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Published on Friday, March 24, 2017

The Senate proposes large pension cost increases for employers of firefighters and police officers

Released last Wednesday, the Senate budget, SB 5048, proposed eliminating the long-standing state contribution to the Law Enforcement Officers’ and Fire Fighters’ Plan 2 (LEOFF 2) pension system and requiring the employer to make up the difference. This change would increase statewide city pension costs by at least $35 million in fiscal year 2017. The Senate proposal would also make this a permanent change.

Since LEOFF 2’s inception in 1977, pension contributions have been split among the employee (50%), the employer (30%), and the state (20%). The Senate budget proposal is to eliminate the state’s 20 percent share and increase the employer’s share to 50 percent.

The newly proposed rate structure is in the table below. These rates exclude the employer administrative expense of .0018%. The Senate budget also proposes to eliminate that administrative surcharge.

 

FY 2016

FY 2017

Senate budget proposal
FY 2017-19

Employee

8.41%

8.75%

8.75%

Employer

5.05%

5.25%

8.75%

State

3.36%

3.50%

0%

The LEOFF 2 system covers all full-time commissioned law enforcement officers and fire fighters and would directly impact almost every city in the state. Preliminary data provided by Senate nonpartisan staff show the state’s contributions per city in fiscal year 2015 and can be found by clicking here. We advise cities to use the above proposed rates to determine their potential new pension costs. As drafted, the new rate would take effect July 1, 2017 impacting cities’ current budgets.

AWC is working with other LEOFF 2 stakeholders to fight this proposed change.

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