TRS Underfunding

One of the major concerns of LEOFF 1 members about the proposed TRS 1/LEOFF 1 merger is the failure of the legislature to properly fund the TRS 1 pension plan.  In fact, the under funding has been so bad that there is no reason to expect the legislature will address these issues in the future.  This would condemn LEOFF 1 to a chronically underfunded pension and subject it to the threat of a move to lower or alter benefits.

Of course the legislature “promises” that no benefits would change and that all future benefits would be protected.  Given the recent court actions in California and New Jersey it is clear that members can take little comfort in these promises.

As a tier within the TRS 1 system, LEOFF 1 members would have no way to effectively lobby for their own interests and protection.  Changing or altering benefits within the system would be extremely difficult when we would be asking for changes that would correct or improve benefits.  A good example is the latest law passed in the last session that re-opened the sign up window for members to include a post retirement spouse as a survivor.  This was a no-cost improvement and it took three sessions of intense lobbying to get it passed.

Think of how that would play out when we ask legislators to properly fund the pension plan.  This would involve not just LEOFF 1 but TRS 1 as well.  Even with the WEA, one of the largest and strongest unions in the state, pushing for proper funding no progress has been made.  In fact just the opposite is true.

Prior to enactment of the Pension Funding Reform Act in 1989, contributions to the TRS Plan 1 were made on an ad hoc basis. For the nine biennia (18 years) extending from 1973 through 1991, the full funding requirements of PERS, TRS, and LEOFF were satisfied by the legislature only once. Actual contributions ranged from a low of 60 percent of the required amount in 1973-75 to a high of 95 percent in 1979-81.

After passage of the Pension Funding Reform Act, the legislature embarked upon a 12-year period (1991-2003) of funding 100 percent of the actuarially required contributions. However, in the 2001-2003 and the 2003-2005 biennia the legislature again created a gap between the actuarially required contributions and the amounts actually appropriated for expenditure, funding the retirement systems at the 70 percent level for 2003-2005.

We don’t currently have the data for the intervening biennia, but we see the legislature now attempting to circumvent the UAAL payments by creating the so called TRS 1/LEOFF 1 merger.

It is very clear that the legislature does not want to fund the pensions and it becomes obvious that this underfunding is likely to continue as the legislature continues to fail to meet its obligations.

This is, of course, why LEOFF 1 members are frightened by the proposed merger.  We simply cannot trust the legislature to fund the pensions properly.  LEOFF 1 has been fortunate to one of the pension systems where the funding has been adequate.  It should stay that way.

Part of the risk is clear as we can see what has happened in other states.  See California court opens door to changing public-employee pensions.

Also, please review this SCPP document from 2005 that details the under funding and discusses the actions of other states in dealing with similar problems. See http://leoff1.net/pdf/TRS_1_Pension_Hist.pdf

LEOFF 1 is a properly funded pension system.  It should be left alone.

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