Provides relative to funding of state retirement systems. (6/30/13) (OR INCREASE APV)
If enacted, SB 17 is expected to facilitate the liquidation of unfunded liabilities for various state retirement systems more efficiently. The bill aims to reduce employer contribution rates by establishing a dedicated source of revenue for permanent benefit increases without increasing the liabilities further. This move would allow retirement systems to address long-standing funding shortfalls while also providing for potential increases in retirees' benefits based on the funds accumulated in the State Retirement Fund.
Senate Bill 17 (SB 17) proposes the establishment of a State Retirement Fund within the state treasury, with funds allocated from 2% of revenue collections from taxes, assessments, and fees exceeding the amounts collected in the fiscal year prior to 2012. The bill details that these funds will be distributed to various state retirement systems, with the majority—80%—directed towards addressing unfunded accrued liabilities. The remaining 20% will support post-retirement benefit increases through a structured approach to liquidating these liabilities over time and funding permanent benefit increases for retirees.
The general sentiment surrounding SB 17 appears to be cautious optimism among supporters, who view it as a necessary step to strengthen the financial health of state retirement systems. Proponents highlight the potential for improved benefit distributions and a more stable financial footing for retirees. However, some skepticism exists regarding the long-term implications and whether the revenues will be sufficient to meet the projected needs for benefit increases, suggesting a need for careful monitoring of fund growth and allocations.
Opposition to SB 17 may stem from concerns about reliance on future tax revenues, especially considering the proposed shift from an income tax to a sales tax. Critics warn that fluctuations in tax collections could affect the stability of the State Retirement Fund. Additionally, while the bill does not change current amortization payment schedules, some argue that it does not do enough to address deeper systemic issues facing public retirement systems in the state.