Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Figueroa
LAST UPDATED
ORIGINAL DATE 01/29/2025
SHORT TITLE Educational Retirement Changes
BILL
NUMBER Senate Bill 75
ANALYST Simon
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
ERB
No fiscal
impact
No fiscal
impact
No fiscal
impact
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
Educational Retirement Board (ERB) Public Employees Retirement Association (PERA)
State Ethics Commission (SEC)
SUMMARY
Synopsis of Senate Bill 75
Senate Bill 75 (SB75) makes several clarifying changes to the Educational Retirement Act that
align with current practices used by the Educational Retirement Board (ERB), including:
Expanding gifts that may be accepted by ERB employees or board members from
contractors or potential contractors;
Allowing “unclaimed member contributions” be deposited in the educational retirement
fund;
Defining how ERB must calculate “contributory employment” to determine if a member
has become eligible for ERB benefits;
Clarifying that a retiree receiving a disability benefit continues to receive the annual cost-
of-living adjustment for retirees on disability benefits after they turn 60; and
Removing a requirement that purchases of service credit must be in a lump sum payment
and expanding the time for which a member has to make payment for service credit.
Additionally, the bill would allow ERB to share member information with the Public Employees
Retirement Association (PERA) for the purpose of implementing the Public Employees
Retirement Reciprocity Act. ERB is currently prohibited from sharing information with PERA to
properly implement this act. Senate Bill 75 – Page 2
This bill was endorsed by the interim legislative Investments and Pensions Oversight Committee.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
FISCAL IMPLICATIONS
ERB does not anticipate a fiscal impact from SB75.
SIGNIFICANT ISSUES
Gift Exemption
Current text of the Educational Retirement Act allows ERB employees and board members to
accept “gifts of food or beverage given in a place of public accommodation at the time of receipt
not exceeding fifty dollars for a single gift…”. The bill would amend this exemption to provide
an exemption for a gift of food or beverage “or” a single gift of value not exceeding $50. ERB
staff indicate the current statute not clear on whether food and beverages are the only gifts which
may be accepted and the bill would clarify the exemption and aligns board’s interpretation of the
current statute’s intent: that gifts of food or drink are not subject to the limit as long as they are
consumed in a public place and that other gifts may not have a value of more than $50 for a
single gift or $150 per year. However, analysis from the State Ethics Commission (SEC)
suggests current law only allows gifts of food or drink and the bill would expand allowable gifts
to include gifts other than food and drink.
Analysis from SEC notes the elimination of the cap on food or drink is inconsistent with limits
placed upon state officers and employees by the Gift Act. Under that act, ERB members are
prohibited from accepting any gift from “restricted donors,” which includes state contractors and
potential state contractors, with a market value of greater than $250 and the definition of “gift”
includes “anything of value, including food…”.
Analysis from SEC notes the $50 limit on other gifts, with a $150 per year aggregate limit, is not
inconsistent with limitations under the Gift Act, which has a limit of $250 with an aggregate
limit of $1,000 per year.
Unclaimed Member Contributions
SB75 would provide that “unclaimed member contributions” would be deposited in the
educational retirement fund. Current law provides that all “contributions from members” are to
be deposited in the fund. The Educational Retirement Act does not currently define “unclaimed
member contributions” and how those contributions differ from “contributions from members.”
Analysis from the Legislative Education Study Committee notes “unclaimed member
contributions” are associated with member accounts that have been labeled “inactive” because
ERB has been unable to locate and make payments to a member after federal tax rules require
the member begin receiving payments from the fund. After an account has been labeled inactive,
the member’s accounts stops accruing additional interest, although the member or the member’s
beneficiary may still claim the balance of contributions and interest accrued prior to being placed
on inactive status. At an interim meeting of the Investment and Pensions Oversight Committee,
ERB presented a bill to clarify the process for “unclaimed member contributions,” which could Senate Bill 75 – Page 3
provide additional information on “unclaimed member contributions,” but as of the date of this
analysis, that legislation has not been introduced.
Calculation of Service Credit
SB75 would clarify that a member must make contributions through the last business day of a
month of the 60th month of employment to become eligible for ERB benefits. For members on a
contract, they must make contributions through the last business day of the year. According to
ERB, this change would not alter any current practice at ERB.
Purchase of Service Credit
Current law allows a member with certain other kinds of previous employment, such as military
service or work at a public school in another state, to purchase service credit from ERB. The bill
would repeal a provision that requires members purchasing service credit for military service to
make payment in a lump sum and extend the amount of time that may pass before payment is
received from 60 to 90 days. While the bill would not explicitly require ERB to accept payments
in installments, it would allow ERB flexibility to determine how to accept the required payment
for service credits.
Disability Cost-of-Living Adjustments
To ensure the ongoing solvency of ERB’s trust fund, legislation enacted in 2013 provided for a
reduction in most ERB member’s cost-of-living adjustments until the plan is fully funded.
However, that law provided a higher cost-of-living adjustment for members retired on disability
status. The bill clarifies a member on disability status continues to receive the higher cost-of-
living adjustment after turning 60. ERB notes this aligns with current procedures and does not
have a fiscal impact.
Reciprocity Information Sharing
The Public Employees Retirement Reciprocity Act is designed to allow public employees with
service in both of the state’s retirement systems to receive the benefits to which they are entitled.
To properly implement the act, both PERA and ERB report the need to share necessary
information, which is currently not possible because of restrictions on disclosure of member
information. The bill would provide an exception to ERB’s disclosure prohibitions for PERA,
but only for the purposes of administering the reciprocity act.
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