A bill that would transfer the administrative duties of the $1.4 billion Omaha School Employees' Retirement System to a state board is moving forward in the Nebraska Legislature.
On May 6, state senators, in a 31-5 vote, advanced a bill that would permit the state's Public Employees Retirement Board, Lincoln, to take over day-to-day operations of OSERS from Omaha Public Schools beginning in 2024. The investment responsibilities for OSERS were transferred in 2016 to the Nebraska Investment Council, Lincoln, which oversees $34 billion.
Sen. Mark Kolterman, who introduced the bill in January, said in a May 7 column on his website that the state will not assume "any financial responsibility or liability for the nearly $1 billion of OSERS' unfunded liability" if the bill were to pass.
In 2020, a study Mr. Kolterman initiated determined that transferring the management of OSERS to the state board would result in an annual management cost savings of about $250,000, according to Mr. Kolterman.
The bill's path forward, however, is uncertain. Gov. Pete Ricketts came out against it in a March statement, citing concerns of the state having to assume OSERS' $848 million funding shortfall. The bill would put the state on "a slippery slope toward taking on the huge financial liability resulting from the pension fund's poor investments," he said.
Moreover, Mr. Ricketts added, "A state takeover of administering the day-to-day affairs of the fund is a step towards exposing state taxpayers to liability for bad decisions made by the OSERS trustees. Senators should oppose passing a law that could eventually lead the state to inherit the financial problem. After (Omaha Public Schools) finishes shoring up their pension fund, we can revisit whether the state should play a role in managing it for them."
In his column, Mr. Kolterman highlighted a passage from the bill that notes Omaha Public Schools "at all times and in all circumstances remains solely liable for all funding obligations of the OSERS plan and at no time or under any circumstances does the state assume any financial liability or obligation for the OSERS plan."