Lawmakers unlikely to lower minimum retirement age for Nebraska school employees

LINCOLN — Senators and school administrators expressed hesitation Wednesday in lowering, back to age 55, the minimum retirement age at which Nebraska school employees can step down with full benefits.

Currently, eligible school employees face what is known as the “Rule of 85,” whereby if someone’s age plus years of service exceeds 85, that person can retire without any reductions in benefits. Employees who started before July 2018 can retire as young as 55, but employees hired after have to wait until at least age 60.

Tim Royers, president of the NSEA, said an amendment to reverse that “poor decision” would have little financial or staffing impact and could incentivize young educators to look ahead to retirement.

“Our young educators deserve the same flexibility that I and other veteran teachers enjoy when it comes to deciding when we turn off the classroom lights for the last time,” Royers said at a Wednesday hearing on the proposed amendment, which he supported.

The Nebraska Council of School Administrators and the Nebraska Association of School Boards opposed the change.

Lawmakers advance changes to Nebraska school retirement plan to help close budget hole

Royers said it would be in the best interest of a teacher who, at age 55, already has 30 years of service, to step back if they’re exhausted rather than being forced to work five more years.

State Sen. Beau Ballard of Lincoln, chair of the Legislature’s Nebraska Retirement Systems Committee, proposed the change as a deal with the NSEA. In return, the State of Nebraska would agree to withhold annual contributions to the school retirement plan for the next two years before going to a stair-stepped contribution system based on the plan’s funding level.

The amendment comes to Legislative Bill 645, which was introduced by Ballard on behalf of Gov. Jim Pillen and seeks to change the annual contribution levels for the state, employees and school districts. 

The school retirement plan for employees statewide outside of Omaha Public Schools (who have a separate pension plan) is currently 99.91% funded.

If passed, the current version of LB 645 is expected to save the state about $80 million. With the new amendment, the state would save approximately $20 million more.

State Sen. Danielle Conrad of Lincoln, who has consistently opposed a shaky negotiations process behind LB 645, has repeatedly asked why the school plan had to be changed now.

Royers said the original LB 645, which would have offered no reduced contributions to school employees or employers, was a “poor bill” that he said was brought for the wrong reasons, mainly to help plug the state’s nearly half-a-billion-dollar projected budget deficit.

However, Royers said it presented a rare chance to “force” a conversation on the plan, leading to an amended bill that could give the average school teacher more than $1,000 in annual take-home pay because of reduced contributions. Now, he views the amended bill as a way to give hard-working employees a benefit and put them on a more “equal playing field.”

Royers said he has to look for any wins for educators in a political environment where he said the “political will” makes such victories “candidly, limited.”

Conrad asked Royers what happens if he is wrong about the feasibility of the amended bill, to which Royers responded that he hopes he’s not. He pointed to an actuarial study showing that the amended LB 645 and a lower Rule of 85 could be financially feasible.

Tim Hruza, appearing on behalf of the school administrators association, said the organization wanted a new actuarial study to fully understand the impact of a modified Rule of 85. 

But if the changes have to wait another year, Royers said he’s OK with that.

“If the end result of this is we’ve had this conversation, it’s on the radar but it’s not going to be something we get to until next year,” Royers said, “I’m perfectly fine with that.”

LB 645 will return for the second of three stages of debate on Thursday. Ballard said he is likely to withdraw the amendment that was considered Wednesday. The full state budget will need to advance from the Appropriations Committee by next Tuesday, with debate beginning May 6.