Nebraska Retirement Systems Committee
February 28, 2025
Committee Chair: Sen. Beau Ballard | Bills Heard: 2 | Full Transcript (PDF)
LB571: Cost-of-Living Adjustment for Public Power District Retirees
Introduced by: Sen. John Cavanaugh | Testimony: 1 proponents, 1 opponents, 0 neutral | Read bill text (PDF)
OPPD retirees without Social Security would get inflation protection under Cavanaugh bill, but at steep cost to ratepayers. LB571 would require Omaha Public Power District to provide annual cost-of-living adjustments matching Social Security's formula to employees ineligible for federal benefits—a group that hasn't received COLAs since 2009.
Why it matters: OPPD workers excluded from Social Security face eroding purchasing power in retirement. But the bill would force a 3% annual rate increase ($45 million) on customers and balloon the pension plan's unfunded liability by $420 million, dropping its funded ratio from 74% to 60%.
What they're saying: - Proponents: Social Security recipients get annual COLAs; OPPD retirees deserve equivalent inflation protection. Union leader Mark Salerno noted employees historically received COLAs for 18 straight years (1992-2009) and now contribute 9% of wages to the plan. - Opponents: OPPD already offers a robust package—defined benefit plan, two defined contribution plans, and retiree medical benefits. The bill would hit ratepayers hard and worsen an already-strained pension fund. Sixty percent of current employees are in a cash balance plan and wouldn't benefit anyway.
By the numbers: $45 million annual cost; $420 million increase in pension liability; 58% of OPPD's active workforce in cash balance plan (ineligible for COLAs); plan currently 74.3% funded.
What's next: No vote was taken. Committee members expressed skepticism about timing and cost, with Sen. Hardin questioning whether a $45 million ask is prudent during belt-tightening.
Committee sentiment: Skeptical: Sen. Tony Sorrentino, Sen. Margo Juarez, Sen. Deb Hardin Unclear: Sen. Danielle Conrad, Sen. Rob Clements
Sentiment estimated from questions and comments — not stated positions.
LB661: Divestment from Chinese Entities Designated as National Security Threats
Introduced by: Sen. Bob Andersen | Testimony: 2 proponents, 1 opponents, 0 neutral | Read bill text (PDF)
Andersen's bill would force Nebraska to dump Chinese investments, but the Investment Council warns it could cost retirees hundreds of millions. LB661 directs the Nebraska Investment Council to divest state pension funds from Chinese entities the federal government deems national security threats—a move eight states have already made, but one that carries steep financial consequences.
Why it matters: Geopolitical risk is real. Russia-Ukraine showed states that kept investing in adversarial nations suffered massive losses. But Nebraska's $43 billion pension fund is already heavily exposed to China through complex investment strategies, and forced divestment could force the state to fire top-performing money managers and accept mediocre returns.
What they're saying: - Proponents: China has sworn to dominate the U.S.; Nebraska shouldn't fund its enemy. State Auditor Mike Foley supports the framework, noting compliance auditing would be straightforward. State Shield's Mary Vaggalis emphasized the bill allows gradual divestment as bonds mature, not fire sales. - Opponents: Investment Officer Ellen Hung provided stark numbers: $575 million in lost revenue, $22 million in increased expenses, and potential $179-$330 million annual losses from losing top-quartile managers. Only 2.5% of the portfolio ($590 million) is in China anyway, and NIC is already reviewing exposure methodically.
By the numbers: $43 billion in state funds managed; $590 million currently invested in China; $575 million potential revenue loss; $179-$330 million annual performance loss if top managers leave.
What's next: No vote was taken. Committee members raised questions about whether existing fiduciary duties already require this analysis, whether the bill is too blunt an instrument, and whether a narrower amendment targeting state-owned enterprises (like Florida's approach) might be preferable.
Committee sentiment: Skeptical: Sen. Margo Juarez, Sen. Danielle Conrad Unclear: Sen. Deb Hardin, Sen. Rob Clements, Sen. Tony Sorrentino
Sentiment estimated from questions and comments — not stated positions.
Session Notes
Committee Chair Ballard outlined hearing procedures, including three-minute testimony limits with green-yellow-red light system. Testifiers were required to fill out green sheets to be recorded as proponents, opponents, or neutral; yellow sheets were available for those wishing to record position without testifying. Committee noted Legislature's policy requiring letters for the record be submitted via online portal by 8 a.m. hearing day. Handouts required 12 copies for distribution to committee members. For LB571: 2 written position comments received (proponents only). For LB661: 0 written position comments received. No votes were taken on either bill during the hearing.
Generated by NE Wire Service | Source: Nebraska Legislature Transcribers Office This is an AI-generated summary. Verify all claims against the official transcript.