State patrol retirement changes discussed

The Retirement Systems Committee heard testimony Feb. 4 on a proposal that would make changes to the retirement plans of new Nebraska State Patrol members.

Seward Sen. Mark Kolterman presented the proposed amendment to LB467, which was introduced last session by Sen. Jeremy Nordquist as a placeholder bill.

“After working over the interim, several additional issues were identified and are incorporated in the amendment,” Kolterman said.

He said the amended bill would create a second tier of reduced benefits similar to those created in recent years for members of the state’s school employee and judges’ retirement plans.

“It is the committee’s goal to continue to make each plan sustainable,” Kolterman said.

Among other provisions, the amendment would make the following benefit changes for state patrol officers who are hired on or after July 1, 2016:
• increase the officer contribution rate from 16 to 17 percent;
• reduce the maximum cost of living adjustment from 2.5 to 1 percent;
• prohibit participation in the deferred retirement option plan (DROP);
• increase from three to five the number of years of employment used to calculate a member’s final compensation rate; and
• exclude any unused sick, vacation, holiday and compensatory leave in the calculation of a member’s final average monthly compensation.

The amendment also would clarify rules regarding service credit for state patrol members who also are active military members.

Kurt Frazey, testifying on behalf of the State Troopers Association of Nebraska (STAN), opposed the amendment. The patrol’s plan currently is not in crisis, he said, and STAN would prefer to negotiate any changes to the benefits offered to newly hired patrol members.

“We want to continue productive dialogue that will be fiscally beneficial to the state of Nebraska and to members of the state patrol,” Frazey said.

He noted that DROP currently is undergoing study, and suggested that lawmakers wait for the results before eliminating the option for new members. In addition, he said, significantly reducing benefits would hinder the patrol’s ability to meet projected staffing needs.

“The changes in benefits in the amendment will greatly diminish our ability to effectively recruit and retain quality personnel,” Frazey said.

Orron Hill, legal counsel for the Public Employees Retirement Board, testified in a neutral capacity. Hill said the board is responsible for ensuring that the state’s retirement plans are adequately funded and sustainable.

Recent changes to the school and judges’ retirement plans increased member contribution rates and reduced benefits, he said, and an evaluation of the state patrol plan suggests that similar changes are in order. Currently, he said, patrol plan contributions are insufficient to cover costs.

“[The amendment] clarifies the current law and addresses the patrol plan’s funding status and sustainability,” Hill said.

No one spoke in support of the amendment and the committee took no immediate action on it.