State legislative sessions are now complete or are winding down. NPPC and our state coalitions have worked tirelessly this year to protect and better the pension benefits provided to public employees. From Alaska to Connecticut and all across the country, public employees dedicate their careers to serving their communities, and our mission is to ensure they can retire with security and dignity.
Here are major updates from states around the country:
During this year’s legislative session, state lawmakers introduced HB 1040, a bill that moved future state employees participating in the North Dakota Public Employee Retirement System (NDPERS) from the defined-benefit pension system to a defined-contribution 401(k) retirement system. The bill passed the legislature and was signed into law by the governor, making North Dakota one of the only a few states in the country that does not offer a pension to state employees. NPPC and our in-state coalition fought hard against the legislation, and the state will now only exacerbate its recruitment and retention crisis of public employees and lead the state in the wrong direction.
The bill, estimated to cost the state over $5 billion (the most expensive bill in state history), was advocated for by the Reason Foundation and TIAA, a defined-contribution plan operator. We’ve written about the two entities’ relationship in the past, and we’ve written about the importance of not listening to the Reason Foundation, which often pushes faulty projections to advance a “sky-is-falling” narrative. Public employees should be wary moving forward and be on the lookout for the Reason Foundation and their anti-pension idealogues in other states.
This year, SB 88 was introduced in the Alaska State Senate. The bill will provide a pension component to all future public employees in the state. In 2005, after the state’s actuary made faulty assumptions for the Public Employee Retirement System (PERS) and the Teachers’ Retirement System (TRS), state lawmakers decided to close the plan to future public employees. Instead of a pension, public employees participate in a defined-contribution 401(k) retirement plan, which is concerning because most do not receive Social Security, making their 401(k) their only retirement vehicle.
Since the closure of the pension plans, Alaska’s state agencies, school districts, and municipalities have struggled to recruit and retain public employees–something we covered extensively in our report Fiscal Responsibility and 401(k)s. With the Alaska legislature operating on a two-year schedule, NPPC and our state coalition, the Alaska Public Pension Coalition, is dedicated to making SB 88 law next year.
With the Oklahoma legislative session coming to a close, Keep Oklahoma’s Promises and NPPC have worked hard to advance HB 2854. In 2015, state lawmakers closed the Oklahoma Public Employees Retirement System (OPERS) to future state employees. Since then, newly hired state employees have only participated in a defined-contribution 401(k) retirement plan through Pathfinder, which OPERS operates. HB 2854 will re-open the pension plan to all current and future state employees, offering a secure and dignified retirement. Since its’ closure, state agencies have had trouble recruiting and retaining public employees in the state–this bill seeks to reverse that course.
This year, the Oklahoma State House of Representatives passed HB 2854, and the bill remains alive next year for the State Senate to take action. NPPC will be working with KOP to educate lawmakers and the general public on the importance of providing a secure retirement to public employees through a pension benefit throughout the next year.
At the beginning of the legislative session, state lawmakers introduced HB 559–a bill that would establish a defined-contribution 401(k) retirement plan for new state employees who begin service on or after July 1, 2024. This new law would impact state employees who previously would have been enrolled in Group 1, and instead, they would be required to participate in the new plan administered by the state Deferred Compensation Commission. Although the bill did not have the votes to pass in the House Executive Departments and Administration Committee, an interim study committee on the legislation will be held this summer. NPPC and our allies in the state will work together to ensure this legislation is defeated.
In the 2023 legislative session, House lawmakers introduced HB23-1176. The bill would have created a “flexible defined-contribution plan,” much like a 401(k), for public employees employed by the state’s schools, including teachers. This bill would have allowed teachers and other school employees participating in the Public Employee Retirement System (PERS) to choose between the defined-benefit pension plan and a defined-contribution 401(k) plan. Policies like this only harm defined-benefit pension systems and the retirement security of public employees. In fact, it is often used as a backdoor way to introduce legislation in the future, forcing all future public employees into a defined-contribution-only retirement plan. Although the bill did not get passed out of the House Education Committee, it is something to watch out for next year.
In another whirlwind of a legislative session in Kansas, we saw similar legislation from last year that sought to close the Kansas Public Employees Retirement System (KPERS) Tier 3 cash balance plan and move most public employees to a thrift savings plan. SB 230 would create a thrift savings plan, which is a defined-contribution plan, for all future public employees who would participate in KPERS. This bill would harm the retirement security of public employees in the state and cause significant harm to KPERS funded status. Although the bill was not heard this year, it is rolled over to next year. Keeping the Kansas Promise (KKP) and NPPC are staying vigilant to protect public employees’ retirement security.
Also, this summer, the state will be auditing KPERS Tier 3, which could present an opportunity to improve the plan for public employees. We will be keeping a close eye on developments throughout the process.
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