LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 7154 NOTE PREPARED: Jan 14, 2025
BILL NUMBER: SB 416 BILL AMENDED:
SUBJECT: Public Defender Participation in PARF.
FIRST AUTHOR: Sen. Rogers BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: Membership in the Prosecuting Attorneys Retirement Fund (PARF): The bill adds
a person who serves in one of the following positions on or after January 1, 2016, to PARF:
(1) The state public defender or chief deputy state public defender employed by the state public defender.
(2) The executive director of the Public Defender Council of Indiana or the second highest paid staff person
or a full-time staff attorney employed by the Public Defender Council of Indiana.
(3) The highest paid or the second highest paid staff person employed by the Indiana Commission on Court
Appointed Attorneys.
(4) A chief public defender or chief deputy public defender.
The bill also allows staff attorneys of the Prosecuting Attorneys Council of Indiana employed on or after
January 1, 2012, to participate in PARF. This bill also changes the name of the Prosecuting Attorneys
Retirement Fund to the Prosecuting Attorneys and Public Defenders Retirement Fund.
Benefit and Contribution for Members with more than 22 Years of Service: The bill provides that after a
participant has contributed to PARF for 22 years, the state or county shall pay the contributions to the fund
for the participant.
Salary Rate Used to Calculate PARF Benefits: It provides that the computation of benefits is based in part
on the highest salary that was paid to the participant before separation from service.
Benefit Calculation: It provides that 1% shall be added to the percentage used to calculate benefits for each
year of service after 22 years.
Reduced Early Retirement Penalty: The bill provides that a reduced annual retirement benefit equals the
benefit that would be payable if the participant were 65 years of age reduced by 0.10% for each month before
the participant's sixty-fifth birthday.
SB 416 1 Cost of Living Adjustment (COLA) for PARF: The bill provides for a COLA for participants of PARF based
on increases to judge salaries.
Purchase of Service Credits: It allows a participant to receive service credit in PARF for more than one year
and less than 10 years of service received by the participant in the Public Employees' Retirement Fund
(PERF) under certain conditions.
PERF Offset: The bill provides for the calculation of an offset of PARF benefits payable to a participant from
a participant's Public Employees' Retirement Fund Benefits based on the concurrent service and wages the
participant earned in both the Public Employees' Retirement Fund and PARF.
It also makes corresponding changes.
Effective Date: July 1, 2025.
Explanation of State Expenditures: Summary - The bill would increase the present value of future
benefits for PARF by more than $51 M. This would increase the actuarial accrued liability for PARF by more
than $46 M and reduce the funded status of PARF by more than 17.5 percentage points. The bill will require
increased annual General Fund appropriations for PARF of more than $5.9 M beginning in FY 2026.
These estimates are based on a 2023 actuarial cost estimate of a similar proposal (Cavanaugh McDonald
Consulting, 2023). The numbers used in the 2023 estimate were calculated assuming a COLA of 2%;
however, this bill would provide a COLA equal to the percentage increase in judges annual salary, which
fund actuaries assume to be 2.65%. Thus an updated actuarial estimate will show a significantly larger fiscal
impact for the COLA than what was estimated previously. In order to provide a more accurate cost estimate
of the proposal, fund actuaries will need current data on the individuals who would be added to PARF under
the bill, including salary, years of service in covered positions, and prior service in PERF.
[The fiscal note will be updated when an actuarial estimate of the bill is available.]
Adding 50 new members to PARF and covering past service in a covered position would increase the present
value of future benefits for PARF by an estimated $5 M. This would result in increased pension benefits for
the 50 active individuals who will be added to PARF. The other provisions of the bill apply to all members
of PARF. These provisions would increase the present value of future benefits for PARF by more than $46
M.
PARF is funded through a biennial state General Fund appropriation in the state budget, by employee
contributions, and by employer contributions for members with more than 22 years of service. The Board
of the INPRS recommends an appropriation amount to the General Assembly that is sufficient to cover the
anticipated normal cost and unfunded liability of the fund for the biennium. The normal cost represents the
present value of future retirement benefits earned in the current year. The unfunded liability of the fund is
amortized over 20 years.
Absent further legislation appropriating sufficient funds to cover the increase in the present value of future
benefits, the bill would necessitate increased General Fund appropriations in future budgets to cover the
increased normal cost and unfunded liability created by the bill.
SB 416 2 Change Proposed Current Law Estimated Cost
Membership in
PARF
Adds 50 active employees to PARF.
New members include the following:
(1) Chief and deputy chief public
defenders.
(2) The leadership of the Public
Defender Council of Indiana and the
Indiana Commission on Court
Appointed Attorneys.
(3) Staff attorneys of the Indiana
Prosecuting Attorney Council (IPAC).
Past service back to 2016 will be
covered for public defenders while past
service back to 2012 will be covered for
the IPAC staff attorneys.
Membership in PARF
limited to certain
prosecuting attorneys
and leadership of
IPAC.
$5.0 M
COLA Monthly benefit increases with the
percentage increase in judges annual
salaries under IC 33-38-5-8.1(b).
None. >$28 M. (Estimate is
based on a 2% COLA
assumption, whereas
the assumption used for
the percentage
increases in judges
salaries is 2.65%.)
PERF Offset* Members of PARF are also members of
PERF.
The PARF benefit amount is only
reduced by the PERF benefit the
member earned while serving in a PARF
covered position. PERF benefits remain
unchanged.
Fund members who earn PERF service
credits prior to working in a PARF
covered position would receive a larger
benefit at retirement than under current
law.
Members of PARF are
also members of
PERF.
Benefit recipients
receive a payment
from PERF and from
PARF. PARF benefits
are reduced by the
amount of benefit an
individual is eligible
for under PERF.
$13.2 M
Reduced Early
Retirement
Penalty
The retirement benefit is reduced by
0.10% for each month that the member
retires before age 65.
The retirement benefit
is reduced by 0.25%
for each month that
the member retires
before age 65.
$3.9 M
SB 416 3 Change Proposed Current Law Estimated Cost
Benefit for
Members with
more than 22
Years of
Service**
Adds 1% of salary to PARF retirement
and disability benefits for each year of
service after 22 years for members who
serve in a covered position after June
30, 2023.
PARF retirement and
disability benefits for
members with more
than 22 years of
service is equal to
60% of the salary rate.
The PARF pension
benefit is not
increased for service
after 22 years.
$2.0 M
Salary Rate
Used to
Calculate PARF
Benefits*
Highest salary paid to the member
before separation from service.
This change will increase the salary rate
used to calculate pension benefits by
approximately half of the salary increase
provided to members in the final year of
employment.
Highest Annual
Salary.
$0.7 M
Contribution for
Members with
More Than 22
Years of Service
Contribution of 6% of salary paid by
state or county for members with more
than 22 years of service.
The contribution amounts will increase
with increases to member salary and the
number of active fund participants with
more than 22 years of service.
None. Cost of 6% of salary for
state or counties for
members with more
than 22 years of
service.
Purchase of
Service Credits
Allows a member to purchase PARF
service credit for up to 9 years of prior
service in PERF in a position not
covered under PARF. It does not apply
to someone who has vested in PERF.
The state or county employer and the
member bare the cost of the purchase.
No purchase of
unvested PERF
service credit is
allowed.
No fiscal impact to
PARF.
Increases expenditures
for state and county
employers of members
purchasing service
credits.
Total*** >$51 M
*The changes for the PERF Offset and the Salary Rate Used to Calculate PARF Benefits are assumed to apply only to
individuals who retire after the bill goes into effect. If those provisions are interpreted to apply to current retirees as well,
the estimate for those provisions would increase significantly.
**The estimate assumes a reduced retirement rate for members eligible for unreduced benefits between the ages of 55
and 64 from 40% to 30%.
***Individual sections do not sum to the total due to interaction effects between different sections of the bill.
Additional Information - The bill provides retirement, disability, and survivor benefits in PARF to chief
public defenders and deputy chief public defenders for service in these positions on or after January 1, 2016.
It also provides those benefits to the executive director and assistant executive director of the Public
Defender Council of Indiana and the Indiana Commission on Court Appointed Attorneys as well as staff
SB 416 4 attorneys of the Indiana Prosecuting Attorneys Council. The staff attorneys of the Indiana Prosecuting
Attorneys Council will receive service credits for service back to January 1, 2012. The bill does not require
the newly eligible members of PARF to purchase service credits in PARF for prior service in covered
positions or to make employee contributions for past service.
INPRS administers PARF and would experience additional workload and expenses to add the new members
to the fund. The administrative costs of PARF are paid from the fund.
The Public Defender Council of Indiana, the Indiana Commission on Court Appointed Attorneys, and the
Indiana Prosecuting Attorneys Council would experience increased costs if they elect to pay member
contributions for fund participants.
Explanation of State Revenues: PARF: PARF would receive additional revenue from employee
contributions under the bill. New members of the fund would be required to pay member contributions of
6% of salary into the fund for service on or after July 1, 2025. Employee contributions are not required for
service after 22 years. PARF would also receive additional revenue from state and counties of 6% of salary
for fund members with more than 22 years of service.
Explanation of Local Expenditures: Counties: Counties would have increased expenditures to make
contributions of 6% of salary for any public defenders with more than 22 years of service. Counties would
also have increased costs related to the purchase of service credits for prior PERF service. In addition,
counties would have increased expenditures if they elect to make member contributions for fund members.
Explanation of Local Revenues:
State Agencies Affected: Indiana Public Retirement System; Public Defender Council of Indiana; Indiana
Commission on Court Appointed Attorneys; Indiana Prosecuting Attorneys Council.
Local Agencies Affected: Counties.
Information Sources: Cavanaugh Macdonald Consulting, LLC. (2023, March 10). Proposed PARF
Amendments in House Bill No. 1605 (COLA Update).
Fiscal Analyst: Camille Tesch, 317-232-5293.
SB 416 5