LEOFF I Coalition Moves To Protect Surprise Pension Surplus

The LEOFF I Coalition, on behalf of active and retired Law Enforcement Officers and Fire Fighters members and beneficiaries, will testify in the House Appropriations Committee, Thursday, February 15, 2001, 3:30 p.m., . . . "We [the Coalition] are strongly opposed to House Bill 1072," said Coalition Chairman, Mark Curtis. Curtis went on to say, "The LEOFF I members and beneficiaries generally believe that whatever happens, they have a legal, equitable, and moral right to the surplus as a matter of good faith and justice. For the Legislature to ignore such a position would in fact be a breach of good faith and a gross injustice."

"The Coalition is committed to protect the surplus from unwarranted invasion by various governmental entities who believe that they have found a source of scarce funds to be used to relieve a burden they are otherwise legally obligated to carry," according to Curtis.

The LEOFF I pension system was started in 1970 as a result of legislation bringing law enforcement officers and fire fighters together under one state wide pension system. The pension is what is called a "defined benefits plan" wherein employers and employees contribute to the pension fund. The State of Washington, after years of delaying its contribution, finally contributed to the plan to assure its solvency. The plan is now closed to new members with a successor plan called LEOFF II for current employees and new hires.

In recent years, many private and public pensions are found to harbor an unexpected surplus. It is believed that on an international basis, pension surpluses exceed a trillion dollars. This has occurred because of the "bull stock market" of recent years and wise investment strategies. "The 9000 plus active and retired members and beneficiaries of the LEOFF I (Law Enforcement Officers and Fire Fighters I Pension System) are among the groups that have found that their pension system has a surplus in excess of $1.2 billion dollars according to the Office of the State Actuary," Curtis, said.

Last year the legislature granted a "contributions holiday" to current active LEOFF I members and employers relieving them of the need to make contributions to the plan because of the surplus. Retired members and beneficiaries received no additional benefit. Now the legislature has proposed several new bills, HB 1072 and SB 5191, that would make the first "preemptive strike" on the plan's surplus. The legislature's plan is to subsidize part of the current employer obligation in order to take care of certain medical and long term care costs by dipping into the fund's surplus.

While under a "defined benefit plan" retirees are generally limited to a set of predefined benefits, it is the belief that since no provisions have been made for a surplus, and because under state law pension funds are special funds and not "state funds", that plan members and beneficiaries have a "contractual and constitutionally vested right" to those funds under legal and equitable principals of law. However, since certain legislators believe those funds belong to "the state", it has become necessary for the LEOFF I members and beneficiaries to find a way to protect their interest and to assure that they have "a say" in how the funds are utilized.

Curtis said, "The LEOFF I Coalition is prepared to lobby and negotiate with the legislature if possible. If the legislature is unresponsive and proceeds with the invasion of the fund surplus, then the Coalition is prepared to seeking legal counsel to review the law on the matter and if necessary to pursue litigation as a last resort."