House Bill 605: PERS Employer and Employee Contribution Rates

February 7, 2023February 10, 2023 Bill Tracker

Latest Action

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The House failed to take action on HB 605 by the February 9 deadline, causing this bill to die on the calendar.

Explanation of the Bill

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House Bill 605 would prevent the Public Employees’ Retirement System (PERS) Board of Trustees from raising the PERS employer or employee contribution rate above the rates that were in effect on January 1, 2023, unless authorized by the state legislature. Additionally, it would direct the Board to develop recommendations for the legislature regarding changes to the PERS system that would ensure the program is properly funded and reduce the need for periodic increases in employer contribution rates. 

In recent years, there has been concern that the PERS system may be on a “financially unstable trajectory,” driven by a growing number of retirees and declining number of public sector workers. As a result, the program’s employer contribution rate has increased five times since 2005. The largest of these increases was passed in late 2022 and will increase the employer contribution rate from 17.4% to 22.4%, effective October 1, 2023. This five percentage point increase translates to a 29% increase in state funds directed towards the state retirement system. HB 605 would prevent this increase–and future increases–from taking place without authorization from the state legislature. Additionally, it would establish a framework for improving the financial health of the PERS system.

As introduced, HB 605 would have allowed retired teachers to be re-employed by public school districts and receive their retirement benefits in addition to a beginning teacher’s salary. On January 31, the House Appropriations Committee passed a committee substitute that did not include this portion of the bill.