Latest news with #NebraskaRetirementSystemsCommittee
Yahoo
30-04-2025
- Business
- Yahoo
School retirement, tax incentive reductions pass, narrow Nebraska deficit by $136 million
State Sen. Brad von Gillern of Elkhorn, center, flanked by State Sens. Beau Ballard of Lincoln and Mike McDonnell of Omaha. Aug. 20, 2024. (Zach Wendling/Nebraska Examiner) LINCOLN — Lawmakers gave wide final approval Wednesday to two measures designed to shrink the state's looming budget deficit by $136 million. The two bills are Legislative Bill 650, from State Sen. Brad von Gillern of the Elkhorn area, related to trimming business incentives, and LB 645, from State Sen. Beau Ballard of Lincoln, related to scaling back school retirement contributions based on how well funded the pension plan is. LB 650 passed 40-7. LB 645 passed 45-2. LB 650 from von Gillern, who chairs the Legislature's Revenue Committee, would reduce or defund various tax incentives with savings this biennium, including: Buyer-based exemption for construction contractors to purchase materials tax-free if appointed to do so by a client ($12.9 million). Credit for retailers collecting sales taxes (reduced, $11.7 million savings). Renewable Chemical Production Tax Credit Act for local businesses producing renewable chemicals (defunded after 2025, $8.5 million savings). Nebraska Relocation Incentive Act offering tax incentives for relocation expenses (reduced, $8 million savings). Nebraska Advantage Rural Development Act for individuals or companies that increase economic activities intended to benefit rural Nebraska (reduced, $6.8 million savings). Nebraska Biodiesel Tax Credit Act for retail dealers who sell and dispense biodiesel at a taxpayer's retail gas station (reduced, $1 million savings). Creating High Impact Economic Futures (CHIEF) Act for charitable contributions to community assistance or services helping to alleviate areas of chronic economic distress (defunded after 2025, $900,000 savings). Nebraska Shortline Rail Modernization Act to offset railroad infrastructure maintenance and capital improvements for Class III railroads (reduced, $500,000 savings). Food donation income tax credit for grocery stores, restaurants or agricultural producers that donate food to a food bank, food pantry or food rescue (defunded after 2025, $500,000 savings). Cast and Crew Nebraska Act for qualifying film companies, productions and actors (defunded after 2025, $500,000 savings). Reverse Osmosis System Tax Credit Act for the one-time installation of a reverse osmosis system at a taxpayer's primary residence (reduced, $250,000 savings). Urban Redevelopment Act designed to grow small businesses and generate investment in Nebraska's urban cores (defunded after 2025, $101,000 savings). LB 645 from Ballard, who chairs the Legislature's Nebraska Retirement Systems Committee, would reduce annual contributions to the state's school retirement pension plan — for all employees outside Omaha Public Schools, who have a separate retirement plan — depending on the actuarial funding level of the pension plan. The school plan is currently 99.91% funded. The state currently gives 2% of statewide payroll for employees covered under the plan. School employees contribute 9.78% of their monthly payroll, while school districts match that at 9.88% of the eligible employees in their district. Under the amended LB 645, contribution rates would change each July 1 for all three groups depending on whether the plan is: Less than 96% funded (employees 9.75%, employers 9.85%, state 2%). Between 96% and 98% funded (employees 8.75%, employers 8.84%, state 0.7%). Between 98% and 100% funded (employees 8%, employers 8.08%, state 0.7%). 100% funded or more (employees 7.25%, employers 7.32%, state 0%). Multiple senators said the tiered system could offer a 'cushion' in hard economic times. Teachers and other school employees could see an immediate take-home pay increase, and school districts could have a property tax reduction. However, if the plan's funding level falls, closing the gap would fall back to the state, employees and school districts. Ballard, at the urging of State Sen. Danielle Conrad of Lincoln, earlier this week put in language to LB 645 protecting the state's continued contributions of 2% of payroll for Omaha Public Schools employees to the separate district retirement plan each year. That amendment also said it isn't the Legislature's intent to pick up 'any financial responsibility or liability' for the OPS pension, which the state now manages. With the passage of LB 650 and LB 645, and with Gov. Jim Pillen's expected support — he included both measures in his January budget proposal — the state's projected budget deficit would fall by $136 million. The state also would save $187.24 million in the following two-year budget cycle, based on current projections. Lawmakers still would need to find $259.4 million over the next two weeks to balance the budget and meet a statutorily required reserve limit, according to estimates from the Legislative Fiscal Office. SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Yahoo
14-04-2025
- Business
- Yahoo
Changes to school retirement plan advance to full Nebraska Legislature
School employees engaged in the retirement changes process with State Sen. Beau Ballard of Lincoln. (Aaron Sanderford/Nebraska Examiner) LINCOLN — The full Nebraska Legislature appears likely to debate a governor-backed bill to reexamine contributions for school employees' retirement plans, which the sponsor described as a 'win-win-win.' The Nebraska Retirement Systems Committee on Monday morning voted 4-0 to advance Legislative Bill 645 by State Sen. Beau Ballard of Lincoln, the committee chair. State Sens. Brian Hardin of Gering and Danielle Conrad of Lincoln were absent from the vote, but Ballard left the vote open through at least the end of the day for both to weigh in if they choose to. 'This is a win for state tax dollars, a win for teachers and also, I believe, a win for property taxpayers as well,' Ballard told the Nebraska Examiner of his amended bill. The school retirement plan at center stage applies to eligible school employees outside of the Omaha Public Schools, which has a separate retirement plan. Currently, teachers and other eligible school staff contribute 9.78% of their monthly payroll to the pooled retirement plan. School districts match this at 9.88% of the amount they pay their employees, while the state contributes 2% of statewide school employee payroll each year. The estimated payroll for teachers in Nebraska, as of July 1, 2024, was $2.5 billion annually. That means the plan took in $543 million in direct contributions — about $50 million from the state, $245 million from employees and $248 million from school districts in the most recent year. The amended LB 645 is significantly different from when it was introduced in January, which at the time would have reduced state contributions to 0% depending on the plan's actuarial funding status, but left contribution rates for employees and school districts the same. The plan is currently 99.91% funded. If LB 645 moves forward, contribution levels of all three groups would change at four stages based on the actuarially funded level — less than 96% funded, between 96% and 98% funded, between 98% and 100% funded and fully funded. The state would fall to 0.7% of annual contributions at the two intermediate stages, retaining the 2% contribution level when the retirement plan is underfunded and paying zero when the plan is fully funded. State Sen. Rob Clements of Elmwood, chair of the Legislature's Appropriations Committee, and a member of the Retirement Committee, said LB 645 could save the state $77 million over the next biennium. The governor's office maintains that the freed-up funds should not be used to balance the state's projected budget deficit but instead to invest in education. Under the latest version of Ballard's bill, school employees would contribute 9.75% of payroll if the plan is less than 96% funded. This would lower to 8.75% and 8%, respectively, at the intermediate stages. When fully funded, employees would contribute 7.25% of their individual pay to the plan. Employees were brought to the table for negotiations prior to LB 645's public hearing last month. Ballard's staff provided data estimating that the average school teacher could receive $1,000 in more take-home pay if the retirement plan is more than 98% funded, as it is now, because of lower monthly contributions. When the plan is fully funded, take-home pay for the average teacher could rise by up to $1,500 each year. Employers would continue to contribute 101% of what their employees do, which is a first for the continued negotiations. Before, LB 645 would have locked the employer contribution rate at 9.88% of what employees are paid. Ballard said allowing lowered contributions when the retirement plans are flush could lead to reduced property taxes. Lowered contributions at full funding would lower contributions for both employers and employees by 2.5%, potentially freeing up funding for a priority of the Nebraska State Education Association — funding more long-term substitutes so teachers can take paid time off around significant life events. That bill, LB 440 from State Sen. Ashlei Spivey of Omaha, is planned to be advanced through the Education Committee's LB 306. An amended version of her bill seeks a 0.35% payroll tax, for both employees and employers, to fund four weeks of long-term substitutes, rather than her original proposal's idea for six weeks. Excess funds collected under the Spivey proposal above what's needed to cover subs would be steered toward teacher retention or recruitment, such as forgivable loans for special education teachers as provided in Lincoln State Sen. George Dungan's LB 408. Before structural changes to state retirement plans can be made, an actuarial study must assess the feasibility. The latest study came back last Thursday indicating the plan would still receive about 0.27% more funds each year than required under state law at full funding. The actuaries said this provides 'little cushion … to absorb adverse experience.' State law currently requires that the state is on the hook for additional funding in any given year if the plan requires more funds outside of annual contributions. The actuaries wrote that part of the 'challenge' in the future will be adjusting to the varied contribution rate, which could eat into state funds, property taxes or employee pay. The study also takes into account a phased-in slightly lower assumed return on investment for the retirement plan. State Sen. Tony Sorrentino of the Elkhorn area, vice chair of the Retirement Committee, said normally contributions would increase in that case. The actuaries agreed this could increase risk to the retirement plan. However, Ballard and Clements noted that one built-in fail-safe is increased contributions if the funding status of the retirement plan lowers. The actuaries predicted the probability that the retirement plan would be fully funded about 56.4% of the time over the next 20 years, while it could be less than 96% funded about 31.5% of the time. Ballard, who introduced LB 645 more than 50 legislative days ago, said he appreciated the feedback that he received from teachers, administrators, school boards, the Governor's Office and more, all of which he said are now on board. Conrad clashed with Ballard at LB 645's public hearing in March in part over the bill's negotiations. She could not immediately be reached for comment Monday on the advanced bill, nor could the NSEA. Ballard said he took the feedback of teachers and other employees with 'high consideration.' 'This is their livelihood, this is their retirement plan,' Ballard said. 'We want to make sure that they are protected because they do so much for our state, and we just really appreciate their feedback.' SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
