PROPOSED IN SENATE 2002 SUPPLEMENTAL BUDGET
(Proposed Substitute Senate Bill - PSSB 6387 )

SOLVING THE 1.5 BILLION DOLLAR PROBLEM

The proposed Senate 2002 supplemental budget takes a four-part approach to bringing the 2001-2003 biennial budget back in balance through:

• Budget Reductions and Savings ($654 Million)
  
• Securtizing Tobacco Settlement Payments ($420 Million)
  
• Use of General Fund Reserves and Money Transfers ($308 Million)
  
• Revenue Increases ($83 Million)

PENSIONS

PENSION CONTRIBUTION RATE ADJUSTMENTS -
$63 Million General Fund-State Savings . . .

The Senate budget (in separate legislation, HB 2782) includes reductions in employer and state contribution rates for PERS, TRS, SERS and LEOFF Plan 2 and employee contribution rates for the Plan 2 retirement systems. Most of the savings ($54 million) is in the K-12 system

The 1995-2000 experience study by the State Actuary showed that the contribution rates for PERS, TRS, SERS and LEOFF were higher than necessary to fully fund those systems. Effective April 1, 2002, employer contribution rates will be reduced from 1.54 percent to 1.10 percent for PERS; 1.54 percent to 0.96 percent for SERS; and 2.75 percent to 1.05 percent for TRS. The basic state contribution for LEOFF 2 will be reduced from 1.80 percent to 1.75 percent.

Plan 2 employee contribution rates will be reduced from 4.50 percent to 4.39 percent for LEOFF 2; 0.88 percent to 0.65 percent for PERS 2; 0.88 percent to 0.35 percent for SERS 2 and 1.23 percent to 0.15 percent for TRS 2

PSSB 6387 does not address any changes to Plan 1 pension systems at this time.