Following last year’s shortened legislative sessions due to the coronavirus pandemic, state legislators across the country returned to work full legislative sessions in 2021. Today we’re going to share the most significant actions they made on pensions in part two of this year’s legislative recap

While much of the Arizona legislature’s attention this year focused on the ongoing partisan 2020 election audit, there were efforts to weaken retirement security in the state. House Bill (HB) 2138 would impact all employees at the three state-run universities, giving everyone in the Arizona State Retirement System (ASRS) the opportunity to switch to the Optional Retirement Program, a defined-contribution plan. The bill was removed from the House Government and Elections Committee agenda in February due to lack of support.

In Colorado, the legislature passed Senate Bill (SB) 205, an appropriations bill for the state’s fiscal year beginning on July 1, 2021. The legislation included a $225 million payment into the Public Employees’ Retirement Association (PERA), which was part of a compromise measure known as SB 200 that passed in 2018. As part of SB 200, the state increased employer and employee contributions, capped cost-of-living adjustments (COLAs) at 1.5% for retired public employees, and increased eligibility requirements. In exchange, the legislature would then allocate an annual $225 million payment into the pension system. However, as a result of the pandemic-induced economic crisis, Colorado did not make its contribution to PERA last year.

On June 23, Governor Lamont signed a two-year budget into law. The budget includes two appropriations designed to lower the state’s unfunded liabilities. The first is a $63 million payment that Connecticut will make towards its unfunded liabilities, and the second will be an additional $1 billion payment for the unfunded liabilities at the end of the 2021 fiscal year. 

For years, Kansas has been clawing back the effects of the disastrous Brownback tax cuts, which put the state in economic turmoil and underfunded the state’s pension system, the Kansas Public Employees Retirement System (KPERS). Unfortunately, in 2021, lawmakers passed yet another tax cut bill after having a budget surplus last year. It’s too early to tell if this will impact KPERS in the future in terms of funding. 

Additionally, there were several bills related to KPERS. HB 2405 authorized another $500 million in pension obligation bonds to help further pay down the KPERS unfunded liability. Secondly, HB 2243, which was an omnibus KPERS related policy bill that included tweaks to the Kansas Deferred Retirement Option Program (also known as DROP); codifying the Governor’s funding allotment in 2020 to the KPERS Death and Disability Fund; and syncing up specific KPERS provisions with recent changes at the federal level. Both of these bills passed and were signed into law. 

At the end of the legislative session, there was an attempt to amend a thrift savings proposal into another bill during a debate on the Senate floor. This effort was unsuccessful. However, the comments made by several senators during the debate serve as a reminder that some pension opponents in the legislature would like to convert future public employees to a defined-contribution system.  

New Hampshire
In New Hampshire, there were a number of bills introduced relating to the New Hampshire Retirement System (NHRS). HB 390 would have reamortized the Unfunded Actuarial Accrued Liability, which would have had negative effects on both city and municipality budgets, but was defeated in committee. HB 497 would have allowed school districts to exempt chief administrative officers from compulsory participation in NHRS. It was defeated in the House by voice vote. HB 173, which requires the NHRS Independent Investment Committee to report investment fees, passed the legislature and was signed into law by Governor Sununu on April 26th.

The Oklahoma legislative session presented several threats to public employee retirement. The first was SB 1009, a bill that would change the composition of the Oklahoma Firefighters Pension and Retirement System (OFPRS). SB 1009 would have rewarded more board seats to political appointees while taking away seats held by firefighters. This bill was defeated in committee. The second was HB 2293, which threatened to nullify $26 million dollars in federal matching funds, which would have cost the Teachers’ Retirement System (TRS) $28 to $37 million dollars. Due to the efforts by Keep Oklahoma’s Promises, HB 2203 was watered down to have almost no effect on TRS.

This year, the Texas legislature passed SB 321, a major piece of legislation reforming the state’s Employees Retirement System (ERS). SB 321 will enroll newly hired public employees in ERS into a less secure cash-balance retirement plan instead of a defined-benefit pension. It will also require newly hired public employees to contribute 6% of their pay into ERS instead of the current percentage of 9.5%, increase the employer contribution rate from 7.4% to 9.5%, and appropriate a yearly payment of $350 million into ERS through 2053 to shore up the system’s funding. The bill will take effect on September 1, 2021.