Labor battle looms, but pensions stay solvent


April 19th, 2011

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Lincoln, NE -A bill to help keep teachers and state troopers’ pension plans solvent turned into a foreshadowing of a bigger battle to come in the Legislature.

The legislation would increase the percentage of pay that school employees and school districts, as well as members of the state patrol retirement system and the state, would set aside for their defined benefit plans. School employees would see their contributions rise from just over 7.25 percent to 8.25 percent next year, and 9.75 percent after that, with schools districts paying 100 percent of that. State patrol employees, who don’t pay social security taxes, would see their pension contributions rise from 16 percent to 19 percent of their pay for the next two years, which would be matched by the state.

The plan would cost both patrol employees and state taxpayers about $830,000 a year. It would cost school employees and schools around $19 million combined the first year, and $47 million the second. Omaha Senator Steve Lathrop contrasted the outcome to what he said would happen if there was no collective bargaining.

“These groups of people would get lawyers, they’d file lawsuits and demand exactly what they’ve been promised,” he said. “And instead, the collective bargaining process has worked. Concessions have been made by those who … appreciate the spot the state is in, who have agreed to participate in the solution, and they have made sacrifices along the way.”

Omaha Sen. Steve Lathrop said Nebraskans with collective bargaining abilities have been understanding with the state's budgetary situation. (Photo courtesy Nebraska Legislature)

Lathrop is sponsoring a bill to reform the Commission of Industrial Relations, the state body that resolves public employee wage disputes when they reach an impasse. Last week, the Omaha, Lincoln, and state Chambers of Commerce said the legislation doesn’t go far enough. On Friday, Gov. Dave Heineman echoed those concerns. Heineman was particularly critical of what he said was a lack of cost controls applying to schools. The governor said the education establishment, including school administrators, boards and teachers, had “punted” on the opportunity for real reform. But he promised to work with senators to achieve CIR reform this session.

Business groups have talked about running an initiative to abolish the Commission, while the Nebraska State Education Association is talking about a petition drive to protect the CIR.

The pension legislation received first round approval on a vote of 42-0.

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