2012 Senate Bill 1040 ↩

House Roll Call 449: Passed

To no longer provide post-retirement health benefits to new school employees, and instead give them a 401(k) contribution equal to 2 percent of their salary. Also, current retirees who are under age 65 on Jan. 1, 2013 would have to contribute 20 percent to the cost of these health benefits, up from 10 percent now. The bill would also authorize “prefunding” these retiree health benefits (which are optional and not an enforceable obligation on the state); the annual amount is not specified but is probably $100-$200 million annually. In addition, current school employees would have to contribute more toward their pensions, or else receive benefits calculated under a less generous formula. The House did not adopt a Senate-passed provision to “close” the school pension system to new hires, instead giving them a 401(k) account (as has been done for new state employees hired since 1997).