Senate committee advances $35.7 million deposit to Highway Patrol pension fund

The Senate Appropriations — Government Operations Division voted to recommend Senate Bill 2120, which would deposit $35,700,000 into the Highway Patrol Defined Benefit Plan trust to improve long-term funding stability.

The bill, presented to the committee by Derek Holbein of the Public Employees Retirement System, would raise the plan’s funded status to roughly 90% and place it “on a path to be fully funded in 25 years,” Holbein said. The committee voted for a “do pass” recommendation; the motion was made by Senator John Dwyer and seconded by Senator Burkhart, and several members recorded aye votes.

The nut graf: The Highway Patrol Defined Benefit Plan covers a small population — the PERS July 1, 2024 valuation shows 147 retirees and 167 active employees — and is not part of Social Security. That combination produces relatively high contribution rates and a risk that the trust could be exhausted if additional funding is not provided, witnesses told the committee.

Derek Holbein, chief operating and financial officer at the North Dakota Public Employees Retirement System, told the committee the plan is currently about 68.6% funded and that a $35.7 million lump-sum deposit was chosen to get the fund to about 90% funding by Jan. 1, 2026. “The intent to Senate Bill 2120 is to help fund a critical benefit within the state, and I am here today to testify in support of Senate Bill 2120 on behalf of the PERS board,” Holbein said.

Holbein said the Highway Patrol plan covers a small group, so reaching a 90% threshold is intended to allow contribution adjustments set by the PERS board to be incremental and manageable. He added that the plan’s active employees pay 15.3% into the plan and employers contribute 21.7%, and that the average benefit paid to retirees is $4,346 per month. Holbein also told the committee that “for many who are part of this plan this is the only source of retirement that they're gonna have,” because the plan participants do not participate in Social Security.

Holbein cited prior policy steps and interim actuarial scenarios that show delaying funding increases long‑term costs. He said employee benefits staff provided alternate actuarial solutions showing that spreading costs over longer schedules would raise the eventual lump-sum needed to reach the same funding outcome.

Rebecca Fricke, executive director of PERS, answered questions about why Highway Patrol members do not participate in Social Security, explaining that the plan’s election to be outside Social Security predates PERS’s administration of the plan and was made decades ago; the plan’s benefit is designed to be higher to account for that difference.

Captain Derek Arton of the North Dakota Highway Patrol testified the pension and related death-and-disability guarantees are important to recruitment and retention. “The Social Security piece, the death and disability benefits, and the guaranteed monthly benefit is a huge piece of our, not only our recruitment efforts, but our retention efforts as well,” Arton said.

Committee members asked technical questions: Sen. Burkhart confirmed that the population covered is small (147 retirees and 167 actives, per the July 1, 2024 valuation), asked whether benefits include cost-of-living adjustments (Holbein and Fricke said the Highway Patrol plan has no built-in COLA), and sought confirmation that the $35.7 million figure would move the fund to about 90% funding. Holbein said reaching 100% immediately would require a larger infusion — roughly $50 million based on the July 2024 valuation — which the board did not propose at this time.

On process and funding source, committee members noted the governor’s budget book showed a slightly different number earlier in development; committee staff said numbers changed during budget preparation. Committee members also asked where the deposit would be drawn from; the clerk and members noted the bill specifies the SIF fund as the source.

Action and next steps: Senator Dwyer moved a “do pass” recommendation; Senator Burkhart seconded. The roll call in committee recorded ayes from several members. Committee leadership said they would keep the vote open for Senator Sickler if he was not present at the moment of the vote. Committee staff indicated the bill would be sent to State Local Government for further consideration.

The bill’s sponsors and PERS emphasized that an earlier, larger infusion would be less costly over time than waiting for further deterioration in funded status. The PERS board said it introduced the measure to start a legislative conversation and to give the board flexibility to set contribution levels to the actuarially determined employer contribution on a biennial basis.

Votes at a glance: The committee recorded a motion for a do-pass recommendation moved by Senator John Dwyer and seconded by Senator Burkhart; recorded ayes included members who responded in roll call. Committee leadership kept the vote open for Senator Sickler to register later; the committee indicated the measure would proceed to the State Local Government committee for consideration.

The meeting adjourned after the committee completed testimony and took the committee vote on Senate Bill 2120.