Committee advances overhaul of Plan 1 pension funding and governance with amendments

The Ways and Means Committee moved Engrossed Second Substitute House Bill 2034, which would terminate the overfunded Plan 1 and establish a restated Plan with a 110% funding target by 06/30/2029, to the Rules Committee with a due-pass recommendation after lengthy briefing and amendment votes.

Staff summarized the bill’s core change: termination of the existing Plan 1 and creation of a restated plan with a funding target and governance structure. The briefing noted a Department of Retirement Systems fiscal estimate showing modest implementation costs and a larger long-range liability figure discussed in committee (approximately $1.5 billion liability mentioned in hearing context). Amendments under consideration included removing a $569 million transfer to the Climate Commitment Act, distributing a share of surplus funds to cities and counties, creating a pension surplus holding account for transfers and implementation expenses, and directing the Select Committee on Pension Policy to study governance and the state assuming medical-benefit costs currently borne by local employers.

Senators questioned the timing of governance changes relative to IRS determinations and whether the select committee had authority and capacity to study the oversight transition. Senator Schussler and others pressed for protections for local governments facing increased medical-benefit responsibilities. One amendment would provide a one-time lump-sum payment to retirees amounting to $100 per month of service paid in 2029, with staff estimating a significant effect on funded status (a back-of‑the‑envelope estimate reduced the projected funding level from 110% to about 106%).

After debate, the committee adopted several amendments (including creation of a pension surplus holding account and direction for studies of governance and fiscal impacts) and moved the bill as amended with a due-pass recommendation to the Rules Committee. The chair announced the due-pass recommendation; transcript does not show roll-call tallies for the final motion.