Capitol Updates
Wednesday, April 23, 2025
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Administrator and School Board Associations Block Rule of 85 Retirement Reform
Today, a public hearing was held on AM1023, an amendment to LB645 that proposed allowing teachers in the statewide school employees’ retirement plan to retire at age 55 with an unreduced benefit under the Rule of 85, aligning benefits for those hired on or after July 1, 2018, with those hired before that date. The Rule of 85 permits retirement with full benefits when an employee’s age and years of creditable service total 85 (e.g., age 55 with 30 years of service).
Unfortunately, the proposal faced notable opposition from the Nebraska Association of School Administrators and the Nebraska Association of School Boards, which both argued that LB645’s already-slated reduction in employer contribution rates was sufficient; that an additional benefit change in AM1023 posed unnecessary financial risk without further study. However, they expressed a willingness to consider this change next year. Despite Senator Ballard’s efforts to introduce the amendment with stakeholder support, this opposition has halted its advancement. The NSEA appreciates Senator Ballard’s commitment to educators’ retirement flexibility by introducing the amendment for hearing.
Currently, teachers hired before July 1, 2018, can retire at age 55 under this rule, but those hired after must wait until age 60, creating inequity. AM1023 aimed to restore fairness and flexibility for newer hires, with minimal cost to the overall $16.3 billion statewide school retirement plan and potential state savings of an additional $18.8 million over the biennium.
At the hearing, NSEA President Tim Royers passionately advocated for AM1023, highlighting its minimal financial impact, with an actuarial study showing only a 0.25% increase in the plan’s actuarial cost next year and less than 1% by 2040. He emphasized the need for fairness, sharing the story of a young special education teacher who faces physical and mental challenges and deserves the flexibility to retire at 55 after decades of service. Royers also noted that restoring the Rule of 85 for newer hires would aid teacher retention, addressing the critical shortage of early-career educators, and urged the committee to support the amendment to show solidarity with Nebraska’s educators.
CALL TO ACTION – ADVOCATE FOR RULE OF 85 REFORM: NSEA members, your voice is needed now! When an appropriate opportunity presents itself, please let your school district administrators and school board members know your support for lowering the Rule of 85 retirement age to 55 for all educators, and the importance of working with NSEA on this issue next session. Emphasize that this change would provide critical flexibility for teachers who are ready—physically and financially—to retire at 55, fostering morale and fairness. Share how this reform supports a stronger, more equitable retirement system. Your advocacy can keep this issue alive for future legislative sessions!
LB645 Set for Key Debate, Promises Retirement Savings
Tomorrow, April 24, LB645 is scheduled for Select File debate following last week’s strong 38-0-8 vote on General File. Introduced by Senator Ballard of Lincoln at the request of Governor Pillen, LB645 initially proposed only eliminating the state’s 2% contribution to the statewide school employees’ retirement plan. Thanks to your advocacy, including hundreds of emails and calls to senators, the bill was significantly revised by AM876, creating a more equitable solution for educators. After productive discussions between Senator Ballard, Governor Pillen, and NSEA’s Government Relations team, AM876 was adopted on April 17, ensuring a balanced approach to retirement contributions.
As amended, LB645 ties both state and employee retirement contributions to the funding status of the statewide school retirement plan, which is nearly 100% funded. Starting Jan. 1, 2026, employee contributions will adjust based on the plan’s actuarial funded ratio, with contributions set at 7.25% of pay if over 100% funded, 8% if between 98% and 100% funded, 8.75% if between 96% and 98% funded, and 9.75% if below 96% funded. The employer contribution rate remains unchanged at a 101% match of employee contributions, while state contributions will vary, set at 0% if the plan is 100% funded, 0.7% if between 96% and 100% funded, and 2% if below 96% funded. This is a significant improvement over the original bill, which would have kept employee contributions at 9.78% while only reducing the state’s contribution.
The proposed changes apply only to the statewide school employees’ retirement plan due to its strong funding status and do not impact the Omaha School Employees Retirement System (OSERS), which is less than 80% funded. It is hoped that once the funding status of the OSERS plan improves, similar plan adjustments will be considered for its members. An actuarial report released last week shows the statewide school retirement system is well-funded, with a funded ratio of 99.91% using the actuarial value of assets as of July 1, 2024. This robust financial health ensures sufficient assets to cover liabilities, allowing reduced contribution rates without risk to long-term solvency.
The graduated contribution structure incentivizes prudent financial management, avoids overfunding, and increases employees’ take-home pay, supporting job satisfaction and aiding in retaining and recruiting qualified educators, which enhances overall education quality. The reduction in employee contributions could lead to substantial savings; for example, if contributions drop to 7.25%, a starting teacher earning $45,244 annually would save $1,145 pretax per year, while a teacher with an average salary of $60,377 would save $1,528 pretax annually.
CALL TO ACTION: While LB645 is expected to move forward, your continued advocacy is critical. Please contact the senators who were recorded as “Not Voting” on April 17; urge them to support advancing LB645 to Final Reading. Your voice has already shaped this bill into a fairer solution, so let’s ensure it crosses the finish line. The following senators were recorded as “Not Voting” on LB645, lowering school employee contribution rates, are:
Sen. Machaela Cavanaugh, Omaha
Sen. Danielle Conrad, Lincoln
Sen. Wendy DeBoer, Omaha
Sen. George Dungan, Lincoln
Sen. John Fredrickson, Omaha
Sen. Dunixi Guereca
Sen. Terrell McKinney, Omaha
Sen. Ashlei Spivey, Omaha
LB440 Teacher Paid FMLA Hangs in Balance
With only six weeks left in the Nebraska legislative session, the Education Leave and Support Act (LB440), championed by Sen. Ashlei Spivey, awaits a critical decision from the eight senators on the Education Committee. The fate of paid Family and Medical Leave (FMLA) for Nebraska teachers hinges on negotiations, with four weeks of paid leave currently being discussed to secure swing votes on the committee. Originally introduced with six weeks of paid FMLA, the bill’s advancement is urgent as the session nears its close.
LB440 requires that school districts provide teacher paid FMLA, and it grants funding for a school’s substitute costs incurred during the paid FMLA time period, through a 0.35% payroll deduction matched by school districts. This Act enables educators to welcome a new child, care for a loved one, or recover from illness without depleting sick days or facing financial strain. Any surplus funds would be allocated to an Education Retention Fund to address teacher shortages and enhance professional development. If advanced, LB440’s priority status guarantees a full legislative debate, a vital step toward a sustainable future for Nebraska’s educators.
Paid FMLA tackles systemic inequities, particularly for young women who face disproportionate barriers due to limited leave options. By easing the need to exhaust personal leave, LB440 reduces burnout, supports teacher retention, and ensures stable classrooms for students. This bill is a bold investment in educators’ well-being and Nebraska’s education system.
CALL TO ACTION: NSEA members, your voice is critical! Contact the senators on the Education Committee this week and urge them to support LB440’s advancement. Share personal stories—like the challenges of balancing life events without paid leave—to emphasize the bill’s importance. Your advocacy can sway the negotiations and secure a brighter future for teachers and students. Act now!
Sen. Dave Murman, Chair, Glenvil
Sen. Jana Hughes, Vice Chair, Seward
Sen. Danielle Conrad, Lincoln
Sen. Megan Hunt, Omaha
Sen. Margo Juarez, Omaha
Sen. Dan Lonowski, Hastings
Sen. Glen Meyer, Wayne
Sen. Rita Sanders, Bellevue
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