LINCOLN — Gov. Dave Heineman's first veto of the year stood for less than 24 hours.
Nebraska lawmakers voted Tuesday to override his veto of a bill shoring up retirement plans for school employees, judges and State Patrol troopers.
Only one senator voted against the override, which passed with 32 votes in favor.
Several others who had argued against making long-term changes in the school employee plan sat out the vote on Legislative Bill 553.
Like the governor, they suggested passing some short-term accounting changes that would eliminate the state liability in the current budget period and leave other issues to be studied later.
The legislative majority stood with State Sen. Jeremy Nordquist of Omaha, chairman of the Nebraska Retirement Systems Committee.
He said the governor's suggestion would push the problem into the future, an approach he compared to congressional inaction on Social Security and to Omaha's problems with underfunded pension plans.
“Skipping out on the bill is what got cities like Omaha in trouble,” Nordquist said. “This is an obligation we have to meet.”
But Sen. John Nelson of Omaha said he believed the best option would be to adopt a cash balance plan for school employees, like the one used for state employees.
Such plans guarantee participants a minimum rate of growth on money they and their employers contribute. Unlike a pension, the benefit that participants receive after retirement is not a guaranteed amount.
Nordquist said the courts have ruled that such a switch could be done only for newly hired employees. He said it would not take care of the state's liability for those hired earlier.
LB 553 would make long-term fixes, including a reduction in retirement benefits for newly hired school employees and an agreement to continue employee and school district contributions at the current level.
It also would raise the state contribution from 1 percent of school employee salaries to 2 percent, an increase of $20 million per year.
Lawmakers had raised the teacher and school district contribution rates to deal with earlier shortfalls in the retirement plans. The rates were slated to drop in 2017.
Heineman had objected to the long-term provisions of LB 553, calling them unwise and unwarranted. He especially objected to the increased state funding.
Four major school organizations sent a joint letter to senators urging the override vote.
The letter was signed by representatives from the Nebraska State Education Association, the teachers union, as well as the Nebraska Council of School Administrators, Nebraska Association of School Boards and Nebraska Rural and Community Schools Association.
“LB 553 is good public policy because the overall funding for the school employee retirement plan is primarily borne by school employees and school districts,” the letter said.
Heineman's veto message said the Legislature's approach would move away from the tradition of having school employees, school districts and the state equitably address problems with the retirement plans. He said the bill would increase the state's contribution but would not increase contributions from most school employees and school districts.
Employees of the Omaha Public Schools would be the only exception. Their contribution rates were to increase to match statewide rates of 9.78 percent of income.
Heineman added that taxpayers, “in addition to the school lobby,” should be involved with crafting new long-term solutions.
His office did not respond to a message seeking comment on the override vote.
Nebraska, like most states, has been struggling to keep its pension plans healthy in recent years. The plans are still recovering from losses suffered during fiscal years 2008 and 2009, when the country was in recession.
The governor's budget recommendations did not include a proposed solution to the projected shortfalls in school, judges' and troopers' retirement plans.
Some lawmakers also pointed out that his administration had not testified on LB 553 or participated in discussions of the issue.
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