Four Washington state legislators are proposing an amendment to the state constitution that would ensure state pension plans will be at least 80% funded.
The measure, if passed, would impact the $76.7 billion Washington State Investment Board, Olympia, which manages the state’s defined benefit plans and have combined a nearly $4 billion unfunded liability.
The bill would require state government to make contributions to the funds. It would also establish a schedule to pay off the $6.9 billion unfunded liability of two pension plans — Washington Public Employees’ Retirement System Plan 1 and Washington Teachers’ Retirement System Plan 1 — that were closed in 1977.
That payment schedule would take effect on July 1, 2015. The amendment includes a two-year waiting period for any changes to economic assumptions or actuarial methods that would reduce the state’s contributions.
The bill’s sponsors — state Reps. Kevin Van De Wege and Barbara Bailey, and state Sens. Mark Schoesler and Steve Conway — spoke at a Tuesday news conference in Olympia. Washington state Treasurer James McIntire said the constitutional amendment would make sure pension contributions are consistently made in good times and in bad times, which will in the long run save taxpayers money. It is better to make contributions now to allow them to benefit from investment returns, he said.
Ms. Bailey noted that even during good economic times, the Legislature skipped making pension contributions “for various reasons,” which made the unfunded liability worse.
“It was my hope the Legislature would be fiscally prudent and responsible, but they have not been. Constitutionally requiring contributions in good times and bad times” will ensure the pension plans continue to be healthy and “will help in the budgeting process to structure budgets within our means and to pay our bills,” she said.