Retirement Systems

Retirement bill clears first round

A measure that would shorten the amortization period for certain state retirement plans was amended to address a shortfall in the judges’ retirement plan and advanced from general file April 7.

Sen. Mark Kolterman
Sen. Mark Kolterman

LB17, as introduced by Seward Sen. Mark Kolterman, would adopt shorter amortization periods to reflect current actuarial standards for the judges’, state patrol and school employee retirement plans. Beginning July 1, 2021, the amortization period would be reduced from the current 30-year period to a 25-year period.

The bill also would authorize the actuary to combine or offset certain amortization bases to reduce future volatility.

Discussion focused on provisions of a Nebraska Retirement Systems Committee amendment that would add provisions of LB24, also introduced by Kolterman. The provisions would increase several court fees — and the earmarked amount of other court fees — to provide additional revenue to cover a shortfall in the judges’ retirement plan.

Under the committee amendment, several court fees would increase beginning July 1, 2021, and rise incrementally until July 1, 2025.

Kolterman said the judges’ retirement plan has been funded by contributions from Nebraska’s judges and court fees since it was established in 1955. The plan does not include an employer contribution, he said, and revenue from court fees has declined steadily in recent years due to an increase in pretrial diversion programs and waivers.

This trend accelerated during the 2020 pandemic, Kolterman said, resulting in a 22 percent decrease in revenue for the judges’ retirement plan and an actuarially required payment from the state of $1.4 million.

Omaha Sen. John Cavanaugh offered and later withdrew an amendment that would have halted the increase in court fees after 2023. The state needs to fund the judges’ retirement plan adequately, he said, but should not fund essential government responsibilities through fees — particularly when the impact is felt disproportionally by those least able to afford those fees.

“We are incarcerating people based off of their inability to pay [court] fees,” Cavanaugh said.

Sen. Justin Wayne of Omaha also offered and withdrew an amendment that would have funded the shortfall through a $3 million direct transfer from the state’s General Fund to the judges’ retirement plan.

The state has the resources to ensure that the retirement plan is fully funded, he said, and shouldn’t rely on a revenue stream that could infringe on people’s ability to access the courts and exercise their constitutional rights.

“We have more money in the budget than we can allocate,” Wayne said.

Kolterman said he is working on an amendment to be offered on select file that would halt the proposed fee increases if the judges’ retirement plan is 100 percent funded for more than two consecutive years.

The committee amendment, which also includes provisions of Kolterman’s LB16 that would add a 5 percent state contribution to the judges’ retirement plan starting July 1, 2023, then was adopted 38-2.

Following adoption of the committee amendment, senators voted 35-5 to advance LB17 to select file.

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