24-04-2025
Former Nebraska lawmaker expresses concern about major changes to school retirement plan
Former State Sen. Mark Kolterman of Seward returns to the Nebraska Legislature for an annual event honoring former state lawmakers. April 16, 2025. (Zach Wendling/Nebraska Examiner)
LINCOLN — A bill to reduce contributions to a state teachers retirement plan advanced toward final passage on Thursday despite a stern warning from a former Nebraska lawmaker who once guided state retirement plan policies.
The measure, Legislative Bill 645, is designed to help close the state's projected $457 million budget deficit over two years by reducing the state's contributions into teacher retirement plans by about $77 million, thus freeing up that money to help close the budget gap.
Former State Sen. Mark Kolterman, who headed the Legislature's Retirement Systems Committee for seven years, said that using retirement plan funds to balance the budget doesn't make financial sense, particularly when it's uncertain if investments will garner enough revenue to maintain retirement funds.
'You don't make reductions in contributions when the economy is moving in the wrong direction,' Kolterman said, noting the recent stock 'market tumble.'
A member of the Nebraska Public Employees Retirement Systems Board resigned earlier this week after Gov. Jim Pillen rejected the 'best candidate' to head the agency that oversees state and school retirement plans.
Allen Simpson of Lincoln, a long-time PERB member, had headed the board's personnel committee, which had recommended the hiring of the current interim director/deputy director of the agency, Tyler Cummings, to fill the vacancy left when former State Treasurer and State Sen. John Murante resigned in December.
'They're not going to get a better candidate than Tyler Cummings,' said Simpson on Thursday.
Simpson said he resigned from the board on Monday feeling that if the governor did not agree with his committees' pick, 'you probably shouldn't stay on.'
'I'm trying to say this in the most politically correct way possible,' said Simpson, who, like Pillen, is a Republican.
Pillen's office did not respond immediately to a request for comment Thursday afternoon.
The search for a new director reportedly has been reopened. The job paid $205,000-a-year.
On Thursday, State Sen. Danielle Conrad said that the 'uncertainty' with the director's job and the vacancy on the PERB board has made it more difficult to decide the best policies when it comes to state retirement plans.
Advocates of LB 645, including Lincoln Sen. Beau Ballard, the current chair of the Retirement Committee, dismissed the concern, maintaining that the state can safely lower its contributions to the school retirement plan because that plan is currently nearly 100% funded, and is taking in more contributions — from teachers, local school districts and the state — than needed.
Ballard has called the bill a 'win' for the state budget and for teachers, because they will see about $1,000 a year in additional take-home pay by reducing their contributions via the proposal.
Kolterman commented after the state lawmakers, on a voice vote, advanced LB 645 to the final stage of debate. Prior to Thursday's debate on the bill, the former senator sent a letter — obtained by the Nebraska Examiner — to the members of the Retirement Committee outlining his objections.
In the letter, Kolterman said that major changes in the state's retirement plan contributions are usually not made so hastily, because if a pension plan becomes underfunded, the state has to make up the difference.
'Any changes to retirement benefits in any of the retirement plans must be approached with great caution, study, and examination of the actuarially calculated costs,' he wrote. LB 645, he said, was 'kicking the can down the road' and delivering higher costs for taxpayers later.
Kolterman pointed out that during the 2008-09 recession, the state's retirements plans lost 28% of its assets — about $2 billion — and that it took years of work to make them healthy again.
He cautioned in his letter that Nebraska doesn't want to find itself in the same situation again — forced to increase funds toward pension plans. It doesn't make sense, he argued, to mess with what's working.
Despite that, and despite similar warnings during floor debate on Thursday from Lincoln Sen. Danielle Conrad, the bill advanced to final reading.
Ballard said that he was 'reassured' that LB 645 would not require additional state funds. He quoted from a projection that even with a 0% increase in state investment income, no additional state contribution would be needed.
On Thursday, he withdrew his amendment that would have changed the state's long standing 'Rule of 85' for teachers that now allows educators, of at least 60 years of age, to retire if they have at least 25 years of service, which adds up to 85. Ballard's amendment would have allowed younger teachers, of at least 55 years of age, to retire with 30 years of service.
Education groups, during a public hearing on that amendment on Wednesday, had opposed the idea out of concern that its impact — which some feared would increase retirement fund payouts — had not been studied.
Conrad also withdrew a proposed amendment to ensure that the state would not be liable for covering any financial shortages in the Omaha Public Schools retirement plan, a plan that the state recently took over to manage.
The senator said it was a 'belt and suspenders' amendment to continue the state's current policy of not being liable for shortages in that plan. She agreed to let fellow senators have more time to consider her proposal, and that she will reintroduce it during final round debate on LB 645.
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