Study of legacy LEOFF‑1 plan highlights funding history, tax‑qualification risks and competing policy proposals

Committee staff presented an educational briefing on the LEOFF‑1 study, explaining benefit formulas, demographic composition, historic funding and federal tax issues that could affect proposed statutory changes. Aaron Gutierrez, committee staff, led the briefing. The study matters because LEOFF‑1 is a legacy plan with very few active members, large retiree liabilities, and proposals under consideration that could change plan structure, benefits and the possible disposition of surplus assets. Gutierrez summarized LEOFF‑1 benefits: a formula based on years of service, final-average salary and a tiered multiplier (1% for years 5–10; 1.5% for years 10–20; 2% for 20+), plus a one‑time benefit enhancement paid starting in 2023. He noted LEOFF‑1 retirees receive an uncapped cost‑of‑living adjustment tied to CPI and employer funding of necessary medical benefits (after Medicare). The office’s prior OPEB valuation (based on the 6/30/2022 data) estimated the present value of medical liabilities at about $2.2 billion and annual medical payments near $124 million; a portion of those costs is offset by the fire insurance premium tax, estimated to direct about $7 million per year to local governments for medical…