The Senate State Affairs Committee held a hearing Thursday on SB 12, a proposal by Chairwoman Joan Huffman to shore up the pension fund on a long-term basis by increasing contributions from the state, active members, and school districts. The bill also provides a small one-time payment for retirees.

The bill would increase contributions, phasing the new rates in over a period of several years, as follows:

  • The state's contribution would rise from its current 6.8 percent to 8.25 percent.
  • Active member contribution would increase from the current 7.7 percent to 8.25 percent.
  • District contributions (for districts not participating in Social Security) would go from 1.5 percent to 2 percent.

These changes would bring the fund into actuarial soundness quickly (assuming other factors, such as investment returns, occurred as expected), which would allow for a retiree cost-of-living benefit increase in the near future. The bill also provides for a one-time supplemental payment to retirees, or "13th check", that would be capped at $500.

TCTA provided testimony taking a neutral position on the bill. Although we support Huffman's efforts to ensure actuarial soundness and appreciate the higher state contribution in the bill, we prefer the approach taken in a similar House bill, HB 9. That proposal, by Rep. Greg Bonnen, would increase the state's contribution to 8.8 percent over several years without increasing contributions from districts or active members. It also includes a much more substantial 13th check for retirees, capped at $2,400.

Huffman said she is working closely with Bonnen on this legislation.