The Legislature ensured Tuesday afternoon that a negotiated solution to sustain the school employee retirement fund would stay in place.
Senators voted 32-1 to override Gov. Dave Heineman's veto of the bill (LB553), introduced by Sen. Jeremy Nordquist, chairman of the Nebraska Retirement Systems Committee. Fifteen senators were present, not voting.
Thirty votes were needed to override the veto. Sen. Bill Kintner of Papillion was the lone no vote.
Retirement funds for judges and state troopers are included in the bill.
Speaker Greg Adams told the Legislature the defined contribution method of retirement funding was the battleground.
"Like it or not, we've got it," he said. "And we have obligations."
Omaha Sen. Steve Lathrop said the Legislature had led on the issue after the governor ignored a shortfall in the pension fund in his budget proposal. The bill, worked out by the Nebraska Retirement Systems Committee and education associations, was based on sacrifice from educators, he said.
"We cannot stick our head in the sand on this one," he said, "and spend $88 million over the biennium for no reason other than to support someone who had no leadership on the issue."
In his Monday veto message, Heineman said he supported the short-term solutions in the bill, but the long-term proposals were not warranted. The bill could cost the state $20 million each year, or $500 million over 25 years, he said.
He called for a public study before implementing any long-term changes to pension funding. And he encouraged senators to amend and pass a different bill dealing with short-term solutions to address the shortfall.
Omaha Sen. Bob Krist introduced a resolution Tuesday to study all state retirement plans, including those for state, counties, schools, state patrol and judges.
The study would examine issues of funding needs, benefits, contributions, effectiveness and efficiency, and the overall administration of each retirement system.
In the meantime, he said, senators needed to override the veto.
"We need to do what's right. … We don't need to break contracts with the citizens of Nebraska," he said.
The bill addresses the $2.2 billion unfunded liability in the pension plan over the next 30 years. It reduces retirement benefits for school employees who begin work on or after July 1, 2013, along with changing the state's contribution.
Benefits remain unchanged for employees who are members of the School Employees Retirement Plan before that.
The average retirement payment to state teachers and administrators is $1,700 a month.
Omaha Sen. John Nelson said the best solution for those employees was to go to a cash balance system for new hires. With that system, a participant's account is credited with a set percentage of his or her yearly salary.
Sen. Charlie Janssen of Fremont said he did not support LB553 and felt it needed more debate.
"The teachers work hard and they were promised something and we need to decide where it was at, what are we obligated to. Are we getting unrealistic numbers forecast or not?" he said.
Nebraska State Education Association representatives said that without LB553, the state would have been obligated to pay the currently required plan contribution of $48.1 million July 1, and an estimated $60.5 million the next fiscal year.
The bill saves the state $88.6 million in general fund dollars in the next two-year budget that would be required otherwise.
Nancy Fulton, president of the 28,000-member Nebraska State Education Association, said that without the override, there would have been a “critical delay in making necessary funding changes to the school employees’ retirement plan in order to sustain the plans’ long-term stability.”
The Retirement Committee's solution was a balanced approach to address the long-term funding needs of the plan, she said.