Legislative Report

Report 10-05
June 4, 2010

HOUSE BUDGET HELPS RETIREMENT FUNDING

The House of Representatives approved a modified state budget for 2010-11 early on Friday morning. The budget proposal contained in the House Committee Substitute for Senate Bill 897 now goes back to the Senate for a vote on concurrence. The Senate is expected to reject the changes adopted by the House, setting up the appointment of a joint conference committee to resolve differences between the House and Senate versions.

The House took two important steps toward full funding for the Teachers’ and State Employees’ Retirement System. The House budget appropriates $40 million to TSERS and establishes a reserve to receive any excess collections (up to a total of $135 million) generated by the Department of Revenue Settlement Initiative if state General Fund revenue collections exceed the projections included in the budget. The Settlement Initiative is a program established to recover delinquent state taxes from business tax payers.

The House proposal has the potential of producing the $181 million that is needed to meet the Annual Required Contribution (ARC) for the state retirement system in 2010-11. The success of this approach depends on two factors.

1. Recovery of state tax revenue collections sufficient to exceed the budgeted revenue projections for 2010-11.
2. Effectiveness of the Settlement Initiative to collect more than the amount projected ($110 million) during the upcoming year.

SUPPORT THE HOUSE PROPOSAL!

Although the House was unable to provide a direct appropriation of the entire $181 million that is needed by TSERS, the proposal is superior to the Senate version that contained only $20 million. Please contact your state Senator and ask that they accept the House proposal on funding for the Teachers’ and State Employees’ Retirement System when the issue is considered by the conference committee. Thank you.