Legislative Report #07-14

Report 07-14
April 27, 2007

PENSIONS COMMITTEE APPROVES BILLS

The House Pensions and Retirement Committee met on Wednesday and took action on two important bills addressing retirement benefits. A summary of these Committee actions is presented below. Our Association strongly supports both of these bills.

House Bill 778: Enhance Retirement Benefits

The Committee gave a favorable report to an amended version of HB 778. The Committee Substitute provides the following retiree benefit increases effective July 1, 2007:

• COLAS
  A 2.5% Cost-Of-Living increase for members of the Teachers’ and State Employees’ Retirement System (TSERS), the Consolidated Judicial Retirement System (CJRS), and the Legislative Retirement System.
   
  A 2.2% Cost-Of-Living Adjustment for members of the Local Governmental Employees’ Retirement System (LGERS). This COLA uses all of the undistributed gains available in the LGERS.
   
• Retirement Accrual Formula
  The accrual rate of the TSERS is increased from the current 1.82% to 1.83%. This increase also is applied retroactively to the monthly pension received by retired teachers and state employees, resulting in an additional .55% increase in the monthly benefit.
   
• State Employer Contribution Rate
  The bill also increases the state’s employer contribution rate from the current 2.66% to 4.0% of payroll. The employee contribution rate remains at 6.0%.

The amended bill would require additional state appropriations of $168.7 million to fund the enhancements proposed for the Teachers’ and State Employees’ Retirement System. The Committee Substitute has been re-referred to the Committee on Appropriations for consideration in the House budget.

House Bill 779: Increase Contributory Death Benefit

This bill was approved by the Pensions and Retirement Committee in amended form. The Committee Substitute increases the amount of the optional death benefit that state and local government employees can elect at the time of retirement. The benefit will increase from the current $9,000 to $10,000 effective July 1, 2007. The benefit increase does not require any increase in the premiums paid by retirees.

HOUSE BUDGET TAKING SHAPE

Leaders of the House Committee on Appropriations continued to meet during the week to complete the proposed budget for the 2007-09 biennium. The budget proposal may be considered by the full Appropriations Committee as early as next week.