LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
200 W. Washington St., Suite 301
Indianapolis, IN 46204
(317) 233-0696
iga.in.gov
FISCAL IMPACT STATEMENT
LS 6352 NOTE PREPARED: Dec 10, 2021
BILL NUMBER: SB 257 BILL AMENDED:
SUBJECT: Military Service Credit for Teachers.
FIRST AUTHOR: Sen. Alting BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED: X GENERAL IMPACT: State & Local
X DEDICATED
FEDERAL
Summary of Legislation: The bill provides that a member of the state Teachers' Retirement Fund (TRF)
who retires after June 30, 2022, and served time in voluntary or involuntary active military service is entitled
to a military service credit for the member's active military service in an amount equal to the duration of the
member's active military service, if the member: (1) received an honorable discharge; and (2) has at least 10
years of in-state service credit. It provides that not more than six years of military service credit may be
granted. It also makes conforming amendments.
Effective Date: July 1, 2022.
Explanation of State Expenditures: TRF Pre-‘96 Fund: The bill would increase expenditures from the
Pension Stabilization Fund for pension payments for future retirees in the TRF Pre-‘96 Fund who receive
up to six TRF service credits for military service under the bill. The Pension Stabilization Fund is funded
by General Fund appropriations and surplus lottery revenues.
Additional Information - A member of TRF who retires at age 65 with an average annual compensation of
$60,000 after teaching for 30 years would receive an additional $3,960 annually in pension payments at
retirement if they receive an additional six years of TRF service credits for prior military service. An
individual’s pension benefit amount is calculated by multiplying an individual’s average annual
compensation (calculated using the highest 20 quarters of salary), years of creditable service, and a rate of
1.1%. Some individuals receiving service credits may be able to retire earlier than they otherwise would be
able to, and would receive additional years of pension benefits.
It is unknown how many teachers are military veterans and will receive additional service credits at
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retirement due to this bill. The National Center for Education Statistics estimates that 1.6% of elementary
and secondary teachers in the midwest were military veterans in 2016. Applying that rate to the number of
active members of TRF who taught for 10 or more years, there may be approximately 630 elementary and
secondary teachers in Indiana who are veterans, around 130 of them are likely active members of the TRF
Pre-‘96 Fund and 500 in the TRF ‘96 Fund. However, many teachers who are veterans are already eligible
for TRF service credits. The individuals who would be newly eligible for military service credit under the
bill are teachers who served in the military prior to pursuing a teaching degree.
Under current law, teachers are eligible to receive TRF service credits for military service in the following
situations:
1. Teachers who leave their teaching position to give military service and then return to teaching are
able to earn TRF service for their military service under the federal Uniformed Services Employment
and Reemployment Rights Act of 1994 (USERRA).
2. Teachers whose individual’s military service interrupted their 4-year college teaching education
or occurred after they completed their teaching education can receive up to six service credits for
their military service. (Expires under the bill.)
3. Individuals who do not otherwise qualify for military service credit under TRF may purchase up
to two years of service credits for their prior service. The cost to purchase a service credit is equal
to the present value cost of receiving an additional year of service in the TRF pension. (Expires
under the bill.)
This bill provides up to six service credits for all active duty military service and expires the provisions in
current state law allowing the purchase of up to two service credits and for service credits for individuals
who started or completed their teacher training prior to their military service.
Members of the TRF Pre-‘96 Fund began teaching prior to July 1, 1995. The TRF Pre-‘96 Fund is a pay-as-
you-go pension fund. The Pension Stabilization Fund was created in 1995 by the General Assembly to
stabilize the General Fund teacher pension expenditures as a percentage of the General Fund budget. This
bill will not change the appropriation to the Pension Stabilization Fund to pay for TRF Pre-‘96 Fund pensions
in the next several years. However, it will increase the unfunded liability of the TRF Pre-‘96 Fund and the
overall expenditures from the fund over time.
Explanation of State Revenues:
Explanation of Local Expenditures: TRF ‘96 Fund: The bill would increase expenditures from the TRF
‘96 Fund for pension payments for future TRF ‘96 Fund retirees who receive up to six TRF service credits
for military service under the bill. Providing the service credits for prior military service will increase the
unfunded liability of the fund. The TRF ‘96 Fund is funded through employer contributions.
Additional Information - See Explanation of State Expenditures.
There may be approximately 500 active TRF ‘96 members with prior military service. Members of the TRF
‘96 Fund began teaching after June 30, 1995.
Explanation of Local Revenues:
State Agencies Affected: Indiana Public Retirement System.
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Local Agencies Affected:
Information Sources: Legislative Services Agency. Indiana Handbook of Taxes, Revenues, and
Appropriations, FY 2021.
National Center for Education Statistics. Digest of Education Statistics. Table 209.27. Number and
percentage of teachers who are military veterans, by control of school; sex, race/ethnicity, and age group
of teacher; region; and level of instruction: 2006.
https://nces.ed.gov/programs/digest/d17/tables/dt17_209.27.asp
Fiscal Analyst: Camille Tesch, 317-232-5293.
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Statutes affected:
1. Introduced Senate Bill (S): 5-10.4-4-8