(The Center Square) – A Washington state bill that would dissolve a pension plan created in the 1960s and closed to new members in 1977 took a barrage of criticism during a Feb. 26 public hearing in the Senate Ways & Means, with opponents arguing the proposal is both illegal and threatens other plans.
Under House Bill 2034 sponsored by Rep. Timm Ormsby, D-Spokane, Law Enforcement Officer and Fire Fighter Plan 1 would be dissolved, reinstated, with $4.5 billion taken from the fund and placed elsewhere.
While analysis of the proposal by both the State Attorney General’s Office and pension law firm Ice Miller concluded it is likely to be found legal, critics such as LEOFF 1 Coalition Executive Director Joyce Willms told the committee during the public hearing that they can expect a lawsuit if it passes.
“You guys made a promise to them, so why don’ t you keep it?” she said. “Do you realize what you’re doing is violating the Washington State Constitution? Just leave things alone. We have a problem, yes – we’ve a spending problem. The LEOFF 1 fund was never meant to be a savings account. If you pass this into law, all pensions, so no matter what your pension is, it’s opening up the door to be raided.”
While not opposed to HB 2034, LEOFF Plan 2 Retirement Board Executive Director Steve Nelsen expressed concerns during public testimony over a provision in the bill that moves the responsibility of the Select Committee on Pension Policy to oversee and make recommendations on policies and funding for the Restated LEOFF to the LEOFF Plan 2 Board.
Others speaking in opposition was Patrick McElligott, vice president of Tacoma Professional Firefighters Local 31.
“As members in Ways and Means Committee, you are tasked with solving difficult budget challenges, but balancing the state budget by restructuring LEOFF Plan 1 in a way that allows surplus pension assets to be redirected for other purposes sets a troubling precedent,” he said. “These funds exist because of disciplined contributions and responsible investment performance, not because they were intended to be used to offset general fund pressures.”
LEOFF Plan 1 retiree David Maehren told the committee that they shouldn’t just “pension funds to patch a hole in the state budget. The state and federal law says pension fund are for the benefit of the pension members – honor the law. If you’re not, certainly legal action will follow.”
According to a 2024 actuarial valuation, the LEOFF Plan 1 is 160% overfunded, albeit the valuation is based in part on the assumed rate of return on pension investments set by the state Legislature. Recently, the Legislature voted to raise that assumed rate to 7.25%, the highest of any state in the country.
Candice Bock with the Association of Washington Cities told Ways and Means that LEOFF Plan 1 “is significantly overfunded and taxpayer resources are scarce. It’s good to look at ways to use those dollars effectively.”
She added that there are “considerable expenses still at the local level tied to these retirees, as you’ve heard, in the medical benefits, and for some cities over the years, those costs have exceeded what they spend on current active-duty employee medical benefit. So, we would really like to see at least some of these funds dedicated to those needs.”
Maehren noted that “the bill targets a surplus that’s not assured. I’ve lived through times when investments have dropped 50%. It will happen again. This bill fails to recognize the contributions that the members have made that help create that surplus. I think that should be honored.”
Retired Tacoma firefighter and Tacoma LEOFF Disability Board member John Carman told Ways & Means the bill is “simply legally, ethically, wrong. What are you going to spend our money on? It’s general state funding, as it says. This bill contains no guarantees. What is a promise? A promise is something that you will do. When is the promise not a promise? Apparently, when it’s a Washington state law.”
