CNHI Statehouse Bureau Chief
A 2011 law that triggers an automatic taxpayer refund when the state has a surplus also has provided a boost to the state’s pension funds.
On Thursday, Indiana Gov. Mitch Daniels announced that $360 million from the state’s budget surplus will go to shore up five public pension funds.
"There are many states and some localities that are never, ever going to be able to honor the [pension] obligations that they made,” Daniels said. “That will never be the case in Indiana.”
Daniels said the payments mean that four of the five funds are considered “fully funded”, meaning they’re at or above 80 percent of their obligations.
Indiana law requires the governor to return excess funds when the state’s reserves exceed a certain threshold. A portion goes back to taxpayers in the form of an automatic refund and a matching amount goes to boost the funding levels of the state’s pension funds.
The payments announced Thursday include $90.2 million to the Judges Pension Fund; $14.6 million to the Conservation, Gaming and Excise Officers Pension Fund; $17.4 million to the Prosecutors Pension Fund; $31.7 million to the State Police Pension Fund and $206.8 million to what’s called the “pre-1996” Teachers’ Retirement Fund.
It’s that pre-1996 teachers fund that has about $11 billion in unfunded liabilities, according to Steve Russo, Director of the Indiana Public Retirement System. It’s a fund, set up in 1921, as a “pay as you go” system. The state legislature has been allocating money each year from the state’s general fund to pay off the obligations over time; meanwhile, the state has put into place a post-1996 teachers retirement fund that is paid for like the other state pension funds are.
As Daniels earlier announced, the state will return $360 million from the budget surplus to state taxpayers. Each individual filing a return is expected to get about $100; joint filers will get $200. It’s money returned to taxpayers as a deduction rather than a check.