38 for funding both those systems and the public employees' retirement 39 p. 20 SB 5085 system plan 1 )) (b) Basic employer contribution rates for the legacy 1 retirement system. 2 The council may adopt annual rate changes for any plan for any 3 rate-setting period. The contribution rates adopted by the council 4 shall be subject to revision by the legislature. 5 (3) The employer and state contribution rates adopted by the 6 council shall be the level percentages of pay that are needed:7 (a) ((To fully amortize the total costs of the law enforcement 8 officers' and firefighters' retirement system plan 1 not later than 9 June 30, 2024;10 (b))) To fully fund the public employees' retirement system plans 11 2 and 3, the teachers' retirement system plans 2 and 3, the public 12 safety employees' retirement system plan 2, and the school employees' 13 retirement system plans 2 and 3 in accordance with RCW 41.45.061, 14 41.45.067, and this section; and 15 (((c))) (b) To fully fund the ((public employees' retirement 16 system plan 1 and the teachers' )) legacy retirement system ((plan 1)) 17 in accordance with RCW 41.45.070, 41.45.150, and this section.18 (4) The aggregate actuarial cost method shall be used to 19 calculate a combined plan 2 and 3 normal cost, a Washington state 20 patrol retirement system normal cost, and a public safety employees' 21 retirement system normal cost. 22 (5) A modified entry age normal cost method, as set forth in this 23 chapter, shall be used to calculate employer contributions to the 24 ((public employees' )) legacy retirement system ((plan 1 and the 25 teachers' retirement system plan 1 )) as described in subsection (13) 26 of this section. 27 (6) The employer contribution rate for the public employees' 28 retirement system and the school employees' retirement system shall 29 equal the sum of: 30 (a) The amount required to pay the combined plan 2 and plan 3 31 normal cost for the system, subject to any minimum rates applied 32 pursuant to RCW 41.45.155; plus 33 (b) The amount required to ((amortize the unfunded actuarial 34 accrued liability in plan 1 of the public employees' )) fund the 35 legacy retirement system ((over a rolling ten-year period using 36 projected future salary growth and growth in system membership, and 37 subject to any minimum or maximum rates applied pursuant to RCW 38 41.45.150; plus39 p. 21 SB 5085 (c) The amounts required to amortize the costs of any benefit 1 improvements in plan 1 of the public employees' retirement system 2 that become effective after June 30, 2009. The cost of each benefit 3 improvement shall be amortized over a fixed ten-year period using 4 projected future salary growth and growth in system membership. The 5 amounts required under this subsection are not subject to, and are 6 collected in addition to, any minimum or maximum rates applied 7 pursuant to RCW 41.45.150)) as described in subsection (13) of this 8 section. 9 (7) The employer contribution rate for the public safety 10 employees' retirement system shall equal the sum of:11 (a) The amount required to pay the normal cost for the system, 12 subject to any minimum rates applied pursuant to RCW 41.45.155; plus13 (b) The amount required to ((amortize the unfunded actuarial 14 accrued liability in plan 1 of the public employees' )) fund the 15 legacy retirement system ((over a rolling ten-year period using 16 projected future salary growth and growth in system membership, and 17 subject to any minimum or maximum rates applied pursuant to RCW 18 41.45.150; plus19 (c) The amounts required to amortize the costs of any benefit 20 improvements in plan 1 of the public employees' retirement system 21 that become effective after June 30, 2009. The cost of each benefit 22 improvement shall be amortized over a fixed ten-year period using 23 projected future salary growth and growth in system membership. The 24 amounts required under this subsection are not subject to, and are 25 collected in addition to, any minimum or maximum rates applied 26 pursuant to RCW 41.45.150)) as described in subsection (13) of this 27 section. 28 (8) The employer contribution rate for the teachers' retirement 29 system shall equal the sum of: 30 (a) The amount required to pay the combined plan 2 and plan 3 31 normal cost for the system, subject to any minimum rates applied 32 pursuant to RCW 41.45.155; plus 33 (b) The amount required to ((amortize the unfunded actuarial 34 accrued liability in plan 1 of the teachers' )) fund the legacy 35 retirement system ((over a rolling ten-year period using projected 36 future salary growth and growth in system membership, and subject to 37 any minimum or maximum rates applied pursuant to RCW 41.45.150; plus38 (c) The amounts required to amortize the costs of any benefit 39 improvements in plan 1 of the teachers' retirement system that become 40 p. 22 SB 5085 effective after June 30, 2009. The cost of each benefit improvement 1 shall be amortized over a fixed ten-year period using projected 2 future salary growth and growth in system membership. The amounts 3 required under this subsection are not subject to, and are collected 4 in addition to, any minimum or maximum rates applied pursuant to RCW 5 41.45.150)) as described in subsection (13) of this section.6 (9) The employer contribution rate for each of the institutions 7 of higher education for the higher education supplemental retirement 8 benefits must be sufficient to fund, as a level percentage of pay, a 9 portion of the projected cost of the supplemental retirement benefits 10 for the institution beginning in 2035, with the other portion 11 supported on a pay-as-you-go basis, either as direct payments by each 12 institution to retirees, or as contributions to the higher education 13 retirement plan supplemental benefit fund. Contributions must 14 continue until the council determines that the institution for higher 15 education supplemental retirement benefit liabilities are satisfied.16 (10) The council shall immediately notify the directors of the 17 office of financial management and department of retirement systems 18 of the state and employer contribution rates adopted. The rates shall 19 be effective for the ensuing biennial period, subject to any 20 legislative modifications. 21 (11) The director shall collect those rates adopted by the 22 council. The rates established in RCW 41.45.062, or by the council, 23 shall be subject to revision by the legislature. 24 (12) The state actuary shall prepare final actuarial valuation 25 results based on the economic assumptions, asset value smoothing 26 technique, and contribution rates included in or adopted under RCW 27 41.45.030, 41.45.035, and this section. 28 (13) The contribution rate for the legacy retirement system 29 charged to employers of the public employees' retirement system, the 30 teachers' retirement system, the school employees' retirement system, 31 and the public safety retirement system shall equal the sum of:32 (a) The amount required to fund the legacy retirement system over 33 a rolling 10-year period using projected future salary growth and 34 growth in system membership, and subject to any minimum or maximum 35 rates applied pursuant to RCW 41.45.150; plus36 (b) The amounts required to amortize the costs of any benefit 37 improvements in the legacy retirement system that become effective 38 after July 1, 2027. The cost of each benefit improvement shall be 39 amortized over a fixed 10-year period using projected future salary 40 p. 23 SB 5085 growth and growth in system membership. The amounts required under 1 this subsection are not subject to, and are collected in addition to, 2 any minimum or maximum rates applied pursuant to RCW 41.45.150.3 Sec. 506. RCW 41.45.070 and 2009 c 561 s 4 are each amended to 4 read as follows: 5 (1) In addition to the basic employer contribution rate 6 established in RCW 41.45.060 or 41.45.054, the department shall also 7 charge employers of public employees' retirement system, teachers' 8 retirement system, school employees' retirement system, public safety 9 employees' retirement system, legacy retirement system, or Washington 10 state patrol retirement system members an additional supplemental 11 rate to pay for the cost of additional benefits, if any, granted to 12 members of those systems. Except as provided in subsections (6), (7), 13 and (9) of this section, the supplemental contribution rates required 14 by this section shall be calculated by the state actuary and shall be 15 charged regardless of language to the contrary contained in the 16 statute which authorizes additional benefits. 17 (2) In addition to the basic member, employer, and state 18 contribution rate established in RCW 41.45.0604 for the law 19 enforcement officers' and firefighters' retirement system plan 2, the 20 department shall also establish supplemental rates to pay for the 21 cost of additional benefits, if any, granted to members of the law 22 enforcement officers' and firefighters' retirement system plan 2. 23 Except as provided in subsection (6) of this section, these 24 supplemental rates shall be calculated by the actuary retained by the 25 law enforcement officers' and firefighters' board and the state 26 actuary through the process provided in RCW 41.26.720(1)(a) and the 27 state treasurer shall transfer the additional required contributions 28 regardless of language to the contrary contained in the statute which 29 authorizes the additional benefits. 30 (3)(a) Beginning July 1, 2009, and continuing until the effective 31 date of this section, the supplemental rate charged under this 32 section to fund benefit increases provided to active members of the 33 public employees' retirement system plan 1 and the teachers' 34 retirement system plan 1 shall be calculated as the level percentage 35 of all system pay needed to fund the cost of the benefit over a fixed 36 ten-year period, using projected future salary growth and growth in 37 system membership. The supplemental rate to fund benefit increases 38 provided to active members of the public employees' retirement system 39 p. 24 SB 5085 plan 1 shall be charged to all system employers in the public 1 employees' retirement system, the school employees' retirement 2 system, and the public safety employees' retirement system. The 3 supplemental rate to fund benefit increases provided to active 4 members of the teachers' retirement system plan 1 shall be charged to 5 all system employers in the teachers' retirement system.6 (b) The supplemental rates charged to all system employers in the 7 public employees' retirement system, the school employees' retirement 8 system, the public safety employees' retirement system, and the 9 teachers' retirement system shall be zero percent in fiscal years 10 2026 and 2027.11 (c) Beginning on the effective date of this section, the 12 supplemental rate charged under this section to fund benefit 13 increases provided to members of the legacy retirement system shall 14 be calculated as the level percentage of all system pay needed to 15 fund the cost of the benefit over a fixed 10-year period, using 16 projected future salary growth and growth in system membership. The 17 supplemental rate to fund benefit increases provided to members of 18 the legacy retirement system shall be charged to all system employers 19 in the public employees' retirement system, the school employees' 20 retirement system, the public safety employees' retirement system, 21 and the teachers' retirement system.22 (4) The supplemental rate charged under this section to fund 23 benefit increases provided to active and retired members of the 24 public employees' retirement system plan 2 and plan 3, the teachers' 25 retirement system plan 2 and plan 3, the public safety employees' 26 retirement system plan 2, the school employees' retirement system 27 plan 2 and plan 3, or the Washington state patrol retirement system 28 shall be calculated as the level percentage of all members' pay 29 needed to fund the cost of the benefit, as calculated under RCW 30 41.45.060, 41.45.061, 41.45.0631, or 41.45.067. 31 (5) The supplemental rate charged under this section to fund 32 postretirement adjustments which are provided on a nonautomatic basis 33 to current retirees shall be calculated as the percentage of pay 34 needed to fund the adjustments as they are paid to the retirees. 35 Beginning July 1, 2009, until the effective date of this section, the 36 supplemental rate charged under this section to fund increases in the 37 automatic postretirement adjustments for active or retired members of 38 the public employees' retirement system plan 1 and the teachers' 39 retirement system plan 1 shall be calculated as the level percentage 40 p. 25 SB 5085 of pay needed to fund the cost of the automatic adjustments over a 1 fixed ten-year period, using projected future salary growth and 2 growth in system membership. The supplemental rate to fund increases 3 in the automatic postretirement adjustments for active members or 4 retired members of the public employees' retirement system plan 1 5 shall be charged to all system employers in the public employees' 6 retirement system, the school employees' retirement system, and the 7 public safety employees' retirement system. The supplemental rate to 8 fund increases in automatic postretirement adjustments for active 9 members or retired members of the teachers' retirement system plan 1 10 shall be charged to all system employers in the teachers' retirement 11 system. 12 (6) A supplemental rate shall not be charged to pay for the cost 13 of additional benefits granted to members pursuant to chapter 340, 14 Laws of 1998. 15 (7) A supplemental rate shall not be charged to pay for the cost 16 of additional benefits granted to members pursuant to chapter 41.31A 17 RCW; section 309, chapter 341, Laws of 1998; or section 701, chapter 18 341, Laws of 1998. 19 (8) A supplemental rate shall not be charged to pay for the cost 20 of additional benefits granted to members and survivors pursuant to 21 chapter 94, Laws of 2006. 22 (9) A supplemental rate shall not be charged to pay for the cost 23 of the additional benefits granted to members of the teachers' 24 retirement system and the school employees' retirement system plans 2 25 and 3 in sections 2, 4, 6, and 8, chapter 491, Laws of 2007 until 26 September 1, 2008. A supplemental rate shall not be charged to pay 27 for the cost of the additional benefits granted to members of the 28 public employees' retirement system plans 2 and 3 under sections 9 29 and 10, chapter 491, Laws of 2007 until July 1, 2008.30 Sec. 507. RCW 41.45.150 and 2023 c 396 s 1 are each amended to 31 read as follows: 32 (1) Beginning July 1, 2015, and ending June 30, 2023, a minimum 33 3.50 percent contribution is established as part of the basic 34 employer contribution rate for the public employees' retirement 35 system and the public safety employees' retirement system, to be used 36 for the sole purpose of amortizing that portion of the unfunded 37 actuarial accrued liability in the public employees' retirement 38 p. 26 SB 5085 system plan 1 that excludes any amounts required to amortize plan 1 1 benefit improvements effective after June 30, 2009.2 (2) Beginning September 1, 2015, and ending August 31, 3 2023(([,])), a minimum 3.50 percent contribution is established as 4 part of the basic employer contribution rate for the school 5 employees' retirement system, to be used for the sole purpose of 6 amortizing that portion of the unfunded actuarial accrued liability 7 in the public employees' retirement system plan 1 that excludes any 8 amounts required to amortize plan 1 benefit improvements effective 9 after June 30, 2009. 10 (3) Beginning September 1, 2015, and ending August 31, 2023, a 11 minimum 5.75 percent contribution is established as part of the basic 12 employer contribution rate for the teachers' retirement system, to be 13 used for the sole purpose of amortizing that portion of the unfunded 14 actuarial accrued liability in the teachers' retirement system plan 1 15 that excludes any amounts required to amortize plan 1 benefit 16 improvements effective after June 30, 2009. 17 (4)(a) Beginning July 1, 2023, and ending June 30, 2027, the 18 following employer contribution rates shall be in effect for the 19 public employees' retirement system and the public safety employees' 20 retirement system that is used for the sole purpose of amortizing 21 that portion of the unfunded actuarial accrued liability in the 22 public employees' retirement system plan 1 that excludes any amounts 23 required to amortize plan 1 benefit improvements effective after June 24 30, 2009. 25 26 Fiscal Year ending: 27 2024 2025 2026 2027 28 29 2.50% 2.00% ((1.50%)) 0.00% ((0.50%)) 0.00% (b) Beginning July 1, 2027, a minimum 0.50 percent contribution 30 is established as part of the basic employer contribution rate for 31 the public employees' retirement system and the public safety 32 employees' retirement system, to be used for the sole purpose of 33 amortizing any portion of an unfunded actuarial accrued liability in 34 the ((public employees' )) legacy retirement system ((plan 1 )) that 35 excludes any amounts required to amortize ((plan 1 )) benefit 36 improvements effective after June 30, ((2009)) 2027. This minimum 37 contribution rate shall be in effect when the actuarial value of 38 p. 27 SB 5085 assets in ((plan 1 of the public employees' )) the legacy retirement 1 system is less than 100 percent of the actuarial accrued liability.2 (5)(a) Beginning September 1, 2023, and ending August 31, 2027, 3 the following employer contribution rates shall be in effect for the 4 school employees' retirement system that is used for the sole purpose 5 of amortizing that portion of the unfunded actuarial accrued 6 liability in the public employees' retirement system plan 1 that 7 excludes any amounts required to amortize plan 1 benefit improvements 8 effective after June 30, 2009. 9 10 Fiscal Year ending: 11 2024 2025 2026 2027 12 13 2.50% 2.00% ((1.50%)) 0.00% ((0.50%)) 0.00% (b) Beginning September 1, 2027, a minimum 0.50 percent 14 contribution is established as part of the basic employer 15 contribution rate for the school employees' retirement system, to be 16 used for the sole purpose of amortizing any portion of an unfunded 17 actuarial accrued liability in the ((public employees' )) legacy 18 retirement system ((plan 1 )) that excludes any amounts required to 19 amortize ((plan 1 )) benefit improvements effective after June 30, 20 ((2009)) 2027. This minimum contribution rate shall be in effect when 21 the actuarial value of assets in ((plan 1 of the public employees' )) 22 the legacy retirement system is less than 100 percent of the 23 actuarial accrued liability. 24 (6)(a) Beginning September 1, 2023, and ending August 31, 2027, 25 the following employer contribution rates shall be in effect for the 26 teachers' retirement system that is used for the sole purpose of 27 amortizing that portion of the unfunded actuarial accrued liability 28 in the teachers' retirement system plan 1 that excludes any amounts 29 required to amortize plan 1 benefit improvements effective after June 30 30, 2009. 31 32 Fiscal Year ending: 33 2024 2025 2026 2027 34 0.50% 0.50% 0.00% 0.00% (b) Beginning September 1, 2027, a minimum 0.50 percent 35 contribution is established as part of the basic employer 36 contribution rate for the teachers' retirement system, to be used for 37 p. 28 SB 5085 the sole purpose of amortizing any portion of an unfunded actuarial 1 accrued liability in the ((teachers')) legacy retirement system 2 ((plan 1 )) that excludes any amounts required to amortize plan 1 3 benefit improvements effective after June 30, ((2009)) 2027. This 4 minimum contribution rate shall be in effect when the actuarial value 5 of assets in ((plan 1 of the teachers' )) the legacy retirement system 6 is less than 100 percent of the actuarial accrued liability.7 (7) Upon completion of each biennial actuarial valuation, the 8 state actuary shall review the appropriateness of the minimum 9 contribution rates and recommend to the council any adjustments as 10 may be needed due to material changes in benefits or actuarial 11 assumptions, methods, or experience. Any changes adopted by the 12 council shall be subject to revision by the legislature.13 Sec. 508. RCW 41.45.200 and 2006 c 189 s 17 are each amended to 14 read as follows: 15 (1) The required employer contribution rate in support of public 16 employees' retirement system members employed as supreme court 17 justices, court of appeals judges, and superior court judges who 18 elect to participate under RCW 41.40.124(1) or 41.40.870(1), or who 19 are newly elected or appointed after January 1, 2007, shall consist 20 of the public employees' retirement system employer contribution rate 21 established under this chapter plus two and one-half percent of pay.22 (2) The required contribution rate for members of the public 23 employees' retirement system plan 2 employed as supreme court 24 justices, court of appeals judges, and superior court judges who 25 elect to participate under RCW 41.40.124(1) or 41.40.870(1), or who 26 are newly elected or appointed after January 1, 2007, shall be two 27 hundred fifty percent of the member contribution rate for the public 28 employees' retirement system plan 2 established under this chapter 29 less two and one-half percent of pay. 30 (3) The required contribution rate for members of the public 31 employees' retirement system plan 1 tier of the legacy retirement 32 system employed as supreme court justices, court of appeals judges, 33 and superior court judges who elect to participate under RCW 34 41.40.124(1), or who are newly elected or appointed after January 1, 35 2007, shall be the contribution rate established under RCW 41.40.330 36 plus three and seventy-six one-hundredths percent of pay.37 p. 29 SB 5085 Sec. 509. RCW 41.45.203 and 2007 c 492 s 12 are each amended to 1 read as follows: 2 (1) The required employer contribution rate in support of 3 teachers' retirement system members employed as supreme court 4 justices, court of appeals judges, and superior court judges who 5 elect to participate under RCW 41.32.584(1), or who are newly elected 6 or appointed after January 1, 2007, shall equal the teachers' 7 retirement system employer contribution rate established under this 8 chapter. 9 (2) The required contribution rate for members of the teachers' 10 retirement system plan 1 tier of the legacy retirement system 11 employed as supreme court justices, court of appeals judges, and 12 superior court judges who elect to participate under RCW 13 41.32.584(1), or who are newly elected or appointed after January 1, 14 2007, shall be the deductions established under RCW 41.50.235 plus 15 three and seventy-six one-hundredths percent of pay.16 Sec. 510. RCW 41.45.207 and 2006 c 189 s 19 are each amended to 17 read as follows: 18 (1) The required employer contribution rate in support of public 19 employees' retirement system members employed as district court 20 judges and municipal court judges who elect to participate under RCW 21 41.40.127(1) or 41.40.873(1), or who are newly elected or appointed 22 after January 1, 2007, shall equal the public employees' retirement 23 system employer contribution rate established under this chapter.24 (2) The required contribution rate for members of the public 25 employees' retirement system plan 2 employed as district court judges 26 or municipal court judges who elect to participate under RCW 27 41.40.127(1) or 41.40.873(1), or who are newly elected or appointed 28 after January 1, 2007, shall be two hundred fifty percent of the 29 member contribution rate for the public employees' retirement system 30 plan 2 established under this chapter. 31 (3) The required contribution rate for members of the public 32 employees' retirement system plan 1 tier of the legacy retirement 33 system employed as district court judges or municipal court judges 34 who elect to participate under RCW 41.40.124(1), or who are newly 35 elected or appointed after January 1, 2007, shall be the contribution 36 rate established under RCW 41.40.330 plus six and twenty-six one-37 hundredths percent of pay. 38 p. 30 SB 5085 Sec. 601. RCW 6.15.020 and 2011 c 162 s 3 are each amended to 1 read as follows: 2 (1) It is the policy of the state of Washington to ensure the 3 well-being of its citizens by protecting retirement income to which 4 they are or may become entitled. For that purpose generally and 5 pursuant to the authority granted to the state of Washington under 11 6 U.S.C. Sec. 522 (b)(2), the exemptions in this section relating to 7 retirement benefits are provided. 8 (2) Unless otherwise provided by federal law, any money received 9 by any citizen of the state of Washington as a pension from the 10 government of the United States, whether the same be in the actual 11 possession of such person or be deposited or loaned, shall be exempt 12 from execution, attachment, garnishment, or seizure by or under any 13 legal process whatever, and when a debtor dies, or absconds, and 14 leaves his or her family any money exempted by this subsection, the 15 same shall be exempt to the family as provided in this subsection. 16 This subsection shall not apply to child support collection actions 17 issued under chapter 26.18, 26.23, or 74.20A RCW, if otherwise 18 permitted by federal law. 19 (3) The right of a person to a pension, annuity, or retirement 20 allowance or disability allowance, or death benefits, or any optional 21 benefit, or any other right accrued or accruing to any citizen of the 22 state of Washington under any employee benefit plan, and any fund 23 created by such a plan or arrangement, shall be exempt from 24 execution, attachment, garnishment, or seizure by or under any legal 25 process whatever. This subsection shall not apply to child support 26 collection actions issued under chapter 26.18, 26.23, or 74.20A RCW 27 if otherwise permitted by federal law. This subsection shall permit 28 benefits under any such plan or arrangement to be payable to a 29 spouse, former spouse, child, or other dependent of a participant in 30 such plan to the extent expressly provided for in a qualified 31 domestic relations order that meets the requirements for such orders 32 under the plan, or, in the case of benefits payable under a plan 33 described in 26 U.S.C. Sec. 403 (b) or 408 of the internal revenue 34 code of 1986, as amended, or section 409 of such code as in effect 35 before January 1, 1984, to the extent provided in any order issued by 36 a court of competent jurisdiction that provides for maintenance or 37 support. This subsection does not prohibit actions against an 38 employee benefit plan, or fund for valid obligations incurred by the 39 plan or fund for the benefit of the plan or fund. 40 p. 31 SB 5085 (4) For the purposes of this section, the term "employee benefit 1 plan" means any plan or arrangement that is described in RCW 2 49.64.020, including any Keogh plan, whether funded by a trust or by 3 an annuity contract, and in 26 U.S.C. Sec. 401 (a) or 403 (a) of the 4 internal revenue code of 1986, as amended; or that is a tax-sheltered 5 annuity or a custodial account described in section 403 (b) of such 6 code or an individual retirement account or an individual retirement 7 annuity described in section 408 of such code; or a Roth individual 8 retirement account described in section 408A of such code; or a 9 medical savings account or a health savings account described in 10 sections 220 and 223, respectively, of such code; or a retirement 11 bond described in section 409 of such code as in effect before 12 January 1, 1984. The term "employee benefit plan" shall not include 13 any employee benefit plan that is established or maintained for its 14 employees by the government of the United States, by the state of 15 Washington under chapter 2.10, 2.12, 41.26, 41.32, 41.34, 41.35, 16 41.37, 41.40, 41.--- RCW (the new chapter created in section 701 of 17 this act), or 43.43 RCW or RCW 41.50.770, or by any agency or 18 instrumentality of the government of the United States.19 (5) An employee benefit plan shall be deemed to be a spendthrift 20 trust, regardless of the source of funds, the relationship between 21 the trustee or custodian of the plan and the beneficiary, or the 22 ability of the debtor to withdraw or borrow or otherwise become 23 entitled to benefits from the plan before retirement. This subsection 24 shall not apply to child support collection actions issued under 25 chapter 26.18, 26.23, or 74.20A RCW, if otherwise permitted by 26 federal law. This subsection shall permit benefits under any such 27 plan or arrangement to be payable to a spouse, former spouse, child, 28 or other dependent of a participant in such plan to the extent 29 expressly provided for in a qualified domestic relations order that 30 meets the requirements for such orders under the plan, or, in the 31 case of benefits payable under a plan described in 26 U.S.C. Sec. 32 403(b) or 408 of the internal revenue code of 1986, as amended, or 33 section 409 of such code as in effect before January 1, 1984, to the 34 extent provided in any order issued by a court of competent 35 jurisdiction that provides for maintenance or support.36 (6) Unless prohibited by federal law, nothing contained in 37 subsection (3), (4), or (5) of this section shall be construed as a 38 termination or limitation of a spouse's community property interest 39 in an employee benefit plan held in the name of or on account of the 40 p. 32 SB 5085 other spouse, who is the participant or the account holder spouse. 1 Unless prohibited by applicable federal law, at the death of the 2 nonparticipant, nonaccount holder spouse, the nonparticipant, 3 nonaccount holder spouse may transfer or distribute the community 4 property interest of the nonparticipant, nonaccount holder spouse in 5 the participant or account holder spouse's employee benefit plan to 6 the nonparticipant, nonaccount holder spouse's estate, testamentary 7 trust, inter vivos trust, or other successor or successors pursuant 8 to the last will of the nonparticipant, nonaccount holder spouse or 9 the law of intestate succession, and that distributee may, but shall 10 not be required to, obtain an order of a court of competent 11 jurisdiction, including a nonjudicial binding agreement or order 12 entered under chapter 11.96A RCW, to confirm the distribution. For 13 purposes of subsection (3) of this section, the distributee of the 14 nonparticipant, nonaccount holder spouse's community property 15 interest in an employee benefit plan shall be considered a person 16 entitled to the full protection of subsection (3) of this section. 17 The nonparticipant, nonaccount holder spouse's consent to a 18 beneficiary designation by the participant or account holder spouse 19 with respect to an employee benefit plan shall not, absent clear and 20 convincing evidence to the contrary, be deemed a release, gift, 21 relinquishment, termination, limitation, or transfer of the 22 nonparticipant, nonaccount holder spouse's community property 23 interest in an employee benefit plan. For purposes of this 24 subsection, the term "nonparticipant, nonaccount holder spouse" means 25 the spouse of the person who is a participant in an employee benefit 26 plan or in whose name an individual retirement account is maintained. 27 As used in this subsection, an order of a court of competent 28 jurisdiction entered under chapter 11.96A RCW includes an agreement, 29 as that term is used under RCW 11.96A.220. 30 Sec. 602. RCW 41.04.440 and 2007 c 492 s 3 are each amended to 31 read as follows: 32 (1) The sole purpose of RCW 41.04.445 and 41.04.450 is to allow 33 the members of the retirement systems created in chapters 2.10, 2.12, 34 41.26, 41.32, 41.35, 41.37, 41.40, 41.34, 41.--- RCW (the new chapter 35 created in section 701 of this act), and 43.43 RCW to enjoy the tax 36 deferral benefits allowed under 26 U.S.C. 414 (h). Chapter 227, Laws 37 of 1984 does not alter in any manner the provisions of RCW 41.45.060, 38 41.45.061, and 41.45.067 which require that the member contribution 39 p. 33 SB 5085 rates shall be set so as to provide fifty percent of the cost of the 1 respective retirement plans. 2 (2) Should the legislature revoke any benefit allowed under 26 3 U.S.C. 414 (h), no affected employee shall be entitled thereafter to 4 receive such benefit as a matter of contractual right.5 Sec. 603. RCW 41.04.445 and 2007 c 492 s 4 are each amended to 6 read as follows: 7 (1) This section applies to all members who are:8 (a) Judges under the retirement system established under chapter 9 2.10, 2.12, or 2.14 RCW; 10 (b) Employees of the state under the retirement system 11 established by chapter 41.32, 41.37, 41.40, 41.--- RCW (the new 12 chapter created in section 701 of this act), or 43.43 RCW;13 (c) Employees of school districts under the retirement system 14 established by chapter 41.32 or 41.40 RCW, except for substitute 15 teachers as defined by RCW 41.32.010; 16 (d) Employees of educational service districts under the 17 retirement system established by chapter 41.32 or 41.40 RCW; or18 (e) Employees of community college districts under the retirement 19 system established by chapter 41.32 or 41.40 RCW. 20 (2) Only for compensation earned after the effective date of the 21 implementation of this section and as provided by section 414 (h) of 22 the federal internal revenue code, the employer of all the members 23 specified in subsection (1) of this section shall pick up only those 24 member contributions as required under: 25 (a) RCW 2.10.090(1); 26 (b) RCW 2.12.060; 27 (c) RCW 2.14.090; 28 (d) RCW 41.32.263; 29 (e) RCW 41.32.350; 30 (f) RCW 41.40.330 (1) and (3); 31 (g) RCW 41.45.061 and 41.45.067; 32 (h) RCW 41.34.070; 33 (i) RCW 43.43.300; and 34 (j) RCW 41.34.040. 35 (3) Only for the purposes of federal income taxation, the gross 36 income of the member shall be reduced by the amount of the 37 contribution to the respective retirement system picked up by the 38 employer. 39 p. 34 SB 5085 (4) All member contributions to the respective retirement system 1 picked up by the employer as provided by this section, plus the 2 accrued interest earned thereon, shall be paid to the member upon the 3 withdrawal of funds or lump sum payment of accumulated contributions 4 as provided under the provisions of the retirement systems.5 (5) At least forty-five days prior to implementing this section, 6 the employer shall provide: 7 (a) A complete explanation of the effects of this section to all 8 members; and 9 (b) Notification of such implementation to the director of the 10 department of retirement systems. 11 Sec. 604. RCW 41.04.450 and 2007 c 492 s 5 are each amended to 12 read as follows: 13 (1) Employers of those members under chapters 41.26, 41.34, 14 41.35, 41.37, 41.--- RCW (the new chapter created in section 701 of 15 this act), and 41.40 RCW who are not specified in RCW 41.04.445 may 16 choose to implement the employer pick up of all member contributions 17 without exception under RCW 41.26.080(1)(a), 41.26.450, 41.40.330(1), 18 41.45.060, 41.45.061, and 41.45.067 and chapter 41.34 RCW. If the 19 employer does so choose, the employer and members shall be subject to 20 the conditions and limitations of RCW 41.04.445 (3), (4), and (5) and 21 41.04.455. 22 (2) An employer exercising the option under this section may 23 later choose to withdraw from and/or reestablish the employer pick up 24 of member contributions only once in a calendar year following forty-25 five days prior notice to the director of the department of 26 retirement systems. 27 Sec. 605. RCW 41.04.803 and 2012 c 236 s 7 are each amended to 28 read as follows: 29 (1) Chapter 236, Laws of 2012 is curative and remedial and is 30 applicable to any future determination of eligibility for membership 31 in a retirement system under chapters 41.26, 41.32, 41.35, 41.37, 32 ((and)) 41.40, and 41.--- RCW (the new chapter created in section 701 33 of this act) RCW. 34 (2) Chapter 236, Laws of 2012 does not apply to or contravene any 35 prior final decision of the state supreme court regarding the 36 interpretation of the statutes addressed in chapter 236, Laws of 37 2012. 38 p. 35 SB 5085 Sec. 606. RCW 41.05.320 and 2023 c 51 s 17 are each amended to 1 read as follows: 2 (1) Elected officials and permanent employees and school 3 employees are eligible to participate in the salary reduction plan 4 and reduce their salary by agreement with the authority. The 5 authority may adopt rules to: (a) Limit the participation of 6 employing agencies and their employees in the plan; and (b) permit 7 participation in the plan by temporary employees and school 8 employees. 9 (2) Persons eligible under subsection (1) of this section may 10 enter into salary reduction agreements with the state.11 (3)(a) An eligible person may become a participant of the salary 12 reduction plan for a full plan year with annual benefit plan 13 selection for each new plan year made before the beginning of the 14 plan year, as determined by the authority, or upon becoming eligible.15 (b) Once an eligible person elects to participate in the salary 16 reduction plan and determines the amount his or her gross salary 17 shall be reduced and the benefit plan for which the funds are to be 18 used during the plan year, the agreement shall be irrevocable and may 19 not be amended during the plan year except as provided in (c) of this 20 subsection. Prior to making an election to participate in the salary 21 reduction plan, the eligible person shall be informed in writing of 22 all the benefits and reductions that will occur as a result of such 23 election. 24 (c) The authority shall provide in the salary reduction plan that 25 a participant may enroll, terminate, or change his or her election 26 after the plan year has begun if there is a significant change in a 27 participant's status, as provided by 26 U.S.C. Sec. 125 and the 28 regulations adopted under that section and defined by the authority.29 (4) The authority shall establish as part of the salary reduction 30 plan the procedures for and effect of withdrawal from the plan by 31 reason of retirement, death, leave of absence, or termination of 32 employment. To the extent possible under federal law, the authority 33 shall protect participants from forfeiture of rights under the plan.34 (5) Any reduction of salary under the salary reduction plan shall 35 not reduce the reportable compensation for the purpose of computing 36 the state retirement and pension benefits earned by the public 37 employee pursuant to chapters 41.26, 41.32, 41.35, 41.37, 41.40, 38 41.--- RCW (the new chapter created in section 701 of this act), and 39 43.43 RCW. 40 p. 36 SB 5085 Sec. 607. RCW 41.24.400 and 2007 c 492 s 7 are each amended to 1 read as follows: 2 (1) Except as provided in subsection (2) of this section, any 3 municipality may make provision by appropriate legislation and 4 payment of fees required by RCW 41.24.030(((1))) (2) solely for the 5 purpose of enabling any reserve officer to enroll under the 6 retirement pension provisions of this chapter or fees required under 7 RCW 41.24.030(((1))) (2) to pay for the costs of extending the relief 8 provisions of this chapter to its reserve officers.9 (2) A reserve officer is not eligible to receive a benefit under 10 the retirement provisions of this chapter for service under chapter 11 41.26, 41.32, 41.35, 41.37, ((or)) 41.40, or 41.--- RCW (the new 12 chapter created in section 701 of this act) RCW. 13 (3) Every municipality shall make provisions for the collection 14 and payment of the fees required under this chapter, and shall 15 continue to make provisions for all reserve officers who come under 16 this chapter as long as they continue to be employed as reserve 17 officers. 18 (4) Except as provided under RCW 41.24.450, a reserve officer is 19 not eligible to receive a benefit under the relief provisions of this 20 chapter. 21 Sec. 608. RCW 41.50.080 and 2011 1st sp.s. c 47 s 21 are each 22 amended to read as follows: 23 The state investment board shall provide for the investment of 24 all funds of the Washington public employees' retirement system, the 25 teachers' retirement system, the school employees' retirement system, 26 the Washington law enforcement officers' and firefighters' retirement 27 system, the Washington state patrol retirement system, the Washington 28 judicial retirement system, the Washington public safety employees' 29 retirement system, the legacy retirement system, the higher education 30 retirement plan supplemental benefit fund, and the judges' retirement 31 fund, pursuant to RCW 43.84.150, and may sell or exchange investments 32 acquired in the exercise of that authority. 33 Sec. 609. RCW 41.50.235 and 1991 c 35 s 52 are each amended to 34 read as follows: 35 Every officer authorized to issue salary warrants to teachers 36 shall deduct from the salary payments to any member of the Washington 37 state teachers' retirement system plan 1 of the legacy retirement 38 p. 37 SB 5085 system regularly employed an amount which will result in total 1 deductions of six percent of the amount of earnable compensation paid 2 in any fiscal year. These deductions shall be transmitted and 3 reported to the retirement system as directed by the department.4 Sec. 610. RCW 41.50.255 and 2004 c 242 s 49 are each amended to 5 read as follows: 6 The director is authorized to pay from the interest earnings of 7 the trust funds of the public employees' retirement system, the 8 teachers' retirement system, the Washington state patrol retirement 9 system, the Washington judicial retirement system, the judges' 10 retirement system, the school employees' retirement system, the 11 public safety employees' retirement system, the legacy retirement 12 system, or the law enforcement officers' and firefighters' retirement 13 system lawful obligations of the appropriate system for legal 14 expenses and medical expenses which expenses are primarily incurred 15 for the purpose of protecting the appropriate trust fund or are 16 incurred in compliance with statutes governing such funds.17 The term "legal expense" includes, but is not limited to, legal 18 services provided through the legal services revolving fund, fees for 19 expert witnesses, travel expenses, fees for court reporters, cost of 20 transcript preparation, and reproduction of documents.21 The term "medical costs" includes, but is not limited to, 22 expenses for the medical examination or reexamination of members or 23 retirees, the costs of preparation of medical reports, and fees 24 charged by medical professionals for attendance at discovery 25 proceedings or hearings. 26 The director may also pay from the interest earnings of the trust 27 funds specified in this section costs incurred in investigating fraud 28 and collecting overpayments, including expenses incurred to review 29 and investigate cases of possible fraud against the trust funds and 30 collection agency fees and other costs incurred in recovering 31 overpayments. Recovered funds must be returned to the appropriate 32 trust funds. 33 Sec. 611. RCW 41.50.500 and 2004 c 242 s 50 are each amended to 34 read as follows: 35 Unless the context clearly requires otherwise, the definitions in 36 this section apply throughout RCW 41.50.500 through 41.50.650, 37 41.50.670 through 41.50.720, and 26.09.138. 38 p. 38 SB 5085 (1) "Benefits" means periodic retirement payments or a withdrawal 1 of accumulated contributions. 2 (2) "Disposable benefits" means that part of the benefits of an 3 individual remaining after the deduction from those benefits of any 4 amount required by law to be withheld. The term "required by law to 5 be withheld" does not include any deduction elective to the member.6 (3) "Dissolution order" means any judgment, decree, or order of 7 spousal maintenance, property division, or court-approved property 8 settlement incident to a decree of divorce, dissolution, invalidity, 9 or legal separation issued by the superior court of the state of 10 Washington or a judgment, decree, or other order of spousal support 11 issued by a court of competent jurisdiction in another state or 12 country, that has been registered or otherwise made enforceable in 13 this state. 14 (4) "Mandatory benefits assignment order" means an order issued 15 to the department of retirement systems pursuant to RCW 41.50.570 to 16 withhold and deliver benefits payable to an obligor under chapter 17 2.10, 2.12, 41.26, 41.32, 41.40, 41.35, 41.37, 41.--- RCW (the new 18 chapter created in section 701 of this act), or 43.43 RCW.19 (5) "Obligee" means an ex spouse or spouse to whom a duty of 20 spousal maintenance or property division obligation is owed.21 (6) "Obligor" means the spouse or ex spouse owing a duty of 22 spousal maintenance or a property division obligation.23 (7) "Periodic retirement payments" means periodic payments of 24 retirement allowances, including but not limited to service 25 retirement allowances, disability retirement allowances, and 26 survivors' allowances. The term does not include a withdrawal of 27 accumulated contributions. 28 (8) "Property division obligation" means any outstanding court-29 ordered property division or court-approved property settlement 30 obligation incident to a decree of divorce, dissolution, or legal 31 separation. 32 (9) "Standard allowance" means a benefit payment option selected 33 under RCW 2.10.146(1)(a), 41.26.460(1)(a), 41.32.785(1)(a), 34 41.40.188(1)(a), 41.40.660(1), 41.40.845(1)(a), 41.37.170, or 35 41.35.220 that ceases upon the death of the retiree. Standard 36 allowance also means the benefit allowance provided under RCW 37 2.10.110, 2.10.130, 43.43.260, 41.26.100, 41.26.130(1)(a), or chapter 38 2.12 RCW. Standard allowance also means the maximum retirement 39 p. 39 SB 5085 allowance available under RCW 41.32.530(1) following member 1 withdrawal of accumulated contributions, if any. 2 (10) "Withdrawal of accumulated contributions" means a lump sum 3 payment to a retirement system member of all or a part of the 4 member's accumulated contributions, including accrued interest, at 5 the request of the member including any lump sum amount paid upon the 6 death of the member. 7 Sec. 612. RCW 41.54.010 and 2007 c 207 s 1 are each amended to 8 read as follows: 9 The definitions in this section apply throughout this chapter 10 unless the context clearly requires otherwise. 11 (1) "Base salary" means salaries or wages earned by a member of a 12 system during a payroll period for personal services and includes 13 wages and salaries deferred under provisions of the United States 14 internal revenue code, but shall exclude overtime payments, nonmoney 15 maintenance compensation, and lump sum payments for deferred annual 16 sick leave, unused accumulated vacation, unused accumulated annual 17 leave, any form of severance pay, any bonus for voluntary retirement, 18 any other form of leave, or any similar lump sum payment; except that 19 forms of payment which are excluded under this subsection shall be 20 included in base salary when reportable to the department in all of a 21 dual member's retirement systems, and when none of the dual member's 22 retirement systems are the Washington state patrol retirement system.23 (2) "Department" means the department of retirement systems.24 (3) "Director" means the director of the department of retirement 25 systems. 26 (4) "Dual member" means a person who (a) is or becomes a member 27 of a system on or after July 1, 1988, (b) has been a member of one or 28 more other systems, and (c) has never been retired for service from a 29 retirement system and is not receiving a disability retirement or 30 disability leave benefit from any retirement system listed in RCW 31 41.50.030 or subsection (6) of this section. 32 (5) "Service" means the same as it may be defined in each 33 respective system. For the purposes of RCW 41.54.030, military 34 service granted under RCW 41.40.170(3) or 43.43.260 may only be based 35 on service accrued under chapter 41.40 or 43.43 RCW, respectively.36 (6) "System" means the retirement systems established under 37 chapters 41.32, 41.40, 41.44, 41.35, 41.37, 41.--- RCW (the new 38 chapter created in section 701 of this act), and 43.43 RCW; plan 2 of 39 p. 40 SB 5085 the system established under chapter 41.26 RCW; and the city employee 1 retirement systems for Seattle, Tacoma, and Spokane.2 Sec. 613. RCW 41.54.040 and 2004 c 242 s 59 are each amended to 3 read as follows: 4 (1) The allowances calculated under RCW 41.54.030, 41.54.032, and 5 41.54.034 shall be paid separately by each respective current and 6 prior system. Any deductions from such separate payments shall be 7 according to the provisions of the respective systems.8 (2) Postretirement adjustments, if any, shall be applied by the 9 respective systems based on the payments made under subsection (1) of 10 this section. 11 (3) The department shall adopt rules under chapter 34.05 RCW to 12 ensure that where a dual member has service in a system established 13 under chapter 41.32, 41.40, 41.44, 41.35, 41.37, 41.--- RCW (the new 14 chapter created in section 701 of this act), or 43.43 RCW; service in 15 plan 2 of the system established under chapter 41.26 RCW; and service 16 under the city employee retirement system for Seattle, Tacoma, or 17 Spokane, the additional cost incurred as a result of the dual member 18 receiving a benefit under this chapter shall be borne by the 19 retirement system incurring the additional cost. 20 Sec. 614. RCW 43.84.092 and 2024 c 210 s 4 and 2024 c 168 s 12 21 are each reenacted and amended to read as follows:22 (1) All earnings of investments of surplus balances in the state 23 treasury shall be deposited to the treasury income account, which 24 account is hereby established in the state treasury.25 (2) The treasury income account shall be utilized to pay or 26 receive funds associated with federal programs as required by the 27 federal cash management improvement act of 1990. The treasury income 28 account is subject in all respects to chapter 43.88 RCW, but no 29 appropriation is required for refunds or allocations of interest 30 earnings required by the cash management improvement act. Refunds of 31 interest to the federal treasury required under the cash management 32 improvement act fall under RCW 43.88.180 and shall not require 33 appropriation. The office of financial management shall determine the 34 amounts due to or from the federal government pursuant to the cash 35 management improvement act. The office of financial management may 36 direct transfers of funds between accounts as deemed necessary to 37 implement the provisions of the cash management improvement act, and 38 p. 41 SB 5085 this subsection. Refunds or allocations shall occur prior to the 1 distributions of earnings set forth in subsection (4) of this 2 section. 3 (3) Except for the provisions of RCW 43.84.160, the treasury 4 income account may be utilized for the payment of purchased banking 5 services on behalf of treasury funds including, but not limited to, 6 depository, safekeeping, and disbursement functions for the state 7 treasury and affected state agencies. The treasury income account is 8 subject in all respects to chapter 43.88 RCW, but no appropriation is 9 required for payments to financial institutions. Payments shall occur 10 prior to distribution of earnings set forth in subsection (4) of this 11 section. 12 (4) Monthly, the state treasurer shall distribute the earnings 13 credited to the treasury income account. The state treasurer shall 14 credit the general fund with all the earnings credited to the 15 treasury income account except: 16 (a) The following accounts and funds shall receive their 17 proportionate share of earnings based upon each account's and fund's 18 average daily balance for the period: The abandoned recreational 19 vehicle disposal account, the aeronautics account, the Alaskan Way 20 viaduct replacement project account, the ambulance transport fund, 21 the budget stabilization account, the capital vessel replacement 22 account, the capitol building construction account, the Central 23 Washington University capital projects account, the charitable, 24 educational, penal and reformatory institutions account, the Chehalis 25 basin account, the Chehalis basin taxable account, the clean fuels 26 credit account, the clean fuels transportation investment account, 27 the cleanup settlement account, the climate active transportation 28 account, the climate transit programs account, the Columbia river 29 basin water supply development account, the Columbia river basin 30 taxable bond water supply development account, the Columbia river 31 basin water supply revenue recovery account, the common school 32 construction fund, the community forest trust account, the connecting 33 Washington account, the county arterial preservation account, the 34 county criminal justice assistance account, the covenant 35 homeownership account, the deferred compensation administrative 36 account, the deferred compensation principal account, the department 37 of licensing services account, the department of retirement systems 38 expense account, the developmental disabilities community services 39 account, the diesel idle reduction account, the opioid abatement 40 p. 42 SB 5085 settlement account, the drinking water assistance account, the 1 administrative subaccount of the drinking water assistance account, 2 the early learning facilities development account, the early learning 3 facilities revolving account, the Eastern Washington University 4 capital projects account, the education construction fund, the 5 education legacy trust account, the election account, the electric 6 vehicle account, the energy freedom account, the energy recovery act 7 account, the essential rail assistance account, The Evergreen State 8 College capital projects account, the fair start for kids account, 9 the family medicine workforce development account, the ferry bond 10 retirement fund, the fish, wildlife, and conservation account, the 11 freight mobility investment account, the freight mobility multimodal 12 account, the grade crossing protective fund, the higher education 13 retirement plan supplemental benefit fund, the Washington student 14 loan account, the highway bond retirement fund, the highway 15 infrastructure account, the highway safety fund, the hospital safety 16 net assessment fund, the Interstate 5 bridge replacement project 17 account, the Interstate 405 and state route number 167 express toll 18 lanes account, the judges' retirement account, the judicial 19 retirement administrative account, the judicial retirement principal 20 account, the limited fish and wildlife account, the local leasehold 21 excise tax account, the local real estate excise tax account, the 22 local sales and use tax account, the marine resources stewardship 23 trust account, the medical aid account, the money-purchase retirement 24 savings administrative account, the money-purchase retirement savings 25 principal account, the motor vehicle fund, the motorcycle safety 26 education account, the move ahead WA account, the move ahead WA 27 flexible account, the multimodal transportation account, the multiuse 28 roadway safety account, the municipal criminal justice assistance 29 account, the oyster reserve land account, the pension funding 30 stabilization account, the perpetual surveillance and maintenance 31 account, the pilotage account, the pollution liability insurance 32 agency underground storage tank revolving account, ((the public 33 employees' retirement system plan 1 account, )) the public employees' 34 retirement system combined plan 2 and plan 3 account, the public 35 facilities construction loan revolving account, the public health 36 supplemental account, the public works assistance account, the Puget 37 Sound capital construction account, the Puget Sound ferry operations 38 account, the Puget Sound Gateway facility account, the Puget Sound 39 taxpayer accountability account, the real estate appraiser commission 40 p. 43 SB 5085 account, the recreational vehicle account, the regional mobility 1 grant program account, the reserve officers' relief and pension 2 principal fund, the resource management cost account, the rural 3 arterial trust account, the rural mobility grant program account, the 4 rural Washington loan fund, the second injury fund, the sexual 5 assault prevention and response account, the site closure account, 6 the skilled nursing facility safety net trust fund, the small city 7 pavement and sidewalk account, the special category C account, the 8 special wildlife account, the state hazard mitigation revolving loan 9 account, the state investment board expense account, the state 10 investment board commingled trust fund accounts, the state patrol 11 highway account, the state reclamation revolving account, the state 12 route number 520 civil penalties account, the state route number 520 13 corridor account, the statewide broadband account, the statewide 14 tourism marketing account, the supplemental pension account, the 15 Tacoma Narrows toll bridge account, ((the teachers' retirement system 16 plan 1 account,)) the teachers' retirement system combined plan 2 and 17 plan 3 account, the tobacco prevention and control account, the 18 tobacco settlement account, the toll facility bond retirement 19 account, the transportation 2003 account (nickel account), the 20 transportation equipment fund, the JUDY transportation future funding 21 program account, the transportation improvement account, the 22 transportation improvement board bond retirement account, the 23 transportation infrastructure account, the transportation partnership 24 account, the traumatic brain injury account, the tribal opioid 25 prevention and treatment account, the University of Washington bond 26 retirement fund, the University of Washington building account, the 27 voluntary cleanup account, the volunteer firefighters' relief and 28 pension principal fund, the volunteer firefighters' and reserve 29 officers' administrative fund, the vulnerable roadway user education 30 account, the Washington judicial retirement system account, ((the 31 Washington law enforcement officers' and firefighters' system plan 1 32 retirement account, )) the Washington law enforcement officers' and 33 firefighters' system plan 2 retirement account, the Washington public 34 safety employees' plan 2 retirement account, the Washington school 35 employees' retirement system combined plan 2 and 3 account, the 36 Washington state patrol retirement account, the Washington State 37 University building account, the Washington State University bond 38 retirement fund, the water pollution control revolving administration 39 account, the water pollution control revolving fund, the Western 40 p. 44 SB 5085 Washington University capital projects account, the legacy retirement 1 system account, the Yakima integrated plan implementation account, 2 the Yakima integrated plan implementation revenue recovery account, 3 and the Yakima integrated plan implementation taxable bond account. 4 Earnings derived from investing balances of the agricultural 5 permanent fund, the normal school permanent fund, the permanent 6 common school fund, the scientific permanent fund, and the state 7 university permanent fund shall be allocated to their respective 8 beneficiary accounts. 9 (b) Any state agency that has independent authority over accounts 10 or funds not statutorily required to be held in the state treasury 11 that deposits funds into a fund or account in the state treasury 12 pursuant to an agreement with the office of the state treasurer shall 13 receive its proportionate share of earnings based upon each account's 14 or fund's average daily balance for the period. 15 (5) In conformance with Article II, section 37 of the state 16 Constitution, no treasury accounts or funds shall be allocated 17 earnings without the specific affirmative directive of this section.18 Sec. 615. RCW 43.84.092 and 2024 c 210 s 5 and 2024 c 168 s 13 19 are each reenacted and amended to read as follows:20 (1) All earnings of investments of surplus balances in the state 21 treasury shall be deposited to the treasury income account, which 22 account is hereby established in the state treasury.23 (2) The treasury income account shall be utilized to pay or 24 receive funds associated with federal programs as required by the 25 federal cash management improvement act of 1990. The treasury income 26 account is subject in all respects to chapter 43.88 RCW, but no 27 appropriation is required for refunds or allocations of interest 28 earnings required by the cash management improvement act. Refunds of 29 interest to the federal treasury required under the cash management 30 improvement act fall under RCW 43.88.180 and shall not require 31 appropriation. The office of financial management shall determine the 32 amounts due to or from the federal government pursuant to the cash 33 management improvement act. The office of financial management may 34 direct transfers of funds between accounts as deemed necessary to 35 implement the provisions of the cash management improvement act, and 36 this subsection. Refunds or allocations shall occur prior to the 37 distributions of earnings set forth in subsection (4) of this 38 section. 39 p. 45 SB 5085 (3) Except for the provisions of RCW 43.84.160, the treasury 1 income account may be utilized for the payment of purchased banking 2 services on behalf of treasury funds including, but not limited to, 3 depository, safekeeping, and disbursement functions for the state 4 treasury and affected state agencies. The treasury income account is 5 subject in all respects to chapter 43.88 RCW, but no appropriation is 6 required for payments to financial institutions. Payments shall occur 7 prior to distribution of earnings set forth in subsection (4) of this 8 section. 9 (4) Monthly, the state treasurer shall distribute the earnings 10 credited to the treasury income account. The state treasurer shall 11 credit the general fund with all the earnings credited to the 12 treasury income account except: 13 (a) The following accounts and funds shall receive their 14 proportionate share of earnings based upon each account's and fund's 15 average daily balance for the period: The abandoned recreational 16 vehicle disposal account, the aeronautics account, the Alaskan Way 17 viaduct replacement project account, the budget stabilization 18 account, the capital vessel replacement account, the capitol building 19 construction account, the Central Washington University capital 20 projects account, the charitable, educational, penal and reformatory 21 institutions account, the Chehalis basin account, the Chehalis basin 22 taxable account, the clean fuels credit account, the clean fuels 23 transportation investment account, the cleanup settlement account, 24 the climate active transportation account, the climate transit 25 programs account, the Columbia river basin water supply development 26 account, the Columbia river basin taxable bond water supply 27 development account, the Columbia river basin water supply revenue 28 recovery account, the common school construction fund, the community 29 forest trust account, the connecting Washington account, the county 30 arterial preservation account, the county criminal justice assistance 31 account, the covenant homeownership account, the deferred 32 compensation administrative account, the deferred compensation 33 principal account, the department of licensing services account, the 34 department of retirement systems expense account, the developmental 35 disabilities community services account, the diesel idle reduction 36 account, the opioid abatement settlement account, the drinking water 37 assistance account, the administrative subaccount of the drinking 38 water assistance account, the early learning facilities development 39 account, the early learning facilities revolving account, the Eastern 40 p. 46 SB 5085 Washington University capital projects account, the education 1 construction fund, the education legacy trust account, the election 2 account, the electric vehicle account, the energy freedom account, 3 the energy recovery act account, the essential rail assistance 4 account, The Evergreen State College capital projects account, the 5 fair start for kids account, the family medicine workforce 6 development account, the ferry bond retirement fund, the fish, 7 wildlife, and conservation account, the freight mobility investment 8 account, the freight mobility multimodal account, the grade crossing 9 protective fund, the higher education retirement plan supplemental 10 benefit fund, the Washington student loan account, the highway bond 11 retirement fund, the highway infrastructure account, the highway 12 safety fund, the hospital safety net assessment fund, the Interstate 13 5 bridge replacement project account, the Interstate 405 and state 14 route number 167 express toll lanes account, the judges' retirement 15 account, the judicial retirement administrative account, the judicial 16 retirement principal account, the limited fish and wildlife account, 17 the local leasehold excise tax account, the local real estate excise 18 tax account, the local sales and use tax account, the marine 19 resources stewardship trust account, the medical aid account, the 20 money-purchase retirement savings administrative account, the money-21 purchase retirement savings principal account, the motor vehicle 22 fund, the motorcycle safety education account, the move ahead WA 23 account, the move ahead WA flexible account, the multimodal 24 transportation account, the multiuse roadway safety account, the 25 municipal criminal justice assistance account, the oyster reserve 26 land account, the pension funding stabilization account, the 27 perpetual surveillance and maintenance account, the pilotage account, 28 the pollution liability insurance agency underground storage tank 29 revolving account, ((the public employees' retirement system plan 1 30 account,)) the public employees' retirement system combined plan 2 31 and plan 3 account, the public facilities construction loan revolving 32 account, the public health supplemental account, the public works 33 assistance account, the Puget Sound capital construction account, the 34 Puget Sound ferry operations account, the Puget Sound Gateway 35 facility account, the Puget Sound taxpayer accountability account, 36 the real estate appraiser commission account, the recreational 37 vehicle account, the regional mobility grant program account, the 38 reserve officers' relief and pension principal fund, the resource 39 management cost account, the rural arterial trust account, the rural 40 p. 47 SB 5085 mobility grant program account, the rural Washington loan fund, the 1 second injury fund, the sexual assault prevention and response 2 account, the site closure account, the skilled nursing facility 3 safety net trust fund, the small city pavement and sidewalk account, 4 the special category C account, the special wildlife account, the 5 state hazard mitigation revolving loan account, the state investment 6 board expense account, the state investment board commingled trust 7 fund accounts, the state patrol highway account, the state 8 reclamation revolving account, the state route number 520 civil 9 penalties account, the state route number 520 corridor account, the 10 statewide broadband account, the statewide tourism marketing account, 11 the supplemental pension account, the Tacoma Narrows toll bridge 12 account, ((the teachers' retirement system plan 1 account, )) the 13 teachers' retirement system combined plan 2 and plan 3 account, the 14 tobacco prevention and control account, the tobacco settlement 15 account, the toll facility bond retirement account, the 16 transportation 2003 account (nickel account), the transportation 17 equipment fund, the JUDY transportation future funding program 18 account, the transportation improvement account, the transportation 19 improvement board bond retirement account, the transportation 20 infrastructure account, the transportation partnership account, the 21 traumatic brain injury account, the tribal opioid prevention and 22 treatment account, the University of Washington bond retirement fund, 23 the University of Washington building account, the voluntary cleanup 24 account, the volunteer firefighters' relief and pension principal 25 fund, the volunteer firefighters' and reserve officers' 26 administrative fund, the vulnerable roadway user education account, 27 the Washington judicial retirement system account, ((the Washington 28 law enforcement officers' and firefighters' system plan 1 retirement 29 account,)) the Washington law enforcement officers' and firefighters' 30 system plan 2 retirement account, the Washington public safety 31 employees' plan 2 retirement account, the Washington school 32 employees' retirement system combined plan 2 and 3 account, the 33 Washington state patrol retirement account, the Washington State 34 University building account, the Washington State University bond 35 retirement fund, the water pollution control revolving administration 36 account, the water pollution control revolving fund, the Western 37 Washington University capital projects account, the legacy retirement 38 system account, the Yakima integrated plan implementation account, 39 the Yakima integrated plan implementation revenue recovery account, 40 p. 48 SB 5085 and the Yakima integrated plan implementation taxable bond account. 1 Earnings derived from investing balances of the agricultural 2 permanent fund, the normal school permanent fund, the permanent 3 common school fund, the scientific permanent fund, and the state 4 university permanent fund shall be allocated to their respective 5 beneficiary accounts. 6 (b) Any state agency that has independent authority over accounts 7 or funds not statutorily required to be held in the state treasury 8 that deposits funds into a fund or account in the state treasury 9 pursuant to an agreement with the office of the state treasurer shall 10 receive its proportionate share of earnings based upon each account's 11 or fund's average daily balance for the period. 12 (5) In conformance with Article II, section 37 of the state 13 Constitution, no treasury accounts or funds shall be allocated 14 earnings without the specific affirmative directive of this section.15 NEW SECTION. Sec. 616. A new section is added to chapter 41.26 16 RCW to read as follows: 17 The assets, liabilities, and membership of the law enforcement 18 officers' and firefighters' retirement system plan 1, the teachers' 19 retirement system plan 1, and the public employees' retirement system 20 plan 1, are hereby merged into a new plan in chapter 41.--- RCW (the 21 new chapter created in section 701 of this act). 22 NEW SECTION. Sec. 617. A new section is added to chapter 41.32 23 RCW to read as follows: 24 The assets, liabilities, and membership of the law enforcement 25 officers' and firefighters' retirement system plan 1, the teachers' 26 retirement system plan 1, and the public employees' retirement system 27 plan 1, are hereby merged into a new plan in chapter 41.--- RCW (the 28 new chapter created in section 701 of this act). 29 NEW SECTION. Sec. 618. A new section is added to chapter 41.35 30 RCW to read as follows: 31 The assets, liabilities, and membership of the law enforcement 32 officers' and firefighters' retirement system plan 1, the teachers' 33 retirement system plan 1, and the public employees' retirement system 34 plan 1, are hereby merged into a new plan in chapter 41.--- RCW (the 35 new chapter created in section 701 of this act). 36 p. 49 SB 5085 NEW SECTION. Sec. 619. A new section is added to chapter 41.37 1 RCW to read as follows: 2 The assets, liabilities, and membership of the law enforcement 3 officers' and firefighters' retirement system plan 1, the teachers' 4 retirement system plan 1, and the public employees' retirement system 5 plan 1, are hereby merged into a new plan in chapter 41.--- RCW (the 6 new chapter created in section 701 of this act). 7 NEW SECTION. Sec. 620. A new section is added to chapter 41.40 8 RCW to read as follows: 9 The assets, liabilities, and membership of the law enforcement 10 officers' and firefighters' retirement system plan 1, the teachers' 11 retirement system plan 1, and the public employees' retirement system 12 plan 1, are hereby merged into a new plan in chapter 41.--- RCW (the 13 new chapter created in section 701 of this act). 14 NEW SECTION. Sec. 701. Sections 201 through 204 of this act 15 constitute a new chapter in Title 41 RCW.16 NEW SECTION. Sec. 702. (1) Sections 401 through 404 of this act 17 are necessary for the immediate preservation of the public peace, 18 health, or safety, or support of the state government and its 19 existing public institutions, and take effect July 1, 2025.20 (2) Section 615 of this act takes effect July 1, 2028.21 (3)(a) Except for sections 401 through 404 and 615 of this act, 22 this act takes effect on the earlier of the department of retirement 23 systems receiving a favorable determination letter from the federal 24 internal revenue service, or September 1, 2027. 25 (b) The department of retirement systems must provide written 26 notice of the effective date under this subsection (3) to affected 27 parties, the chief clerk of the house of representatives, the 28 secretary of the senate, the office of the code reviser, and others 29 as deemed appropriate by the department. 30 NEW SECTION. Sec. 703. (1) Section 614 of this act expires July 31 1, 2028.32 (2)(a) The merger in section 201 of this act must be administered 33 so as to comply with the internal revenue code, Title 26 U.S.C., and 34 specifically with plan qualification requirements imposed on 35 governmental plans by section 401 (a) of the internal revenue code. 36 p. 50 SB 5085 Any section or provision of this act that is susceptible to more than 1 one construction must be interpreted so as to meet this requirement.2 (b) If the federal internal revenue service issues a 3 determination letter stating that section 201 of this act is in 4 conflict with the plan qualification requirements for governmental 5 plans in section 401 (a) of the internal revenue code, and the 6 conflict cannot be resolved through administrative action or 7 statutory change, then: 8 (i) Sections 401 through 404 of this act expire on the next June 9 30th following receipt of the letter or receipt of relevant notice; 10 and 11 (ii) Except for sections 401 through 404 of this act, this act is 12 null and void. 13 (c) The department of retirement systems must provide written 14 notice of the expiration date of sections 401 through 404 of this act 15 to affected parties, the chief clerk of the house of representatives, 16 the secretary of the senate, the office of the code reviser, and 17 others as deemed appropriate by the department. 18 --- END --- p. 51 SB 5085