David Pringle, a staff member, briefed the Ways & Means Committee on the funding status and policy issues affecting the state retirement systems, including the Public Employees’ Retirement System (PERS), teachers’ retirement plans, and law‑enforcement and firefighter plans.

Pringle said the Department of Retirement Systems’ comprehensive annual financial report presents pension liabilities on a market basis, a disclosure format used by credit analysts. He noted unusually large investment returns in 2021 that improved reported funding on that basis. "You can see the same thing, which is that there's very large investment returns in 2021," Pringle said.

Pringle described recent and projected funding positions: PERS Plan 1 and (teachers’ plan) Plan 1 each have unfunded liabilities he estimated at about $500 million in current valuations, while the law‑enforcement and firefighter Plan 1 (LEOFF Plan 1) showed a surplus that Pringle identified as about $2.9 billion. He said the combined plans were projected, on his disclosure basis, to show a surplus of roughly $4 billion by the end of the four‑year budget outlook and about $6.1 billion in his projection out to 2032. Pringle attributed changes in projected liabilities in part to two policy shifts: the Pension Funding Council’s 2021 reduction of the assumed investment return from 7.5% to 7%, and legislative actions that altered funding rates.

Pringle summarized recent legislative steps: the 2020 Legislature directed a $250 million deposit to the teachers’ Plan 1 fund (to be deposited by the end of the 2021–23 biennium), and the 2023 Legislature replaced the previous minimum unfunded‑liability payment rates with a set of fixed, declining base rates intended to better match projected needs.

On cost‑of‑living adjustments (COLAs), Pringle said Plans 2 and 3 have an inflation‑capped COLA that can grant up to 3% in a given year, with amounts above 3% banked for future use. He said PERS Plan 1 and the teachers’ Plan 1 have no regular COLA since its repeal by the Legislature in 2011, though the Legislature has on occasion provided ad hoc COLAs. By contrast, LEOFF Plan 1 has a COLA indexed to the Seattle–Bellevue inflation index, Pringle said.

Pringle addressed post‑retirement employment rules. He said retirees may work up to 867 hours per calendar year in positions covered by the state retirement systems without triggering a reduction in pension payments, noting that a standard full‑time year is 2,080 hours and many K‑12 nine‑month positions are about 1,500 hours. "These restrictions are on pension payments, not on whether you can work," Pringle said, adding that employees may exceed the hour limit but would have benefit payments suspended for the remainder of the calendar year. He said the rules apply only to employment that is itself covered by the state retirement systems.

Pringle reviewed 2023 activity: about 33,100 retirees worked for system employers that year and collectively provided more than 2.1 million hours of service; he also observed that retirees from law‑enforcement and firefighter systems represented a smaller number of workers who supplied a comparatively large share of hours, consistent with younger typical retirement ages in those systems.

On federal changes, Pringle described the Social Security Fairness Act signed into law on Jan. 5, which eliminated the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). He said WEP had often reduced Social Security benefits for former Social Security‑exempt workers by roughly $500 a month for many claimants with less than 20 years of Social Security participation, while GPO could substantially reduce spousal benefits in some cases by several thousand dollars a month. Pringle said the new law will increase combined benefits for affected retirees and surviving spouses, though the exact effect varies by individual case.

Representative Levitt asked whether service credit from a school district can combine with PERS service for eligibility; Pringle said most defined‑benefit service can be combined through portability or "dual member" provisions, with the caveat that the combined formula cannot produce a larger total benefit than if all service had been in a single system. Representative Minjeros asked whether the 867‑hour limit applies only to work for system employers; Pringle confirmed it does. The committee concluded its official business after the Q&A.

Pringle concluded his prepared remarks and offered to provide follow‑up detail on large one‑time lump‑sum payments that had occurred in some law‑enforcement and firefighter plans.

Why it matters: reported funding levels and legislative funding choices affect the state's long‑term fiscal outlook and credit considerations, while changes to federal Social Security rules alter benefit calculations for many public‑safety retirees and survivors.