Judges' pensions spark debate over who pays; claims bill advances

May 1, 2015, 5:27 a.m. ·

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Debate on a bill to shore up Nebraska’s retirement system for judges expanded into discussion of how to pay for justice, and what return to expect on investment, in the Legislature Friday.


As retirement plans go, the Nebraska state judges plan is in relatively good shape – funded at 93 percent of what it should be. But Omaha Sen. Jeremy Nordquist says that still could mean the state would have to put in over $100 million over the next 30 years to fulfill all the promises to retirees.

To avoid that Nordquist, chairman of the Retirement Systems Committee, introduced a bill to scale back on pension promises to future judges. The bill would also add $6 of fees for each pretrial diversion – things like STOP classes to avoid getting points on your license for traffic violations – with the additional money going into the judges’ pension plan.

That set off a philosophical debate, with Omaha Sen. Ernie Chambers opposing the concept. Chambers said neither the legislative nor the executive branches of government are expected to be self-financing. "Only the judiciary, which I think is one of the most important branches when it comes to the impact on citizens, is being asked ‘Raise money so that justice can be dispensed.’ I don’t think a penny of any fee or any cost, whether it’s a docket fee or …any of them should be given consideration when we determine how much money is needed to properly and efficiently allow the court system to function," Chambers said.

On the other hand, Sen. Mike Groene of North Platte said he likes the idea. "I like user fees. If you use the court system, then you ought to pay something towards the judges’ retirement or some way help pay the cost of that court," Groene said.

Other senators questioned the financial assumptions that went into the calculations of how much would be needed to shore up the pension plan. Sen. Paul Schumacher of Columbus asked Nordquist about one of those assumptions, about how much money invested by the pension plans would earn. "Sen. Nordquist, what’s the guesstimated rate of return?" Schumacher said.

"The analyzed rate of return that the Public Employees Retirement Board and the Nebraska Investment Council spend a lot of time looking at is eight percent," Nordquist replied.

Schumacher then asked a similar question to Sen. John Stinner of Gering, a banker. "And your guesstimate, Sen. Stinner, based on your training and experience in the banking industry?"

"You know, right now, I think we’re using three and four percent," Stinner answered.

But Nordquist said Schumacher wasn’t taking inflation into account. And he added there is plenty of time to make adjustments, as the Legislature did with a school employees’ retirement plan two years ago. "This is a long-term transition, and it starts with reducing benefits for new hires. We did that in the school plan; now the school plan doesn’t need to come even close to (an) eight percent rate of return to be sustainable. And we’re doing it with this plan, and it won’t have to have an eight percent rate of return to be sustainable, either," Nordquist said.

Senators adjourned for the day without reaching a first-round vote on the bill.

In other legislative action Friday, senators gave first-round approval to a bill paying claims against the state. The claims approved by a legislative committee include $477,000 for six employees of the Department of Correctional Services who claimed racial discrimination.

They also include $750,000 for plaintiffs who claimed former Attorney General Jon Bruning violated their First Amendment rights by trying get them to stop mailing letters to Nebraskans claiming patent infringement and demanding licensing fees. A federal judge found the state’s action unconstitutional. Bruning had characterized the plaintiffs as "patent trolls."

And the claims also included just over $1,000,000 dollars to be divided among three members of the so-called Beatrice Six, people who were falsely found guilty of a 1985 rape and murder but were exonerated in 2009 when the real killer was discovered through DNA evidence.

The claims bill got first round approval on a vote of 38-0.