LIBA Call to Action (Support LB867) – January 17, 2012

*** CALL TO ACTION *** 

LIBA Members,

We ask each of you to please contact your state senator regarding LB867. This bill is, in part, a response to LIBA’s consistent call to reduce the Lancaster County retirement match from 150 percent to 100 percent. The county contribution rate is capped at 13 percent. The county contributes about 7.8 percent of participating employees’ salaries to their pension funds and the participating employees are required to contribute the other 5.2 percent.

According to a November 2011 survey, a majority of employers that offer a defined contribution plan (what the county offers) contributed no more than 3 percent of participating employees’ salaries for the first 6 percent of contributions, which means their employees were getting, at best, a 100 percent match.[1]

In order to restore pension equity between private-sector employees and public-sector employees, LIBA supports LB867 to allow reduction of the county’s retirement match to 100 percent, which is still a generous match. Please call your state senator today. Below are talking points that you may use to support LB867 when talking to your state senator:

  • It is not equitable to ask taxpayers to fund county employee retirement pensions at 7.8 percent when the average private-sector employee is getting 6 percent. In fact, the Lancaster County Board has publicly declared that “the match is significantly out of line with the private sector” and that they have received numerous complaints that “this generous match is unfair to similarly situated taxpayers working for private employers.”[2]
  • A 150 percent match is unsustainable for the county. It is critical for the county to control personnel costs, which amount to 85 percent of its total budget.[3] This is especially important because the county is operating with approximately $3 million less as a result of a reduction in state aid and prisoner reimbursement,[4] and may lose another $6 million if the state inheritance tax is repealed.[5]
  • LB867 does not mandate a reduction. While Lancaster Countysupports this legislation to reduce its match from 150 percent to 100 percent, LB867 would not force Nebraska counties to reduce their retirement matches.[6]

  


[1] Nevin E. Adams, PLANSPONSOR’s 2011 DC Survey: Points of Hue, PLANSPONSOR (Nov. 14, 2011) (available at http://www.plansponsor.com/MagazineArticle.aspx?id=6442483385, (Out of a pool of 7,000 providers, 31.7% of employers contributed less than 3%, 30.7% contributed exactly 3%).

[2] LR210, 102nd Leg. (November 22, 2011) (Testimony ofLancasterCounty Chief Administrative Officer Kerry P. Eagan beforeNebraska Retirement Systems Committee).

[3] Id.

[4] Id.

[5] LB970, 102nd Leg. (Jan. 12, 2012) (Proposes repeal of inheritance tax, which provides about $6 million to county).

[6] See Neb. Rev. Stat. § 23-2308(2) (all counties in Nebraska that offer DC plans offer a 150 percent employee retirement match).