Read the full article on Nebraska Examiner
LINCOLN — Nebraska lawmakers gave wide first-round approval Thursday to a proposal eliminating state contributions to a retirement plan for about 150 state judges. The plan has been fully funded for nearly five years.
An amended Legislative Bill 1101, from the Nebraska Retirement Systems Committee, would end the state’s annual contribution to the judges’ retirement of 5% based on the total payroll for judges. The state annually contributes a little more than $1.5 million toward judges’ retirement.
Those savings could be important as lawmakers work to close a projected budget deficit.
“LB 1101, as amended, represents the opportunity to provide both savings to the taxpayers and enhance our ability to recruit and retain judges,” said State Sen. Beau Ballard of Lincoln, chair of the Retirement Committee.
The bill advanced 37-0. It faces two more debates before going to Gov. Jim Pillen. His office helped develop LB 1101, mirroring work done on school retirement contribution rates in 2025.
Should the judges’ retirement plan fall below 100% funded for two straight years, Ballard said actuaries could review and suggest that the Legislature change the state’s contribution rate.
Unlike changes to the school retirement plan last year, in which state, employer and employee contributions automatically increase depending on the funding level of the plan, changes to state contributions to the judges’ plan would require new legislation.
Ballard said the judges’ bill didn’t build in a sliding scale because of how much smaller the judges’ plan is and how much less it costs the state. Last year’s school retirement bill came together after a couple of months of pushback and negotiation.
LB 1101 would similarly lower judges’ current 10% monthly contribution rate based on their salaries, which are set by the Legislature. The monthly contribution rate would fall to 9%, but once a judge reaches 20 years of service, judges would contribute 5% of their monthly salary for the rest of their tenure.
State law guarantees judges a monthly retirement payout of 3.5% of their final average compensation, multiplied by their years of service.
Judges who have joined the bench since July 1, 2015, would see a higher annual cost-of-living adjustment for their retirement under LB 1101, up to 2.5% instead of 1%. Lawmakers had lowered the COLA rate for new judges in 2015 but had locked in the higher rate for current judges.
The Legislature last year approved LB 645 from Ballard for similar changes to a retirement plan for school employees, which had also been sought by the Governor’s Office. The state originally contributed 2% of school employee payroll statewide. At 100% funded, the state does not contribute to the plan, saving the state more than $50 million each year.
LB 645 also lowered the contribution rate of school districts and employees, saving money for property taxpayers and teachers’ monthly salaries alike.
Even with lower contribution rates, the judges’ retirement plan is still projected to reach a funding level by 2046 of 112%, Ballard said.
SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
- March 6, 202611:00 amEditor’s note: This article has been updated to clarify how judges’ monthly contribution rates to the retirement plan would change under LB 1101.
