LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6393 NOTE PREPARED: Dec 13, 2021
BILL NUMBER: SB 206 BILL AMENDED:
SUBJECT: Thirteenth Check.
FIRST AUTHOR: Sen. Niezgodski BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: The bill provides for a thirteenth check in 2022 for certain members of the: (1)
Indiana State Teachers' Retirement Fund (TRF); (2) Public Employees' Retirement Fund (PERF); (3) State
Excise Police, Gaming Agent, Gaming Control Officer, and Conservation Enforcement Officers' Retirement
Plan (EG&C); (4) State Police Pre-1987 Benefit System; and (5) State Police 1987 Benefit System.
Effective Date: July 1, 2022.
Explanation of State Expenditures: Thirteenth Checks: Total state costs for the thirteenth check are
estimated at $34.2 M in FY 2023. Pension benefit recipients of PERF (state), TRF ‘96, and EG&C will
receive between $150 and $450 depending on their years of service while State Police pension benefit
recipients will receive a percentage share of the maximum pension for a trooper with certain years of service.
The estimate is based on the cost of similar thirteenth checks provided during the last two bienniums (see
Table 1).
Absent further legislative action to make a General Fund appropriation or instructions that funding come
from the pre-funded supplemental reserve accounts, the thirteenth checks awarded in this bill will be paid
from the pension funds themselves. If the thirteenth checks are paid from the respective pension funds, the
unfunded liability of the funds and the actuarially determined employer contribution (ADC) rate would
increase, potentially impacting future employer contribution rates for PERF and EG&C. TRF Pre-‘96
benefits are funded through General Fund appropriations to the Pension Stabilization Fund.
SB 206 1 Table 1. State Cost of Thirteenth Checks for Pension Recipients in FY 2023
Qualified
Retirees/Beneficiaries
(Approx.)
Total Cost FY 2023 (in
Millions)
PERF (State) 33,500 $11.1 M
TRF Pre-'96 55,300 $22.7 M
EG&C Fund 270 $0.11 M
State Police 1,600 $0.37 M
Total (State) 90,670 $34.2 M
Workload Impact: INPRS administers the PERF, TRF, and EG&C funds. The State Police and the Treasurer
of State’s Office administer the State Police Benefit Funds. This bill will increase workload for these
agencies to make additional payments to pension benefit recipients. The administrative costs of the funds
are paid from the respective funds.
Additional Information - Supplemental reserve accounts were established by SEA 373-2018 for PERF, TRF,
EG&C, and the Legislator’s Defined Benefit Fund (LEDB) as a way to pre-fund postretirement benefit
increases and thirteenth checks. The supplemental reserve accounts are funded by employer contributions
as a surcharge as determined by the INPRS Board, in an amount not to exceed 1% of the employers’ payroll
that is attributable to those employees who are members of PERF, TRF ‘96, or EG&C. Additionally, $30 M
annually of surplus revenue from the State Lottery Commission is transferred to the supplemental reserve
accounts.
Members of the TRF Pre-‘96 Fund began teaching prior to July 1, 1995. The TRF Pre-‘96 Fund is a pay-as-
you-go pension fund. The Pension Stabilization Fund was created in 1995 by the General Assembly to
stabilize the state’s General Fund teacher pension expenditures as a percentage of the state’s General Fund
budget. If the thirteenth check is paid from the TRF Pre’96 Fund, the funding would come from the Pension
Stabilization Fund. This bill will not change the state’s appropriation to the Pension Stabilization Fund to
pay for TRF Pre-‘96 Fund pensions in the next several years; however, if the thirteenth check were paid from
the fund, it will increase the unfunded liability of the TRF Pre-‘96 Fund and the overall expenditures from
the Pension Stabilization Fund over time.
Explanation of State Revenues:
Explanation of Local Expenditures: The local cost for thirteenth checks is estimated to be $25.5 M in FY
2023 for the local share of PERF and TRF ‘96. The checks will provide benefits to approximately 67,000
local PERF members and 9,900 TRF ‘96 members (see Table 2).
Absent further legislative action to make a General Fund appropriation or direct that funding come from the
pre-funded supplemental reserve accounts, the thirteenth checks awarded in this bill will be paid from the
pension funds themselves. If the thirteenth checks are paid from the respective pension funds, the unfunded
liability of the funds and the actuarially determined employer contribution (ADC) rate would increase,
potentially impacting future employer contribution rates for PERF and TRF ‘96.
SB 206 2 Table 2. Local Cost for Thirteenth Checks for Pension Recipients for FY 2023
Qualified
Retirees/Beneficiaries
(Approx.)
Total Cost FY 2023 (in
Millions)
PERF (Local) 67,000 $22.2 M
TRF '96 9,900 $3.3 M
Total (Local) 76,900 $25.5 M
Explanation of Local Revenues:
State Agencies Affected: Indiana Public Retirement System, Indiana State Police, Treasurer of State,
All.
Local Agencies Affected: Units with members in PERF or TRF.
Information Sources: INPRS. 2020 Comprehensive Annual Financial Report.
https://www.in.gov/inprs/annualreports.htm.
Legislative Services Agency. Indiana Handbook of Taxes, Revenues, and Appropriations, FY 2020.
McCready and Keene, Inc. (2019-2021). Department of State Police of Indiana Pension Trust Agreement
Actuarial Valuations.
Fiscal Analyst: Camille Tesch, 317-232-5293.
SB 206 3