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OPS leaders ask Legislature to consider having state take over management of pension system

OPS leaders ask Legislature to consider having state take over management of pension system

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Pt. 3 (copy)

 

LINCOLN — Omaha Public Schools leaders asked lawmakers Tuesday to explore having the state take over management of the district’s troubled pension system as a small step toward resolving the fund’s $771 million shortfall.

OPS is the only school district in Nebraska and one of few in the country with its own pension system, a “huge burden” for the district’s operations and taxpayers, said Marque Snow, president of the OPS board.

“OPS believes as a district we should be in the business of educating our students, not in maintaining and administering a retirement plan,” Snow said.

The chairman of the Legislature’s Retirement Systems Committee made clear, however, that while he wants to help ease the financial burden of the pension fund on the district, he’s not interested in having the state absorb the massive shortfall. That obligation will remain with the district.

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The Legislature held hearings on a series of bills intended to help OPS deal with its pension woes, the subject of a recent series in The World-Herald. The series revealed mismanagement and mistakes by the pension fund’s trustees that produced hundreds of millions of dollars in losses over the past decade.

The district was forced to cut $19 million from its budget last year to make an added payment required to begin shoring up the fund, and it faces escalating payments in coming years. This year’s payment will be known next month and is currently estimated at nearly $26 million — more than 4 percent of the OPS budget.

The only measure that’s likely to pass the Legislature this year is a proposal asking the state board that administers the state’s pension programs to come up with a plan to possibly take over administration of the OPS plan.

OPS will pay for a $140,000 study, and retirement committee chairman Mark Kolterman of Seward said he will make the measure a priority, which will give it a chance to move forward this year.

The Nebraska Public Employees Retirement Board currently administers six separate pension plans for the state. Under Kolterman’s Legislative Bill 31, PERB would work with OPS, the Omaha School Employees’ Retirement System and others to prepare a work plan for what would need to occur to transfer administration of OSERS to the state.

The plan would explore whether there would be economies of scale in having the state take over.

“We manage the plan, we do not merge the plan,” Kolterman said. “We have been very clear about that.”

The Legislature in 2016 transferred investment authority for OSERS to the state’s investment officer, a move Snow said is already yielding positive results. If the upcoming study reveals savings, the district would like to see administration of monthly benefits similarly transferred, he said.

Snow said the district sees the cost of the study as an investment in the financial health of the retirement system. The plan is to be completed by June 2020 for consideration by the 2021 Legislature.

Other substantive legislation aimed at easing the district’s burden could come before lawmakers next year. Kolterman and Sen. Brett Lindstrom of Omaha both introduced bills seen as possible vehicles for future structural changes to the pension plan.

Kolterman’s bill would explore creating an option for OPS retirees to choose to receive a lump sum payment in lieu of regular retirement benefits. Lindstrom’s would authorize a one-year freeze in cost-of-living adjustments to benefits.

A committee made up of OPS leaders, OSERS representatives, retirees and the district’s unions are currently studying such proposals and others. They hope to complete a plan that can be presented to state lawmakers next year.

“We will wait until we find answers to move on anything,” Lindstrom said.

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Reporter - Metro News

Henry is a general assignment reporter, but his specialty is deep dives into state issues and public policy. He's also into the numbers behind a story, yet to meet a spreadsheet he didn't like. Follow him on Twitter @HenryCordes. Phone: 402-444-1130.

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