INDIANAPOLIS | Five state employee pension funds received a windfall payment -- complete with oversized novelty check -- as Gov. Mitch Daniels on Thursday distributed their shares of Indiana's automatic taxpayer refund.
State law requires the governor return excess funds when the budget is balanced and reserves top 10 percent of the next year's spending. Indiana ended the 2012 budget year on June 30 with excess funds of $720 million.
Under the law, half the excess money is returned to taxpayers while the other half must be used to boost the funding levels of the state's pension accounts.
The distribution of $154 million to the pension funds goes to Indiana judges; conservation, gaming and excise officers; and prosecutors and state police. That money brings those accounts to "full funding" status, or 80 percent of the money needed to cover promised benefits.
The remaining $206 million was put toward the pay-as-you-go portion of the Teachers Retirement Fund, reducing required future contributions from the state's general fund and freeing up that money for other purposes.
The Public Employees Retirement Fund was already fully funded and did not receive any money.
"There are many states and some localities that are never, ever going to be able to honor the obligations that they made; that will never be the case in Indiana," Daniels said.
Retired Jasper County Prosecutor Mike O'Neall helped create the prosecutors' retirement fund. He said the extra money will ensure its long-term solvency.
"So far, there's more paid in than there's paid out, so that's good, and I think in time it's going to be 100 percent funded," O'Neall said.
The Republican governor is set to announce later this month exactly how much Hoosiers can deduct from their 2012 income taxes for their share of the automatic taxpayer refund. The deduction is expected to exceed $100 per person.