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Understanding Indiana's Balanced Budget Amendment
Late last week, a Facebook post surfaced stating that the Balanced Budget Amendment to the State Constitution that is on this year’s Election Ballot could affect funding of the teacher pensions in the future.
Here is the official information provided to the Indiana Retired Teachers Association from the Indiana Public Retirement System on Monday. We hope the following information clears up any questions and concerns about the amendment and how it could affect the pension system.
The Impact on Retirement Plans
Indiana voters will have the opportunity to vote “yes” or “no” on Nov. 6, 2018 to determine whether to require the state legislature to enact a balanced budget for each biennial budget period. The amendment would also require public pension funds to be actuarially funded during each budget period. A two-thirds vote in each chamber would be required to suspend these provisions.
If there is a budget shortfall, the difference is subtracted from what may be spent in the next biennial budget. Any shortfall will not impact the contributions made to the Indiana Public Retirement Systems’ various funds.
The requirement that public pension funds be actuarially funded during each budget period impacts only the state’s pre-funded pension funds. This requirement is designed to ensure that pension dollars promised to employees of the State of Indiana are protected. The impacted funds are:
- The State of Indiana’s portion of the Public Employees’ Retirement Fund (PERF) Hybrid Plan.
- The State of Indiana’s portion of select Teachers’ Retirement Fund (TRF) members, which may include teachers employed by state correctional facilities.
- Excise, Gaming and Conservation Officers’ Retirement Fund
The amendment has no impact on pay go funds and funds that are not paid into by the state of Indiana’s biennial budget. The funds that are pay go and that the state of Indiana does not pay into include:
- The Teachers’ Retirement Fund (TRF)
TRF Pre-96 (a pay-go fund)
TRF ’96 (funded by each school district, not the state of Indiana)
My Choice: Retirement Savings Plan for Teachers
- 1977 Fund (funded by each police and fire entity)
- Public Employees’ Retirement Fund (PERF)
Political subdivisions (non-State of Indiana) participating in the Hybrid Plan
My Choice: Retirement Savings Plan for Government Employees
My Choice: Retirement Savings Plan for State Employees
- Legislator’s Defined Benefit Fund
- Legislator’s Defined Contribution Fund
- The Judges’ Retirement System
- The Prosecuting Attorney’s Fund
If you have any questions, please contact IRTA at 888.454.9333.