HB437 Alabama 2023 Session

Summary

Primary Sponsor

Randall Shedd

Republican

Session

Regular Session 2023

Title

Relating to the Retirement Systems of Alabama; to provide for an annualized benefit adjustment procedure for the funding of future benefit increases to retirees of the State Employees' Retirement System and the Teachers' Retirement System which will not increase the unfunded liability of either system due to the provisions which require the actual annual cost of any increase to be authorized and funded one year at a time with no authorization or liability for the benefit increase beyond the fiscal year for which the appropriations are made.

Summary

HB437 creates a one-year, pay-as-you-go funding process for future retiree benefit increases under the State Employees' Retirement System and Teachers' Retirement System, tying any increase to annual appropriations and avoiding new unfunded liabilities.

What This Bill Does

It requires the actuary-estimated annual cost of any proposed benefit increase to be identified and funded in the annual state and education budgets. If the cost is not identified or funded in a given year, the increase is not paid that year. The increase is treated as a one-year adjustment and will be paid only if the cost is included in the appropriation acts and funded in the same month the payment is made to the retiree; it does not increase unfunded liabilities. Any new increase must be established by a separate legislative act specifying the amount and eligible retirees, and local units under ERS/TRS must follow the same funding approach.

Who It Affects

• Retired employees under the Employees' Retirement System (ERS) and Teachers' Retirement System (TRS); they will receive future benefit increases only if the Legislature appropriates and funds the increase for that year.
• State and local government employers and other entities that contribute to ERS/TRS; they must fund the increase through a separate employer rate and transfer funds in the same manner as normal employer contributions when funding is identified.

Key Provisions

• Establishes a pay-as-you-go annualized benefit adjustment procedure for ERS and TRS funded through the State General Fund Budget Act and the Education Trust Fund Budget Act, based on the actuary's estimated cost.
• If the appropriation acts do not identify and fund the cost, the benefit increase for that year is not paid; funding must be provided to continue the increase in a future year.
• Requires a separate employer rate to fund the actual cost of the increase, with transfers from applicable entities made in the same manner as normal employer contributions.
• Any new benefit increase must be enacted by a separate legislative act that specifies the amount and eligible retirees.
• Local units under ERS/TRS must provide funding for increases in the same manner as state employees, with annual actuarial estimates provided.
• Not applicable to or affecting any previously enacted cost-of-living increases or one-time bonuses.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement Systems of Alabama, procedure for funding benefit increases for retirees under TRS and ERS estab