Retired Seattle Police Officers Association
 

LEOFF 1/TRS 1 Merger Study

On Tuesday, August 30, 2019 the 2nd Roundtable Meeting on the proposed TRS 1/LEOFF 1 merger was held in Olympia.

Who was there?

About thirty people attended. The principal speaker was the State Actuary, Matt Smith.  Also in attendance was Ann Hall the assistant Attorney General assigned to the Select Committee on Pension Policy (SCPP), Senator Steve Conway the Chair of the SCPP, Bud Sizemore the lobbyist for WACOPS and Candice Bock the lobbyist for the Association of Washington Cities.  On the telephone for part of the meeting was Senator Barbara Bailey who also serves on the SCPP.

Members from the Seattle Police Retired Officers Association, the Retired Fire Fighters of Washington, the Washington Retired Police Association and the LEOFF 1 Coalition were also in attendance. Additionally there were a number of LEOFF 1 members attending on their own as well as some from other organizations including one person from the retired teachers.

Noticeably absent were members of the SCPP – the people charged with issuing the study to the legislature.  Also absent were the bill sponsors – the people who proposed the merger in the first place. 

What happened?

Matt Smith took the bulk of the time discussing the Fiscal Note  that accompanied SB 6668.  While his presentation is valuable from an educational aspect, all it really does is show what happens with the numbers if the bill were to pass.  This is all we can really expect from the Actuary.  Give him some numbers and he can calculate the impact.  But, he is a State employee and he is not willing to add his comments or even his professional evaluation of any proposal.  Matt was quick to point out in answer to several questions that they dealt with policy issues and that he could not comment.

I see little to gain in once again reviewing the Fiscal Note.  It is a slow read but clearly understandable by anyone who is willing to invest the time to slog through it.  There are several articles on this site that discuss the numbers in detail.  Always the bottom line is that if this bill should become law the LEOFF 1 pension plan will cease to exist except as a tier within the TRS 1 pension plan.  So LEOFF 1 goes from one of the best managed pension plans in the country to a tier in one of the worst managed pension plans in the country. Our funding ration goes from the current 125% to about 85% if you could track it.

There was some discussion about the legality of the proposal and most of that discussion centered on whether or not the bill will pass muster with the IRS.  Matt Smith said that the IRS would not even consider the legality until a bill was passed and that it could take up to three years to get that determination.  Interestingly the Assistant Attorney General made no comment on the issue of legality or anything else for that matter.

Senator Conway did point out that the ultimate goal of the bill is to lower the amount of money the State has to pay into the TRS 1 pension trust.  By reducing the Unfunded Actuarial Liability contribution by 2% the State saves $250 million per biennium.  They can then use that money any way they choose.  Of course this has always been the driving force behind this bill.  It is important to remember that this bill has nothing to do with improving the pensions, but, rather, is simply an effort by the legislators to not meet their obligation to fund the pension system.  It is not a new ploy except for the fact that is tries to build some cover by improving the TRS 1 funding ratio and not mentioning the concurrent underfunding of LEOFF 1. 

I was disappointed to note that Matt Smith when discussing the impact on funding referred only to the impact on TRS 1 and failed to mention the impact of LEOFF 1.  I guess that is because LEOFF 1 would cease to exist.
The meeting lasted for over 3 hours.  Those in attendance had the opportunity to express their concerns and even challenge the concept.  However there was no roundtable discussion simply because there was no participation from the bill supporters.  It missed the whole point of having a discussion.

Since the study was started there have been in excess of 1,400 survey responses.  Many of those included multiple questions, comments and concerns.  So, there are thousands of questions asked.  None have been answered.  Even the simple question of how the $5,000 payout was determined remains unanswered. 

Conclusion

I think that some of the attendees did gain a bit better understanding of the issue from Mat Smith’s presentation.  He does a good job of explaining the fiscal nuances and those who have not studied the fiscal note did get some important information.  Those of us working the issue on a regular basis found nothing of value in the meeting.

The entire concept of the roundtable discussion was in response to our plea for a role in the development of legislation that will impact us.  We asked to have the opportunity to discuss concepts with the legislators and staff and to be given the opportunity to offer our input before these concepts reach the status of a bill.  Obviously nothing even suggestive of such a process has evolved from these roundtables.

Three things are very clear.  First, this is not about pension improvement.  It is about the state avoiding its required pension contributions.  Secondly the issue is very complicated and any proposed legislation may well fail simply because of that complexity.  Try as they might the legislature has yet to find a way to make this action legal.  Thirdly even though there has been an effort to solicit our concerns and questions there appears to be no intention of answering those questions.

Finally, we have found some additional information that now proves the legislature began working on the TRS 1/LEOFF 1 merger concept in early 2013 and possibly even earlier than that.  All that work – three years’ worth – was done in secret.  We will shortly be publishing an article on how this bill was developed and by whom.