On July 9th the Seattle City Employees Retirement System (SCERS) Board of Administration voted to reduce the City’s contribution to the retirement fund from the present 15.06% of salaries to 13.48%. The vote was 3 to zero and I abstained from the vote. The City contributed about $178 million to the pension fund in 2024. The July 9th action will save the City about $12-17 million (my estimate) in 2027 which it can spend on other needs. The final decision is up to the City Council.
I originally considered just voting “no”. SCERS is managed well and is on track to be at 100% funding in 2042. The City contributes extra dollars every year to make up a shortfall which occurred in the recessions of the early 2000s. But why is 2042 such a magical date? Why don’t we aim to be fully funded in 2040 or 2038? The City would have to contribute more than the “actuarially required minimum” to make that happen. And in 2027, 13.48% is that minimum contribution.
The 100% is important. Right now the law says the pension must retain 65% of its purchasing power. At 100% funding, that “floor COLA” rises to 70%. Employees who retired a number of years ago would get a boost in their monthly retirement checks.
Now is a perfect opportunity to play “catch up”. If we set the City’s contribution at, say, 14% or 14.5%, rather than the “required minimum” of 13.48%, the City budget would still get a break – something less than $17 million – and we would get to 100% faster.
The counter argument is this: we want the City Council to keep faith with the concept of spending exactly the actuarially required minimum. Bad times may return – another recession perhaps – or a huge downtown in the stock market or real estate. And at that point the Council would have to increase the City’s contribution, further straining its overall budget.
I get that. So instead of voting a straight “no”, I abstained.
The next issue of the ARSCE News will have more about the results of the July 9th meeting. It should be in ARSCE members’ mailboxes in mid-August.
Image: Changes in the Actuarily Required Minimum Contribution. Source: Milliman Actuarial Valuation Report 2026