Legislative Bulletin #2

Indiana Retired Teachers Association
February 24, 2011

Federal Tax Credit Update
Since our last Legislative Bulletin, the Indiana Retired Teachers Association has made contact with the offices of all nine U.S. Representatives and both U.S. Senators from Indiana. U.S. Senator Richard Lugar made a formal inquiry to the Internal Revenue Service about this issue. The IRS has now issued a statement on this matter. See: http://www.irs.gov/newsroom/article/0,,id=235813,00.html This issue is very complex and affects our members differently. I will continue to pursue this issue on behalf of Indiana retired teachers.

HB 1176 COLA/One Time Payment Bill. Author: Rep. Woody Burton Coauthors: Rep. David Niezgodski., Rep. Suzanne Crouch, Rep. William Crawford. On February 8, 2011, the bill passed out of the House Employment, Pensions and Labor Committee with a vote of 10-0. President Nancy Tolson and Executive Director Andy Thomas testified that: 1) the COLA/One Time Payment comes from the pension fund, not the general fund, 2) there is an assumed 1% COLA by the Teacher Retirement Fund, 3) the cost of living is rising, and 4) the expiration of the Making Work Pay federal tax credit has caused some retired teachers to receive smaller monthly pension checks. On February 8, 2011 the bill was referred to the House Ways and Means Committee. After two hearings, the House Ways and Means Committee amended HB 1176 to include only the one time payment for the same reason of the state deficit that the bill was amended in the past 2 years. On February 21 and 22, since the Indiana House did not have a quorum, HB 1176 died. Our bill’s primary author, Rep. Woody Burton, gave a great speech on the House floor about the need for a cost of living payment. I am working every day with Rep. Burton to amend our language into another bill. This same procedural problem occurred two years ago and we were able to put our language in another bill. This is a very difficult challenge, but we are doing everything we can. See HB 1176 (now dead) http://ai.org/apps/lsa/session/billwatch/billinfo?year=2011&session= 1&request= getBill&doctype=HB&docno=1176

SB 524 Defined Contribution Study Committee. Author: Sen. Greg Walker. This bill would create a study committee to review this issue of requiring a Mandatory Defined Contribution Pension for all newly hired teachers and public employees after the Indiana General Assembly adjourns this session. This would at least DELAY the issue giving both sides appropriate amounts of time to study all the issues. This bill was amended in the Senate Pensions Committee to provide that new state employees may VOLUNTARILY sign up for a defined contribution plan. We must watch this bill closely. I am concerned that this bill may be amended before the end of the session. SB 524: http://ai.org/apps/lsa/session/billwatch/billinfo?year=2011&request=getBill&docno=524

HB 1001 State Budget Bill. Author: Rep. Jeff Espich. This bill sets the budget for the state of Indiana. Retired teachers are mentioned on page 86 of the current version, which will receive many new amendments as the session proceeds. The bill dedicates $65 million to cover post retirement pension increases and $660 million to cover the Teachers’ Retirement Fund Distribution for budget year 2011. HB 1001: http://www.in.gov/apps/lsa/session/billwatch/billinfo?year=2011&request=getBill&docno=1001

SB 39 Tax Structure Study. Authors: Sen. Sue Landske, Sen. Tom Mrvan, Sen. Brent Steele, Sen. Vaneta Becker. Sponsors: Rep. Ed Clere, Rep. Eric Koch, Rep. Woody Burton, Rep. Clyde Kersey. This bill requires the commission on state tax and financing policy to study how the Indiana income tax structure, including existing and potentially new income tax credits and deductions, may influence a senior’s decision on residency in Indiana after retirement. On January 27, 2011 the bill passed out of the Appropriations committee with an 11-0 vote. On February 3, 2011 the bill passed out of the Senate with a vote of 48-0. The bill has been referred to the House. SB 39: http://www.in.gov/apps/lsa/session/billwatch/billinfo?year%20=2011&request=getBill&docno=39

HB 1356 Military Pension and $500 Minimum Monthly Pension Bill. Author: Clyde Kersey. This bill would allow up to six years of service credit in the teacher retirement fund for a member's past active duty military service. Also provides that the pension portion of the monthly benefit payable to a member of the TRF who retired before January 1, 1979, and has at least 20 years of creditable service may not be less than $500. This bill did not get set for a committee hearing, so it died.
HB 1356: http://ai.org/apps/lsa/session/billwatch/billinfo?year=2011&session=1&request=getBill&doctype=HB&docno=1356

SB 549 Combines PERF and TRF Boards. Author: Sen. Phil Boots, Coauthors: Sen. Jim Buck, Sen. Greg Walker. Sen. Mike Young. This bill combines the PERF and TRF Boards with the objective of saving money for each retirement fund. Some experts estimate that over $50 million a year could be saved by combining stockbrokers of the funds. On February 7, 2011 the bill was read a second time and amended by Sen. Phil Boots. The bill has passed the Senate and is now in the House. SB 549: http://ai.org/apps/lsa/session/billwatch/billinfo?year=2011&session=1&request=getBill&doctype=SB&docno=0549

SB 12 PERF and TRF Administrative Matters. Authors: Sen. Phil Boots, Sen. Karen Tallian, Sen. Jim Buck, Sen. Dennis Kruse, Sen. Lonnie Randolph. Sponsors: Rep. Suzanne Crouch, Rep. David Niezgodski. Removes a provision requiring the teachers' retirement fund (TRF) to maintain separate accounts for each employer within the retirement allowance account of the 1996 account. Permits a member of the public employees' retirement fund (PERF) or TRF who is eligible for an early retirement to withdraw the member's annuity savings account without applying for a retirement benefit. This bill passed out of the Senate on January 20, 2011 with a vote of 47- 0. SB 12: http://ai.org/apps/lsa/session/billwatch/billinfo?year=2011&session=1&request=getBill&doctype=SB&docno=0012

Things To Do Immediately:

1. Go to: http://www.retiredteachers.org/ and educate yourself about the Defined Contribution issue. Go to the Legislative Advocacy page in order to find the information.

2. Contact your legislators and let them know you SUPPORT a one time payment for retired teachers and SB 549 combining the PERF and TRF Boards. Please let your legislators know you OPPOSE a mandatory defined contribution bill for newly hired teachers. You can find the email address of your legislator by going to: http://district.iga.in.gov/DistrictLookup/.

3. Bill deadlines are quickly approaching. Senate bills had to pass to the House by February 23, 2011. House bills must pass to the Senate by February 25, 2011. The last day for the Senate to receive House Bills is February 28, 2011 by 12 noon. Please contact your legislators and let them know which bills you support/oppose before these dates.

Andrew P. Thomas, Executive Director
athomas@retiredteachers.org
Indiana Retired Teachers Association
2629 Waterfront Pkwy East Dr., Ste. 105
Indianapolis IN, 46214
Telephone (317) 637-7481
Toll-free (888)-454-9333