Supporters say the unprecedented move will still protect pension benefits. The lawsuit says it leaves them at risk.

Jake Goldstein-Street
Washington State Standard

Retired police officers and firefighters in Washington, including former Congressman Dave Reichert, sued the state Thursday to block an attempt to raid their pension fund to help with ongoing budget shortfalls.

The retired first responders argue the maneuver leaves their pensions vulnerable to market downturns and is unconstitutional.

The new law, signed this month by Gov. Bob Ferguson, terminates the overfunded pension account at the end of June 2029. It would then reinstate the fund, leaving 110% of what the state expects to owe its members. As of June 2024, the fund was 160% funded. By 2029, it’s expected to reach more than 200%.

This move is expected to sweep nearly $4 billion from the Law Enforcement Officers’ and Firefighters’ System Plan 1, or LEOFF 1, with that surplus put into a separate pot where it could potentially cover general state expenses.

Backers of the legislation note that about 80% of the contributions to the pension plan came from the state, with the remaining 20% split between local government employers and workers.

The Legislature and governor intend to use $880 million from the fund to backfill spending from the state’s rainy day savings account. Tapping that money from reserves in the current budget cycle helps fill an estimated $2 billion budget gap. Washington still faces a looming deficit to be dealt with when legislators return to Olympia next year.

The Democrat-backed law passed the Legislature on narrow margins, with some Democrats joining Republicans in opposition.

The potential class-action lawsuit, filed Thursday in federal court in Seattle, argues the move violates the contract clauses of the state and U.S. constitutions. The complaint argues the prevailing legal stance has been that the money in the account can only be used for its beneficiaries.

A spokesperson for the state attorney general said Thursday morning that the office hadn’t had a chance to fully review the suit yet.

The bill’s sponsor, Rep. Timm Ormsby, D-Spokane, said he doesn’t believe the law “runs afoul of any court precedent,” after consultation with outside legal experts focused on pensions during the legislative process.

“Whatever pension those firefighters and law enforcement signed when they came into service, those benefits are guaranteed,” Ormsby said, adding that the redirected surplus funding will be used for the benefit of all Washingtonians.

On the other side, Steve Berman, an attorney for the plaintiffs bringing the lawsuit from Seattle-based firm Hagens Berman, said in a statement that using the money for purposes other than paying out benefits would be a “gross miscarriage of justice.”

The lawsuit also fears that leaving the pension account with only 110% of benefits leaves the fund at risk in the case of a market downturn. Pension funds are allocated across stocks and other investments. The Washington State Investment Board manages the LEOFF 1 fund.

State actuaries have said the law “increases the potential of future state contributions if adverse experience occurs.” The actuarial office expects $3.9 billion from the account to be swept in 2029, under current assumptions.

“Our state lawmakers are flirting with a very dangerous move that jeopardizes the futures and securities of Washington’s first responders and retired law enforcement officers,” Berman said.

Compared to other states, Washington has a reputation for well-managed pension systems.

As of earlier this year, the LEOFF 1 fund had fewer than 6,000 members, just a few of whom were still working. Contributions were suspended in 2000, as the account became fully funded.

Reichert, a former King County sheriff, is one of the lead plaintiffs. After his law enforcement career, he went on to serve in Congress from 2005 to 2019. He was also the Republican candidate for governor in 2024, losing to Ferguson.

Reichert said “it almost seems like elder abuse in a way.”

“The reasons for needing the money are suspect to us, and it’s also offensive that they’ve just disregarded the emotional, physical trauma that these 5,500 remaining cops and firefighters have experienced throughout their career,” he said.

The other plaintiffs include a retired King County sheriff’s deputy, Seattle police officer, Seattle fire official and Lacey officer, among others.

The system is available to police officers and firefighters hired before Oct. 1, 1977. A separate pension fund, unaffected by the new law, covers those who started work after that date.

When the law takes effect June 11, the clock starts for beneficiaries to sue in state court, said Kathryn Leathers, director of the Department of Retirement Systems.

Under the law, pension participants will have until Dec. 31, 2027 to file a suit. There’s a provision mandating claims are “subject to direct review” by the state Supreme Court. And the department must notify every active member, retiree and spousal survivor of this process.

Litigation in state court would proceed on a different legal track than Thursday’s federal suit.

This appears to mark the first time a state has ever terminated a public employee pension plan. The state will need to get approval from the Internal Revenue Service to proceed.

The lawsuit hasn’t been scheduled for a hearing.

Some lawmakers this year had also pushed to use the pension funding to backfill the state’s climate account, but that idea was set aside.

Reporter Jerry Cornfield contributed to this report. This report was first published by the Washington State Standard.