State Government Subsidies for Retirement Plans Sponsored by Local Governments

January, 2010

Printer Friendly Version PDF

In many states, city and county governments, independent school districts, and other governments maintain retirement plans that are legally and functionally independent of the statewide plans for public employees, teachers and other state and local government employees. The most recent comprehensive report on local government retirement plans is the Bureau of the Census report, 2002 Census of Governments: Employee Retirement Systems of State and Local Governments. It provides a state-by-state count of statewide plans and local government plans, and lists the larger state and local plans in each state along with statistical data. Most states have relatively few locally-sponsored plans; Hawaii, Maine and Montana have none. A few states have more than 100 local plans. Illinois is reported as having 365, and Pennsylvania as having 928, as of 2002.

This report is concerned with state government financial subsidies for local government plans. It is not concerned with statewide plans that include employees of local governments, but only plans that are sponsored by a local government for employees of that government. The information in this report was collected by staff of the National Conference of State Legislatures from March 2007 through January 2010.

Contact information:
Luke Martel or Tamara Rivale
National Conference of State Legislatures, Denver, Colorado

 

State
TEACHERS’ PLANS
Do state governments provide any financial support for plans sponsored by local governments?
PUBLIC SAFETY OFFICERS
Do state governments provide any financial support for plans sponsored by local governments?
GENERAL PUBLIC EMPLOYEES
Do state governments provide any financial support for plans sponsored by local governments?
Alabama
No
No
No
Alaska
No local government plans
No
Statewide system
Arizona
No local government plans
Arizona subsidizes, within the Public Safety Personnel Retirement System, the Dept. of Public Safety member rates due to a pay raise offset agreement in FY 03.
Within the Elected Officials Retirement Plan, state and county organizations are subsidized through court fees. 
Arkansas
No local government plans
Statewide system
Yes, in an inadvertent way (i.e. not by specific appropriation).  The normal cost for state employees is about 10%, while that of city and county employees is 14.5% and 13.6% respectively.  However, all employers pay 12.54%; therefore the inadvertent subsidy.
 
California
No local teachers' plans. 
No
No
Colorado
No
Only for one closed plan, the Fire and Police Protection Association
No
Connecticut
Statewide system, state pays employer contribution
No
No
Delaware
No local teachers’ plans
Yes: for County and Municipal Police and Firefighters’ COLA fund
No.
Florida
No
Local police and fire districts may vote to assess a premium on casualty and property insurance policies sold within the district for the benefit of locally-administered retirement plans. The assessment is added to the state premium tax. Companies receive a credit against their tax liability for the amount of the assessment levied, so in effect the assessment is a state subsidy. The local retirement plan may use the revenue only for enhancements to retirement benefits measured against the level of benefits existing in 1997.
 
Georgia
No
No
No
Hawaii
No local government plans
 
 
Idaho
No
No
No
Illinois
No
No
No
Indiana
State funds teacher benefits for the pre-1996 fund; for the fund established in 1996, school districts fund the employer share. Both are statewide funds.
The state guarantees that at least 50% of local government obligations for a now-closed plan is funded through state government revenues, primarily cigarette and liquor taxes and lottery income. The plan now in effect (the 1977 Plan) does not receive a state government subsidy.
No.
Iowa
There is one local government plan for teachers, that of the City of Des Moines, which receives no state support. 
No local government plans.
No
Kansas
No local government plans
No
No
Kentucky
No active local government plans
No active local government plans except one in Lexington
No active local government plans
Louisiana
No
No
No
Maine
No local government plans
 
 
Maryland
No
No
No
Massachusetts
No
No
No
Michigan
No local government plans
No
No
Minnesota
The State of Minnesota provides direct aid to the St. Paul Teachers Retirement Fund Association (StPTRFA). The StPTRFA aid amount (FY 2006) was $4,803,000, or about 12.56 percent of the total noninvestment funding received by StPTRFA that year.  
The state provides direct aid to the Minneapolis Firefighters Relief Association, the Bloomington Fire Department Relief Association, the Virginia Fire Department Relief Association, and approximately 700 local volunteer firefighter relief associations. In calendar year 2005, the aid amounted to between 27% and 38% of the non-investment revenue received by the three named systems, and 77% of the non-investment revenue received by the volunteer relief associations.
The state provides direct aid to the Minneapolis Employees Retirement Fund (MERF). The MERF aid is $9,000,000 (Fiscal Year 2006), or 48.34 percent of the total non-investment funding received by MERF that year.
Mississippi
No
No
No
Missouri
No
No
No
Montana
No local government plans
 
 
Nebraska
Annual state contribution to Omaha school employees' plan--0.7% of payroll plus $873,000 for FY 2004.
No
No
Nevada
No local government plans
 
 
New Hampshire
No local retirement plans
 
 
New Jersey
No local government plans
 No
No
New Mexico
No local government plans
 
 
New York
State categorical reimbursements for the New York City board of education include funding for pensions for teachers hired with the money.
No
No
North Carolina
No local government plans
A portion of court costs is directed to local retirement systems for local law enforcement officers. The state premium tax on homeowners policies for fire and lightning damage is allocated to the fire district where the house of the insured is located and can be used for supplemental retirement benefits or certain other programs to benefit firefighters at the discretion of the local fire district.
No
North Dakota
No
A portion of the state fire insurance premium tax is returned to local fire protection retirement associations.
No
Ohio
No
No
No
Oklahoma
Statewide system, employer contributions paid by district; some state tax revenues to pension fund
No
No
Oregon
No local government plans
 
 
Pennsylvania
No local government retirement plans
The Commonwealth imposes a tax on the premiums of casualty and fire insurance policies sold by out-of-state insurance companies.  The Municipal Pension Plan Funding Standard and Recovery Act (Act 205 of 1984) establishes the General Municipal Pension
System State Aid Program (GMPSSA) financed from the proceeds of this tax.  The act provides for the allocation of this money to municipalities (excluding counties and authorities) based upon the number of full-time employees participating in municipal retirement systems.
Yes. The Commonwealth imposes a tax on the premiums of casualty and fire insurance policies sold in PA by out-of-state insurance companies.  The Municipal Pension Plan Funding Standard and Recovery Act (Act 205 of 1984) establishes the General Municipal Pension System State Aid Program (GMPSSA) financed from the proceeds of this tax.  The act provides for the allocation of this money to municipalities (excluding counties and authorities) based upon the number of full-time employees participating in municipal retirement systems.
Rhode Island
No local government retirement plans
No
No
South Carolina
No local government retirement plans
 
 
South Dakota
No
No
No
Tennessee
Some local government education support staff are covered by local government plans There is no specific state subsidy for local governments' payment of the employer portion of teachers retirement contributions.
Some state funding for local government is intended to support personnel benefits. It may or may not be used for pension contributions.
Some state funding for local government is intended to support personnel benefits. It may or may not be used for pension contributions.
Texas
No
No
No
Utah
No local government retirement plans
 
 
Vermont
No local government retirement plans
 
 
Virginia
No
No
No
Washington
No local government retirement plans
No local government plans for public safely personnel.
Three city plans. No state subsidy.
West Virginia
Yes, partly through school aid formula and partly through lump sum payments to the retirement fund
Through allocation of state insurance premium tax collections, and, a share of table gaming revenues
No
Wisconsin
No
No
No
Wyoming
No local government retirement plans
No local plans
No local plans
Washington, D.C.
N/A
 
 
Puerto Rico
N/A