PSBA believes the most recent pension reform outlined in Senate Bill 1071 is a significant move forward in protecting school districts and taxpayers from the fiscal stress of an unpredictable and costly pension system. Today the Public Employee Retirement Commission reviewed Senate Bill 1071 and provided its analysis in a public meeting.

Through SB 1071, starting July 1, 2017, new members of the Public School Employees’ Retirement System (PSERS) would be placed in a new side-by-side hybrid retirement plan with a reduced defined benefit component (as compared to current employees) and a defined contribution component operating similarly to a 401(k) plan. In addition, the bill would subject current PSERS employees to shared risk/shared gain employee contribution rate adjustments, and would change how the lump sum withdrawal option affects the calculation of annuities for current PSERS employees with regard to withdrawals made after July 1, 2016, of amounts accumulated after July 1, 2016.

“In 2007 PSBA established its first taskforce to review and develop recommendations to address the pension crisis and recommended a hybrid plan,” said PSBA Executive Director Nathan Mains. “Senate Bill 1071 accomplishes this long-standing goal. This reform effort adds much needed predictability to pension costs for the state and taxpayers and provides liability protection to school districts, while also providing security for retired workers.”

It limits school districts and taxpayer risk by more than 60% by placing new employees in a side-by-side hybrid retirement system. The bill further creates a risk-sharing provision that reduces risks due to potential investment losses. This provision periodically adjusts the employee contribution rate in the event of poor investment performance by PSERS. Further, there are changes to lump sum payment options to ensure school districts’ costs will not increase.

PSBA members are pleased that these long-term changes are included and encourage legislators to pass SB 1071, which provides a good step forward to ensuring predictable pension costs and liability protection for school districts and other reforms to alleviate the current pension crisis.

A summary of SB 1071 can be found on PSBA’s website at


PSBA is a nonprofit statewide association of public school boards, pledged to the highest ideals of local lay leadership for the public schools of the commonwealth. Founded in 1895, PSBA was the first school boards association established in the United States.

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