LB147 LB147
2021 2021
LEGISLATIVE BILL 147
Passed over the Governor's veto May 26, 2021.
Introduced by Kolterman, 24; Williams, 36; Lindstrom, 18; Wishart, 27;
McCollister, 20; Wayne, 13; Walz, 15; Cavanaugh, M., 6; Pansing Brooks, 28; Vargas, 7; Hansen, M., 26.
A BILL FOR AN ACT relating to retirement; to amend sections 72-1237,
72-1249.02, and 79-972.01, Reissue Revised Statutes of Nebraska, and sections 79-902, 79-916, 79-966, 79-978, 79-978.01, 79-979, 79-980,
79-981, 79-982, 79-982.01, 79-982.02, 79-983, 79-984, 79-985, 79-986,
79-987, 79-989, 79-990, 79-991, 79-992, 79-992.01, 79-992.02, 79-998,
79-9,102, 79-9,103, 79-9,105, 79-9,107, 79-9,108, 79-9,113, 79-9,115,
79-9,117, 79-9,122, 79-9,123, 84-712.05, 84-1501, and 84-1503, Revised Statutes Cumulative Supplement, 2020; to change provisions of the Nebraska State Funds Investment Act, the School Employees Retirement Act, and the Class V School Employees Retirement Act; to define and redefine terms; to change provisions relating to duties, responsibilities, and termination of
certain boards; to provide powers, duties, and responsibilities for the Public Employees Retirement Board, the director of the Nebraska Public Employees Retirement Systems, the State Treasurer, and the Auditor of
Public Accounts; to change annual audits of a Class V school employees retirement system as prescribed; to change provisions relating to
appointment of an administrator, an actuary, and a legal advisor; to change certain work billing, payment, contract, and contributions provisions; to provide for the transition and transfer of management of a Class V school employees retirement system as prescribed; to provide for indemnity and liability; to change provisions relating to the use and operation of the Class V School Employees Retirement Fund; to create the Class V School Expense Fund; to provide for a late fee; to change provisions relating to the Class V School Employees Retirement System Management Work Plan Fund; to change provisions relating to public records and membership and terms on the Public Employees Retirement Board; to eliminate obsolete provisions; to harmonize provisions; to provide inseverability; to repeal the original sections; and to declare an
emergency.
Be it enacted by the people of the State of Nebraska,
Section 1. Section 72-1237, Reissue Revised Statutes of Nebraska, is amended to read:
72-1237 (1)(a) The Nebraska Investment Council is created. For purposes of the Nebraska State Funds Investment Act, council means the Nebraska Investment Council. The council shall consist of five members, appointed by the Governor with the approval of the Legislature. The State Treasurer, the director of the Nebraska Public Employees Retirement Systems, and except as
provided in subdivision (1)(b) of this section, beginning January 1, 2017, the administrator of each retirement system provided for under the Class V School Employees Retirement Act shall serve as nonvoting, ex officio members. One of
the appointed members shall be designated chairperson by the Governor.
(b) Beginning September 1, 2024, the director of the Nebraska Public Employees Retirement Systems shall also represent each retirement system provided for under the Class V School Employees Retirement Act.
(2) Each of the appointed members of the council shall serve for a term of
five years that begins on January 1 and may be removed by the Governor for cause after notice and an opportunity to be heard. A member may serve until his or her successor's appointment is effective. A member may be reappointed. A
successor shall be appointed in the same manner as provided for the members first appointed, and in case of a vacancy caused by death, resignation, or otherwise, the Governor shall appoint a qualified person to fill the vacancy for the unexpired term.
(3) No member of the council shall be personally liable, except in cases of willful dishonesty, gross negligence, or intentional violation of law, for actions relating to his or her duties as a member of the council.
Sec. 2. Section 72-1249.02, Reissue Revised Statutes of Nebraska, is amended to read:
72-1249.02 The State Investment Officer's Cash Fund is created. A pro rata share of the budget appropriated for the council shall be charged to the income of each fund managed, and such charges shall be transferred to the State Investment Officer's Cash Fund. The allocation of charges may be made by any method determined to be reasonably related to actual costs incurred by the council. Approval of the agencies and boards administering these funds shall not be required.
It is the intent of this section to have funds managed by the state investment officer pay a pro rata share of the investment management expense when this is not prohibited by statute or the constitution.
Management, custodial, and service costs which are a direct expense of
state funds may be paid from the income of such funds when this is not prohibited by statute or the Constitution of Nebraska. For purposes of this
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section, management, custodial, and service costs shall include, but not be
limited to, investment counsel fees for managing assets, real estate mortgage loan service fees, real estate management fees, and custody fees for fund securities. All such fees shall be approved by the council and the state investment officer.
Beginning on March 31, 2016, a pro rata share of the budget appropriated for the council shall be charged to the income of the Class V School Employees Retirement Fund, and such charges shall be transferred to the State Investment Officer's Cash Fund. The allocation of charges among a retirement system provided for under the Class V School Employees Retirement Act and the other funds managed by the council may be made by any method determined to be reasonably related to actual costs incurred by the council. Approval of the board of education, the board of trustees, or the retirement board, as defined in section 79-978 and as the board of trustees provided for in section 79-980,
shall not be required.
Sec. 3. Section 79-902, Revised Statutes Cumulative Supplement, 2020, is amended to read:
79-902 For purposes of the School Employees Retirement Act, unless the context otherwise requires:
(1) Accumulated contributions means the sum of all amounts deducted from the compensation of a member and credited to his or her individual account in
the School Retirement Fund together with regular interest thereon, compounded monthly, quarterly, semiannually, or annually;
(2)(a) Actuarial equivalent means the equality in value of the aggregate amounts expected to be received under different forms of payment.
(b) For a school employee hired before July 1, 2017, the determinations shall be based on the 1994 Group Annuity Mortality Table reflecting sex-
distinct factors blended using twenty-five percent of the male table and seventy-five percent of the female table. An interest rate of eight percent per annum shall be reflected in making these determinations except when a lump-sum settlement is made to an estate.
(c) For a school employee hired on or after July 1, 2017, or rehired on or after July 1, 2017, after termination of employment and being paid a retirement benefit or taking a refund of contributions, the determinations shall be based on a unisex mortality table and an interest rate specified by the board. Both the mortality table and the interest rate shall be recommended by the actuary and approved by the retirement board following an actuarial experience study, a benefit adequacy study, or a plan valuation. The mortality table, interest rate, and actuarial factors in effect on the school employee's retirement date will be used to calculate actuarial equivalency of any retirement benefit. Such interest rate may be, but is not required to be, equal to the assumed rate.
(d) If the lump-sum settlement is made to an estate, the interest rate will be determined by the AAA-rated segment of the Bloomberg Barclays Long U.S.
Corporate Bond Index as of the prior June 30, rounded to the next lower quarter percent. If the AAA-rated segment of the Bloomberg Barclays Long U.S. Corporate Bond Index is discontinued or replaced, a substitute index shall be selected by
the board which shall be a reasonably representative index;
(3) Beneficiary means any person in receipt of a school retirement allowance or other benefit provided by the act;
(4)(a) Compensation means gross wages or salaries payable to the member for personal services performed during the plan year and includes (i) overtime pay, (ii) member retirement contributions, (iii) retroactive salary payments paid pursuant to court order, arbitration, or litigation and grievance settlements, and (iv) amounts contributed by the member to plans under sections
125, 403(b), and 457 of the Internal Revenue Code as defined in section
49-801.01 or any other section of the code which defers or excludes such amounts from income.
(b) Compensation does not include (i) fraudulently obtained amounts as
determined by the retirement board, (ii) amounts for accrued unused sick leave or accrued unused vacation leave converted to cash payments, (iii) insurance premiums converted into cash payments, (iv) reimbursement for expenses incurred, (v) fringe benefits, (vi) per diems paid as expenses, (vii) bonuses for services not actually rendered, (viii) early retirement inducements, (ix)
cash awards, (x) severance pay, or (xi) employer contributions made for the purposes of separation payments made at retirement.
(c) Compensation in excess of the limitations set forth in section 401(a)
(17) of the Internal Revenue Code as defined in section 49-801.01 shall be
disregarded. For an employee who was a member of the retirement system before the first plan year beginning after December 31, 1995, the limitation on
compensation shall not be less than the amount which was allowed to be taken into account under the retirement system as in effect on July 1, 1993;
(5) County school official means (a) until July 1, 2000, the county superintendent or district superintendent and any person serving in his or her office who is required by law to have a teacher's certificate and (b) on or
after July 1, 2000, the county superintendent, county school administrator, or district superintendent and any person serving in his or her office who is
required by law to have a teacher's certificate;
(6)(a) Creditable service means prior service for which credit is granted under sections 79-926 to 79-929, service credit purchased under sections
79-933.03 to 79-933.06 and 79-933.08, and all service rendered while a contributing member of the retirement system; and
(b) Creditable service includes working days, sick days, vacation days,
holidays, and any other leave days for which the employee is paid regular wages
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as part of the employee's agreement with the employer. Creditable service does not include lump-sum payments to the employee upon termination or retirement in
lieu of accrued benefits for such days, eligibility and vesting credit, service years for which member contributions are withdrawn and not repaid by the member, service rendered for which the retirement board determines that the member was paid less in compensation than the minimum wage as provided in the Wage and Hour Act, service which the board determines was rendered with the intent to defraud the retirement system, or service provided to an employer in
a retirement system established pursuant to the Class V School Employees Retirement Act;
(7) Current benefit means the initial benefit increased by all adjustments made pursuant to the School Employees Retirement Act;
(8) Disability means an inability to engage in any substantially gainful activity by reason of any medically determinable physical or mental impairment which was initially diagnosed or became disabling while the member was an
active participant in the plan and which can be expected to result in death or
be of a long-continued and indefinite duration;
(9) Disability retirement allowance means the annuity paid to a person upon retirement for disability under section 79-952;
(10) Disability retirement date means the first day of the month following the date upon which a member's request for disability retirement is received on
a retirement application provided by the retirement system if the member has terminated employment in the school system and has complied with sections
79-951 to 79-954 as such sections refer to disability retirement;
(11) Early retirement inducement means, but is not limited to:
(a) A benefit, bonus, or payment to a member in exchange for an agreement by the member to terminate from employment;
(b) A benefit, bonus, or payment paid to a member in addition to the member's retirement benefit;
(c) Lump-sum or installment cash payments, except payments for accrued unused leave converted to cash payments;
(d) An additional salary or wage component of any kind that is being paid as an incentive to leave employment and not for personal services performed for which creditable service is granted;
(e) Partial or full employer payment of a member's health, dental, life,
or long-term disability insurance benefits or cash in lieu of such insurance benefits that extend beyond the member's termination of employment and contract of employment dates. This subdivision does not apply to any period during which the member is contributing to the retirement system and being awarded creditable service; and
(f) Any other form of separation payments made by an employer to a member at termination, including, but not limited to, purchasing retirement annuity contracts for the member pursuant to section 79-514, depositing money for the member in an account established under section 403(b) of the Internal Revenue Code except for payments for accrued unused leave, or purchasing service credit for the member pursuant to section 79-933.08;
(12) Eligibility and vesting credit means credit for years, or a fraction of a year, of participation in a Nebraska government plan for purposes of
determining eligibility for benefits under the School Employees Retirement Act.
Such credit shall not be included as years of creditable service in the benefit calculation;
(13) Emeritus member means a person (a) who has entered retirement under the provisions of the act, including those persons who have retired since July
1, 1945, under any other regularly established retirement or pension system as
contemplated by section 79-916, (b) who has thereafter been reemployed in any capacity by a public school, a Class V school district, or a school under the control and management of the Board of Trustees of the Nebraska State Colleges,
the Board of Regents of the University of Nebraska, or a community college board of governors or has become a state school official or county school official subsequent to such retirement, and (c) who has applied to the board for emeritus membership in the retirement system. The school district or agency shall certify to the retirement board on forms prescribed by the retirement board that the annuitant was reemployed, rendered a service, and was paid by
the district or agency for such services;
(14) Employer means the State of Nebraska or any subdivision thereof or
agency of the state or subdivision authorized by law to hire school employees or to pay their compensation;
(15)(a) Final average compensation means:
(i) Except as provided in subdivision (ii) of this subdivision:
(A) The sum of the member's total compensation during the three twelve-
month periods of service as a school employee in which such compensation was the greatest divided by thirty-six; or
(B) If a member has such compensation for less than thirty-six months, the sum of the member's total compensation in all months divided by the total number of months of his or her creditable service therefor; and
(ii) For an employee who became a member on or after July 1, 2013:
(A) The sum of the member's total compensation during the five twelve-
month periods of service as a school employee in which such compensation was the greatest divided by sixty; or
(B) If a member has such compensation for less than sixty months, the sum of the member's total compensation in all months divided by the total number of
months of his or her creditable service therefor.
(b) Payments under the Retirement Incentive Plan pursuant to section
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79-855 and Staff Development Assistance pursuant to section 79-856 shall not be
included in the determination of final average compensation;
(16) Fiscal year means any year beginning July 1 and ending June 30 next following;
(17) Hire date or date of hire means the first day of compensated service subject to retirement contributions;
(18) Initial benefit means the retirement benefit calculated at the time of retirement;
(19) Member means any person who has an account in the School Retirement Fund;
(20) Participation means qualifying for and making required deposits to
the retirement system during the course of a plan year;
(21) Plan year means the twelve-month period beginning on July 1 and ending on June 30 of the following year;
(22) Prior service means service rendered as a school employee in the public schools of the State of Nebraska prior to July 1, 1945;
(23) Public school means any and all schools offering instruction in
elementary or high school grades, as defined in section 79-101, which schools are supported by public funds and are wholly under the control and management of the State of Nebraska or any subdivision thereof, including (a) schools or
other entities established, maintained, and controlled by the school boards of
local school districts, except Class V school districts, (b) any educational service unit, and (c) any other educational institution wholly supported by
public funds, except schools under the control and management of the Board of
Trustees of the Nebraska State Colleges, the Board of Regents of the University of Nebraska, or the community college boards of governors for any community college areas;
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