OFM bill would change amortization assumptions and lower 2025 rates short term; actuarial costs rise over 25 years

Senate Bill 5357, presented to the committee at OFM’s request, would modify actuarial funding rules and the timing of rates adopted by the Pension Funding Council.

Sherri Sawyer, legislative affairs director at the Office of Financial Management (OFM), introduced the bill and said the substitute aligns with the governor’s budget. Marcus Erlander, OFM budget advisor, explained the bill reduces certain base rates for the 2025‑27 biennium (staff cited a 0.29% reduction in employee and employer rates in one table) and reamortizes benefit improvements over 15 years rather than 10.

OFM and staff described the policy rationale as recognizing progress toward fuller funding while giving more time to respond and keeping rates lower in the near term. The state actuary’s preliminary estimates provided in committee materials showed near‑term savings: the state actuary’s update estimated $198 million near‑general‑fund savings in 2025 and $313 million over a four‑year near‑general‑fund outlook. However, the state actuary’s 25‑year projection showed a net cost of $293 million to the near general fund and $600 million across all employers as the reamortizations unwind.

Opponents at the hearing urged caution about changing amortization rules without delivering COLAs to Plan 1 retirees. Emmett Mills said his organization opposed the bill because it would reamortize employer obligations without restoring an ongoing COLA for Plan 1, thereby saving employers while leaving retirees without the benefit the select committee recommended.

Ending: OFM staff and proponents argued the substitute mirrors the governor’s budget and provides short‑term budget relief; opponents asked the legislature not to reamortize employer obligations without concurrently restoring a recurring Plan 1 COLA. No committee vote took place in the hearing.