2017 House Bill 4647

Overhaul school employee retirement system

Introduced in the House

May 23, 2017

Introduced by Rep. Thomas Albert (R-86)

To close the current state-run school pension system to new employees hired after Sept. 30, 2017, who would instead get employer contributions to their own lifetime annuity or 401(k) accounts. The bill would also establish more rule-based funding requirements for the defined benefit systems. Inadequate annual contributions are reportedly responsible for the system’s unfunded liabilities having grown to $29.1 billion in 2016.

Referred to the Committee on Education Reform

June 14, 2017

Reported without amendment

With the recommendation that the substitute (H-1) be adopted and that the bill then pass.

June 15, 2017

Amendment offered by Rep. Stephanie Chang (D-6)

To strip out a $5 million appropriation included in the bill that would make it "referendum-proof".

The amendment failed by voice vote

Amendment offered by Rep. Klint Kesto (R-39)

To delete provisions that restrict employees from "purchasing credits" that result in larger pension benefits.

The amendment failed by voice vote

Amendment offered by Rep. Brett Roberts (R-65)

To reduce the share of pension underfunding "catch up" costs that are paid directly by school districts.

The amendment failed by voice vote

Amendment offered by Rep. Brett Roberts (R-65)

To increase the amount of unfunded liabilities the new system would have to incur before triggering a "kill switch" provision that closes it new hires once the underfunding meets a prescribed level.

The amendment failed by voice vote

Amendment offered by Rep. Brett Roberts (R-65)

To exempt more pension system members from a provision that would raise the age at which pensions may be claimed if actuarial studies show an increase in average life expectancy.

The amendment failed by voice vote

Substitute offered by Rep. Adam Zemke (D-55)

To adopt a version of the bill would leave the current system in place but with more generous employer 401k contributions, and more conservative projections of future returns on pension fund investments.

The substitute failed by voice vote

Passed in the House 55 to 52 (details)

To replace the current school pension system with one that requires more cost-sharing by new employees, and contains provisions intended to limit state management practices responsible for the $29.1 billion of unfunded liabilities in the status quo system. New employees could choose instead to receive substantial employer contributions to 401(k) accounts (4 percent of salary automatically, and an employer-match of up to 3 percent more). If the overhauled defined benefit component is not properly funded then employees who enrolled in it would have to pay half the cost of correcting this. If underfunding exceeds specified levels it would be closed to new hires.

Received in the Senate

June 21, 2017

Referred to the Committee on Education