March 18, 2019
Esteemed members of the committee;
Thank you for the opportunity to testify on this very important issue. My name is Lynnette Buffington and I am the Executive Director of the WA State Fraternal Order of Police. We represent nearly 3,000 officers across the state and over 345,000 nationwide. We have regional lodges spread throughout the state and represent over 40 bargaining units. From Shelton to Spokane and up and down the I-5 corridor with rapid growth in the South King County region. Our members work at the local, state and federal level as well as associate members that include records, communications and other law enforcement support departments. As the one organization that represents law enforcement officers from the time they leave the academy throughout their well-earned retirement we do have some comments on HB 2144 / SB 5983.
We signed in “other” today because our members just aren’t sure whether this is a good policy proposal or a bad one. We do know is that our members are desirous of the opportunity to fully, meaningfully, and thoughtfully analyze and understand the ramifications of such a transfer on their pensions – both long and short term. Moreover, our members are processing whether placing LEOFF 2 fund money into the Benefit Improvement Account, or “BIA” is a wise fiscal and actuarial choice. In sum, our members just don’t feel like they have enough information to make a fully informed decision and we would ask you to delay adoption of this bill at this time for the following reasons.
- The 2019 valuation of LEOFF 2 fund is currently pending before the LEOFF 2 Board. The draft of that valuation will be received and finalized in the coming summer months. The data shared today about the funding level could be accurate, but it could also be inaccurate or off a little. At this point in time, our members are telling us to ask you to exercise caution against a transfer of LEOFF 2 funds into the BIA without this and, other necessary information as described today.
- We understand the LEOFF 2 Board and Staff are working with the State Actuary to determine an appropriate funding ratio corridor that would allow the Board to set statistically sound and actuarially based policy for action related to the account - including funding a transfer to the BIA and relieving the legislature of its obligation to transfer general fund money to the BIA under certain circumstances. This study and its contents deserve consideration and, upon its completion, would allow the Board to take sound and predictable action on the LEOFF 2 Fund and the BIA independent of legislative policy action.
- Moreover, we understand the Society of Actuaries is currently developing parameters on the appropriate risk measures of law enforcement pension plans in relation to the industry in which they represent. Our members are telling us that having this analysis would provide valuable and insightful information as to what the society recommends for law enforcement and fire-based pensions before any legislative policy action to transfer funds like this is taken.
- Another strong area of concern is the lack of definition and direction of how the funds and benefits in the BIA would be prioritized and actuarily spelled out. Not knowing this is presenting very strong concerns to not only our members, but their survivors as well. The actuarial funding and analysis necessary to purchase agreed upon and LEOFF 2 Board recommended benefits is partially unknown at this time. The composition of what benefits would be or could be included in such a plan is extremely important to know and understand should be discussed for the purpose of creating funding goals.
- We understand the LEOFF 2 Board, in their December meeting, reviewed the Benefit Improvement Account and the concept funding ratio corridors. We would strongly encourage the committee members to review the audio from this meeting which can be found on the LEOFF 2 Board website and linked here. The relevant discussion begins at the 2:44:00 mark. Ultimately, the Board made the recommendation to wait for the study to be returned before any decision regarding transfers should occur. We viewed the Board’s discussion as one that acknowledged the fiduciary responsibility of such a governing body to make actuarily sound and defensible decisions about the Fund.
- We fully recognize that the vast majority of our membership has not been present at or consulted in the LEOFF 2 Board activity. Our members and all LEOFF 2 participants are asking for caution here and feel they deserve adequate time to be properly informed on this so that they can make educated decisions on their pensions and advise me how to represent those views. This is not a policy decision recommendation that we are comfortable leaving solely to our organizations leadership – the significance of such matters is reigning strongly with our members.
In closing Mr/Madam Chair – our members are telling us that they need more time to consider the broad ramifications of transferring $300 million from the LEOFF 2 members’ retirement account into the BIA and whether this is the right decision at the right time. What I do know is that we sometimes talk negatively about an interim study and waiting for further information before making a decision. Sometimes, as we believe the case is here, knowing that information is so critical that an abundance of caution and fidcuairy insight is called for.
Thank you, Madam/Mr. Chair, for the opportunity to speak today. On behalf of our 3000 members, know we are very appreciative for you listening to me and the views of my members.