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Bill would open door for State of Nebraska to take over OPS pension plan

January 12, 2019

The state board that administers Nebraska’s pension programs would come up with a plan to possibly take over administration of the struggling Omaha Public Schools pension plan under a bill introduced in the Legislature.

Such a change could help OPS deal with the $771 million shortfall in its pension plan. But the senator introducing the bill made it clear: He’s not interested in the state taking on the plan’s massive liabilities.

“I want people to know this is not about us rescuing them,” said Sen. Mark Kolterman of Seward, chairman of the Legislature’s committee overseeing public retirement programs. “This is about us working with OPS to help them rescue their own plan.”

OPS, the state’s largest school district, has been wrestling with its underfunded pension plan, which this fall forced the district to cut $19 million from its budget to make catch-up payments .

The World-Herald will soon publish an investigative series on the roots of the problem, with the first story to be published Sunday.

In 2016, the Legislature passed a bill to have the state take over handling investments for the $1.3 billion Omaha School Employees’ Retirement System.

Now at the request of OPS, it will explore having the state take over the administration of OSERS, too, including sending out monthly pension payments to the system’s 4,500 retirees. It’s possible that such a change could help OSERS save on its current $867,000 in annual operating costs.

OPS leaders asked Kolterman to introduce the bill. The district didn’t have any immediate comment .

Superintendent Cheryl Logan has formed her own stakeholders group that includes representatives of its teacher and staff unions to explore other options for boosting the fund.

Omaha is the only school district in the state with its own retirement program. The programs for the rest of the state’s teachers are administered by Nebraska’s Public Employees Retirement Board, which oversees all other statewide public pension plans.

Under Kolterman’s Legislative Bill 31, PERB would work with OPS, OSERS and others to prepare a work plan for what would need to occur to transfer administration of OSERS to the state.

The plan would look at the current OSERS administrative costs and see if there would be economies of scale by having the state take over. It would also determine what steps and costs would be required to effectuate the transfer of OSERS into PERB.

If PERB took over OSERS, it would annually make an assessment for administrative costs that would then be paid out of plan dollars, just as it currently does on a pro-rata basis with all the other state plans it administers. OSERS would also likely have a representative on the PERB board, as the other plans do now.

“But before we can do that, we need to see if it is cost-effective to have them manage the plan,” Kolterman said.

The plan would be due by June 2020, for possible adoption by the 2021 Legislature. The bill also says that OPS would reimburse PERB for the cost of the study.

OSERS is currently governed by a board of trustees largely made up of representatives of OPS teachers and workers covered by the plan, plus the superintendent. Cecelia Carter, executive director of OSERS, said the trustees are aware of the bill “and plan to fully participate” in the study.

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