Tuesday, April 19, 2016

Bills to Change Plans for New Hires to be Heard in House Retirement Committee

The House Retirement Committee is scheduled to meet Thursday, April 21, 2016 at 9:00 a.m. The following bills, sponsored by Rep. Ivey, are on the agenda:
  • HB 45 (Constitutional Amendment) would modify existing constitutional guarantees to provide that only benefits annuitized by a state retirement system will be guaranteed by the State and that the accrued benefits of members that are annuitized and calculated based on accrual rate and average compensation shall not be diminished or impaired. Current constitutional language provides that the "state shall guarantee benefits payable to a member of a state retirement system or retiree or to his lawful beneficiary upon his death." And, that "accrued benefits ... shall not be diminished or impaired."
  • HB 46 (Constitutional Amendment) would apply for new hires on or after July 1, 2017, whose benefits are guaranteed by the Constitution. The bill specifies that member and employer shall share equally in the normal cost of the member's benefit and any Unfunded Accrued Liability (UAL) associated with an augmentation of the member's benefit.
  • HB 50 would create a new retirement plan with tiered accrual rates for new hires on or after July 1, 2018. 
  • HB 65 would create a new hybrid retirement plan for new hires on or after July 1, 2018.
The LASERS Board of Trustees opposes HBs 45, 46, 50, and 65 since our members do not contribute to Social Security and the Board recognizes the importance of retirement security. In addition to being deemed a qualified plan by the IRS, the existing defined benefit plan has an extremely modest normal cost of four percent of pay. The Board is also aware that over the past decade, the legislature has adopted significant pension reform that, for LASERS alone, is expected to reduce costs by $3 billion.
Also on the agenda is:
  • HB 49 (Ivey) which would stipulate that rather than a set rate, contribution rates for new hires on or after July 1, 2017, shall be calculated each year to 50 percent of the normal cost, plus that year's amortization payment of any Unfunded Accrued Liability (UAL) associated with benefit augmentations, plus that year's amortization of overpayment or underpayment of employee contributions. The change is contingent upon passage of a constitutional amendment.
The LASERS Board of Trustees opposes HB 49 as it recognizes that members who obtain refunds would be repaid funds that should be applied to the Unfunded Accrued Liability (UAL). It could also result in a member paying the UAL of another member, for no corresponding benefit, thereby constituting a tax. The Board also noted that since members would be unsure of the amount of their contribution, they would be unsure of their amount of compensation.

Please note that meeting schedules and agendas are subject to change. Check the LASERS website daily for updates and for detailed information about proposed retirement legislation that may impact LASERS if passed.

Experts to Provide Testimony at House Retirement Committee Meeting

Keith Brainard
Keith Brainard, Research Director for the National Association of State Retirement Administrators (NASRA) is expected to testify at the House Retirement Committee meeting on Thursday, April 21. Mr. Brainard collects, prepares and distributes to NASRA members news, studies, and reports pertinent to public retirement system administration and policy. 
Mr. Brainard is co-author of The Governmental Plans Answer Book, Third Edition, and he created and maintains the Public Fund Survey, an online compendium of public pension data sponsored by NASRA. He created the State & Local Pension Exchange, predecessor to the Public Fund Survey and recipient of the Award for Excellence in Government Finance from the Government Finance Officers Association. He has discussed public pension issues before Congress, state legislative committees, public pension boards of trustees, and on multiple media outlets.
He is an appointed member of the Texas Pension Review Board and an elected member of the Georgetown, Texas, city council. Mr. Brainard previously served as manager of budget and planning for the Arizona State Retirement System and as a fiscal analyst for the Texas and Arizona legislatures. He holds a B.A. and an M.P.A. from the University of Texas at Austin.

Robert Klausner
Robert D. Klausner, principal in the law firm of Klausner, Kaufman, Jensen & Levinson, is also expected to testify at the House Retirement Committee meeting on Thursday, April 21.  For 39 years, he has been engaged in the practice of law, specializing in the representation of public employee pension funds.  The firm represents state and local retirement systems in more than 20 states.
Mr. Klausner has assisted in the drafting of many state and local laws on public employee retirement throughout the United States. He is a frequent speaker on pension education programs and has also published numerous articles on fiduciary obligations of public employee pension trustees.  He is co-author of the book State and Local Government Employment Liability, published by Thomson-Reuters West Publishers and is the author of the first comprehensive book on the law of public employee retirement systems, State and Local Government Retirement Law: A Guide for Lawyers, Trustees, and Plan Administrators, originally published in April 2009, and an expanded version which was published in November 2014. 
Mr. Klausner graduated Phi Beta Kappa from the University of Florida with a Bachelor of Arts and from the University Florida College of Law with the degree of Juris Doctor.  For more than 15 years, Mr. Klausner has been listed in the publication The Best Lawyers in America and holds an "AV pre-eminent" rating, the highest rating for competence and ethics, from Martindale Hubbell national lawyer rating service. In 2008, Mr. Klausner successfully represented the Commonwealth of Kentucky and the Kentucky Retirement Systems in the United States Supreme Court in Kentucky Retirement Systems v. Equal Employment Opportunity Commission, 128 S. Ct. 2361 (2008).

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