Subcommittee advances PERS 2025–27 budget with one‑time modernization funding and staff additions

The General Government Subcommittee on Wednesday advanced Senate Bill 5,534, the primary budget measure for the Public Employees Retirement System, adopting the Legislative Fiscal Office recommendation and moving the bill to the full committee with a due‑pass recommendation.

The recommendation funds PERS for the 2025–27 biennium at roughly $15.5 billion in total funds, including about $178.9 million for agency operations and several targeted additions to information technology and operations staff. The subcommittee also approved a dash‑1 amendment and attached two budget notes directing joint reports with the Department of Administrative Services Enterprise Information Services (DAS EIS) to the interim Joint Committee on Ways and Means in January 2026 on modernization progress and House Bill 4045 implementation.

Why it matters: PERS pays retirement benefits to state agencies, public universities, public school districts, statutory judgeships and participating local governments. The package funds projected benefit payments and adds both permanent and limited‑duration positions to support operations and a multi‑year modernization effort intended to replace legacy systems.

Major figures and structure - Total funds for the biennium: about $15.5 billion (LFO presentation). The largest share is for estimated benefit payments; the operating budget for agency administration was presented at about $178.9 million. LFO noted the operating budget is modestly higher than the 2025 legislatively approved level. - Positions: the recommendation includes roughly 433 positions (about 430.8 FTE) across central administration, financial services, information services, operations, and compliance and risk management divisions. Several packages add permanent positions (examples: human resources, procurement, communications) and multiple limited‑duration positions tied to prior modernization and Senate Bill 1049 cleanup work. - Employer incentive fund and school district unfunded liability: LFO recommended increasing lottery funds expenditure limitation for the employer incentive fund to a total of about $41.3 million to provide matching funds for employer side‑account contributions in 2025–27. A $1 placeholder for a school district unfunded liability fund was removed following prior transfers enacted under earlier legislation.

Modernization and Orion reporting LFO recommended multiple targeted one‑time investments described as “bridge financing” to sustain PERS’s modernization work while the agency reevaluates approach and potential off‑the‑shelf solutions. Notable items: - A scaled‑back modernization package providing approximately $7.8 million and 14 positions to establish a program office and fund contingent project work, with the understanding the positions and one‑time funding will be reassessed when the project plan is finalized. - An additional recommended one‑time adjustment of about $6.7 million for ongoing maintenance of legacy systems while modernization planning and procurement proceed. - Budget notes require PERS and DAS EIS to jointly report to the interim Joint Committee on Ways and Means in January 2026 on progress toward modernizing the Orion Pension Administration System, including stage gate endorsements, results of the contracted solutions analysis, independent quality control reviews, and updates on hiring and standing up the core retirement system application program office.

Operational additions and limited‑duration staffing LFO recommended several staffing packages intended to reduce backlogs and stabilize key operations: a new policy analysis and compliance section (including a mix of permanent and limited‑duration positions to address appeals and contested cases), additional actuarial and data analysis support, and temporary positions to complete manual cleanup tied to prior projects. LFO said limited‑duration positions are expected to terminate at the end of the 2025–27 biennium unless converted and budget authority is requested for permanency.

Questions and concerns raised Committee members pressed on fiscal prudence and definitions. A member expressed concern that adding recurring positions could conflict with prior guidance to avoid new ongoing measures, noting revenue uncertainty and market instability. LFO answered that its approach for PERS differs from other agencies because of the need for operational stability and to support substantial IT investments.

Committee members also asked PERS to provide a clear, plain‑language definition of “modernization” during the interim and to clarify what “Orion” refers to in project documents. The subcommittee asked for additional reporting that breaks down administrative costs versus benefit payouts (per‑person or percentage metrics) to help communicate outcomes to constituents and retirees.

Key performance measures The subcommittee approved PERS’s proposed key performance measures and targets for 2025–27. Committee members singled out the KPM for timely initial retirement payments (target: 80% within 45 days), noting recent improvement from a COVID‑era low but that reported results remain below target.

Formal action and next steps The subcommittee adopted the dash‑1 amendment to SB 5,534 and moved the bill, as amended, to the full Ways and Means committee with a due‑pass recommendation. Budget notes require joint PERS/DAS EIS reports in January 2026 on both modernization and implementation of House Bill 4045. The bill will proceed to full committee consideration.

Ending: The subcommittee closed the work session and scheduled the state treasurer’s budget work session for the following day.