LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6751 NOTE PREPARED: Dec 26, 2024
BILL NUMBER: SB 388 BILL AMENDED:
SUBJECT: 1977 Fund Benefits.
FIRST AUTHOR: Sen. Rogers BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: GENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: The bill increases the basic monthly pension benefit payable to a member of the
1977 Police Officers' and Firefighters' Pension and Disability Fund (‘77 Fund) who retires after June 30,
2025, with 20 years of service. The bill also increases the contribution rate of fund members.
Effective Date: July 1, 2025.
Explanation of State Expenditures: Indiana Public Retirement System (INPRS): INPRS administers the
‘77 Fund and would have increased workload to make administrative changes to provide for increased
benefits to members. The administrative costs of the ‘77 Fund are paid from the fund.
Explanation of State Revenues:
Explanation of Local Expenditures: Increasing the basic monthly benefit for members of the ‘77 Fund
who retire after July 1, 2025 would increase expenditures from the ‘77 Fund for pension benefits. The
proposal would increase the present value of future benefits for the ‘77 Fund by an estimated $501.6 M. This
would increase the unfunded liability of the ‘77 Fund by $352.7 M and would reduce the funded status of
the ‘77 Fund by 3.59 percentage points.
The bill would also increase expenditures for local employers. The bill would increase the employer
contribution rate by an estimated 2.3% of salary—likely beginning in calendar year 2027 since the INPRS
board has already set the employer contribution rate for calendar years 2025 and 2026.
Additional Information - The bill increases the basic monthly benefit for a member of the ‘77 Fund who
retires after July 1, 2025. Under current law, the benefit calculation equals 52% of the monthly salary of a
first class patrolman or firefighter plus 1% for every additional six months served beyond 20 years of service
up to 12 additional years. The bill would increase the basic monthly benefit to 55% of the monthly salary
of a first class patrolman or firefighter plus 1.25% for each additional six months served past 20 years for
service up to an additional 12 years. See Table 1.
SB 388 1 The estimate was done using the data, methods, assumptions and provisions used in June 30, 2023 actuarial
valuations for the ‘77 Fund. The fund impact would differ from what is estimated if members delay
retirement or if members who are currently in the deferred retirement option plan (DROP) decide to exit the
DROP to take advantage of higher benefit accruals under the bill. In addition, some retirees may retire earlier
than they would under current law because they would be able to receive the same retirement amount sooner
than they could under current law.
Table 1. Comparison of ‘77 Fund Retirement Benefit as a Percentage of the Monthly Salary of a First
Class Patrolman or Firefighter
Years of Service at Retirement ‘77 Fund Retirement Benefit
Current Law
‘77 Fund Retirement Benefit
Proposed
20 52% 55%
22 56% 60%
24 60% 65%
26 64% 70%
28 68% 75%
30 72% 80%
32 76% 85%
The employer contribution rate is set as a percentage of salary sufficient to cover the actuarially determined
contribution rate determined by fund actuaries. Actuaries do this by computing the present value of future
benefits. This is the amount required to fund the normal cost (the cost for new service and new pay earned
in the current year) as well as an amount to cover any unfunded liability of the fund. The unfunded liability
is paid for (amortized) over 20 years. The employer contribution rate for the ‘77 Fund is set at 19.1% for
calendar year 2024, and 20.3% for calendar year 2025, and 23.3% for calendar year 2026. The ‘77 Fund is
89.8% funded as of June 30, 2024.
Explanation of Local Revenues: ‘77 Fund: The bill would increase revenue to the ‘77 Fund from employee
and employer contributions. The employee contribution rate would increase from 6% to 8.5% of salary for
active members with up to 32 years of service beginning July 1, 2025. The bill would increase the employer
contribution rate by an estimated 2.3% of salary—likely beginning in calendar year 2027 since the INPRS
board has already set the employer contribution rate for calendar years 2025 and 2026.
State Agencies Affected: Indiana Public Retirement System.
Local Agencies Affected: Local units with police and fire departments with members in the ‘77 Fund.
Information Sources: Cavanaugh Macdonald Consulting, LLC. (2024, August 12.) 1977 Police Officers’
and Firefighters’ Retirement Fund – Alternative Accrual Rates.
Fiscal Analyst: Camille Tesch, 317-232-5293.
SB 388 2