LEOFF 2 Board Releases Budget Review

This report has been released by the LEOFF 2 Board as of July 30, 2017:

We have reviewed the proposed budget for impacts on LEOFF Plan 2.  Below is a summary of our review.

The 2017 Legislature released their 2017-2019 Omnibus Operating Budget (PSSB 5883).

The following is a summary of issues INCLUDED in the budget which impact or are of interest to LEOFF Plan 2:

1. Contribution Rates (Section 711)
   The budget fully funds the contribution rates adopted by the LEOFF Plan 2 Retirement Board for the 2017-2019 biennium.
2. Alternate Revenue (Section 964)
   The $50 million alternate revenue payment scheduled for September 30, 2017 is canceled.  Intent language is added that any distribution to the Benefits Improvement Account in 2019 may include a transfer from the LEOFF Plan 2 trust fund.
3. Reimbursement for Special Events Contributions (Section 964):
   Employers commonly provide emergency services or security at venues, sporting events, etc. LEOFF 2 members who work these duties receive compensation that is included in the member’s basic salary. This compensation is pensionable and therefore requires retirement contributions be paid by all parties (member, employer and state). During fiscal years 2018 and 2019, when an employer charges a fee or recovers costs for this type of work, the employer must cover both the employer and the state contributions.

The following is a summary of issues which were NOT INLCUDED in the final proposed budget:

1. Merger (not included)
   A merger of LEOFF Plan 1 with either TRS Plan 1 or LEOFF Plan 2 is NOT included in this budget proposal.
2. DRS and OSA Administrative Expenses (not included)
   The Dept. of Retirement Systems (DRS) administrative fee of 0.18 percent on all employers is suspended during the 2017-2019 biennium.  Expenses for administration of the Department of Retirement Systems and the Office of the State Actuary are instead paid on a proportional basis from the interest earnings on the pension trust funds.
3. 50/30/20 Funding Ratio Change (not included)
   Except for fire protection districts, the State contribution to LEOFF Plan 2 is eliminated making the contribution rate funding ratio 50% member and 50% employer.
4. Tribal Police Study (not included)
   A $50,000 appropriation is provided for the LEOFF Plan 2 Retirement Board to study the tax, legal, fiscal, policy and administrative issues related to allowing tribal law enforcement officers to become members of LEOFF Plan 2. The Department of Retirement Systems, the Attorney General’s Office, and the Office of the State Actuary are directed to provide the Board with any information or assistance the Board requests. The Board is directed to include stakeholder input as part of its deliberations. The Board is required to submit a report of the results of this study to the legislature by January 8, 2018.
5. Fire Insurance Premium Tax (not included)
   Changes are made to the distribution of the fire insurance premium tax.  Twenty-five percent of fire insurance premiums tax will be distributed eligible cities, towns, and fire protection districts with a cap of $2,000 per eligible firefighter. Eligibility criteria are specified.

Please contact Executive Director Steve Nelsen with any questions about the items in this summary.