The bill aims to implement ongoing cost-of-living adjustments (COLAs) for retirees under Plan 1 of the Teachers' Retirement System and the Public Employees' Retirement System in Washington State. It introduces a new funding policy that consolidates the costs of previous COLAs with new ongoing adjustments, allowing these costs to be amortized over a 15-year period. The legislation specifies that future benefit improvements will be amortized over a fixed 10-year period and establishes specific COLA increases for beneficiaries based on their retirement dates, with increases ranging from 1.5% to 3% and caps on maximum increase amounts. New sections are added to both retirement systems to detail the calculation of annual adjustments based on consumer price index ratios starting July 1, 2026.

Additionally, the bill amends existing laws to clarify the amortization of costs related to benefit improvements, specifying that costs incurred from July 1, 2018, to June 30, 2025, will be amortized over 15 years, while future improvements will follow the standard 10-year amortization. It mandates that employer contribution rates for higher education institutions must adequately fund a portion of projected costs for supplemental retirement benefits starting in 2035. A supplemental rate will also be charged to cover additional costs of benefits granted under the new legislation, calculated as a level percentage of pay needed to fund these benefits over a fixed 15-year period. The bill emphasizes the importance of these changes for the immediate preservation of public peace, health, or safety, and is set to take effect on July 1, 2025.

Statutes affected:
Original Bill: 41.32.4992, 41.32.489, 41.45.060, 41.45.030