Committee recommends $35.7 million deposit to stabilize Highway Patrol retirement fund

Senate Bill 2120 would transfer $35,700,000 into the Highway Patrol Troopers Retirement System Fund to raise the plan’s funded ratio to an actuarial target of roughly 90% by Jan. 1, 2026.

Derek Holbein, chief operating and financial officer for the Public Employees Retirement System, testified the Highway Patrol plan covers a small population — about 147 retirees and 167 active employees — and that because troopers do not participate in Social Security the defined benefit is their primary retirement provision. Holbein said PERS’ actuary calculated a $35.7 million deposit would put the plan on a trajectory to reach full funding in about 25 years if actuarial assumptions hold. “We know $35,700,000 is a lot of money, but when you're talking about a pension reform policy, it's extremely cheap to fix this plan when you're comparing what we're trying to do on the main plan over the course of the next 30 years,” Holbein said.

Holbein reviewed prior reforms and one‑time infusions, including contribution increases enacted in 2021 and a $3 million cash infusion after last session, and said the current proposal is intended to avoid much larger future costs. He explained that an ADEC (Actuarially Determined Employer Contribution) framework would allow the PERS board to adjust contribution rates biennially and prevent future large, sudden increases. He warned the plan, under current contribution rates and actuarial assumptions, could be depleted in the long‑term if nothing changes.

Captain Derek Arndt of the North Dakota Highway Patrol also testified in support, saying the plan is important for recruitment and retention because troopers do not earn Social Security credits while working for the patrol.

Committee members asked about why troopers do not participate in Social Security (an historic employer decision), how an infusion would affect future contribution rates and how the ADEC mechanism would work. Holbein noted that earlier scenarios showed spreading the payments over 10 or 30 years would cost materially more in cumulative dollars.

Representative Steiner moved a “do pass” recommendation; the motion was seconded and passed on roll call (10 yes, 0 no, 3 absent). The committee amended the motion to refer the bill to appropriations for any required spending authority.