Friday, May 20, 2016

State retirees to see bump in pension checks with Governor Edwards' COLA approval

Mark Ballard
The Advocate

A lot of retired teachers, troopers, school workers and state government employees will start seeing slightly bigger monthly pension checks starting July 1.

Gov. John Bel Edwards on Thursday signed into law a cost-of-living adjustment for nearly 125,000 pensioners who are over the age of 60 and have been retired at least a year. Most live in the Baton Rouge and New Orleans areas. It’s the first increase in two years.

Senate Bill 2, now called Act 93, distributes the cost-of-living adjustments, called COLAs, based on calculations that rely on the funding levels of the individual retirement systems.

Members of the Louisiana State Employees’ Retirement System are in line for a 1.5 percent increase on the first $60,000 of their benefits. Teachers Retirement System of Louisiana members will receive a 1.5 percent hike.

Louisiana School Employees’ Retirement System members get a 2 percent raise as do those with the Louisiana State Police Retirement System. A number of State Police retirees over the age of 65 also are eligible for another 2 percent increase.

The average monthly increase would be about $30 but could vary widely based on the circumstances of individual retirees.

The average retired teacher receives about $2,149 per month in benefits, so the average COLA increase would be $29.50. The average retired state worker’s pension is $24,660 annually. At 1.5 percent, the average increase per month would be about $27.

Senate Bill 2 was sponsored by Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport.

Out of a half-dozen votes in committees and in both chambers, the legislation granting retirees a COLA received only one no vote. Central Rep. Barry Ivey, a Republican, opposed the measure in the House Retirement Committee as a gesture to remind his colleagues of the size of the debt being carried by the four retirement systems — $20 billion created partly because state government gave out COLAs in the past without setting aside enough money to pay for them.

The state constitution requires pensions be paid first, so if the systems go broke, taxpayers will be paying retirement benefits before buying books for public schools or repairing roads, he said.

Point made, Ivey voted for the COLA on the House floor.

COLAs ultimately will cost about $385 million. But that money doesn’t come from the state budget, which pays the costs of government agencies and currently has a $600 million deficit.

The money comes out of a fund called the “Experience Account” that collects excess investment dollars. That money can’t legally be used to pay anything but COLAs, though part of it goes to paying down the $20 billion debt of the retirement systems.

Retirement costs state government about $2 billion a year, but is not a line item in the $25 billion budget. Rather, each agency pays its portion out of its appropriation.

Another cost-of-living adjustment would not be available until the fund, called the Experience Account, is refilled.

Peacock linked the raise with two other bills that changed how the retirement systems operate.

Senate Bill 5 would require the retirement systems to timely pay administrative costs rather than roll those charges into the 30-year debt. Senate Bill 18 would reduce the amortization period — paying off debt on a fixed schedule — from 30 years to 20 years.

Edwards signed both of those measures on Thursday, too.

Thursday, May 12, 2016

Pension increase for retired state workers, teachers passes

Mark Ballard
The Advocate
Retired state workers can plan on seeing a little bit more in their monthly pension checks as the state Senate, as expected, approved minor changes in two of the three bills that allow for a cost of living adjustment.
Senate Bills 2, 5 and 18 were approved with little discussion Wednesday and now head to Gov. John Bel Edwards, who is expected to sign the measures.
Nearly 125,000 retirees, who are over the age of 60 and have been retired for a year, will receive a modest boost on the first $60,000 of benefits. Most of the state’s retirees live in Baton Rouge and New Orleans areas.
The percentages are based on how well-funded each of the state systems are.
Retired state workers and retired public school teachers would receive a 1.5 percent increase; retired school workers would get 2 percent; and retired State Police troopers and staff would receive at least 2 percent.
The average monthly increase would be about $30, but the exact amounts could vary widely depending the circumstances of individual retirees.
It’s been two years since some of the state pensioners received a cost of living adjustment, called a COLA. That bump came with passage of a law aimed at tackling a $20 billion debt the four state retirement systems have incurred over the years of granting COLAs and of legislators not putting enough money into the systems to cover the promises made to state employees.
Act 399 set triggers for when cost of living allowances could be given. The check-offs include waiting every other year, ensuring enough money was in an account that collects excess earning on investments, and the systems hit a predetermined level of funding. Another criterion is whether there was inflation in the previous year. There wasn’t. But proponents argued that was because the price of energy fell so dramatically and threw calculation off. But the prices consumers paid for health care and groceries rose.
And the funds where excess earnings are parked — and from which COLAs will be paid — are full and cannot be used for other state government expenses. The COLAs granted in the legislation will cost $385 million.
The cost would not come from the state budget, which is $600 million in the red.

Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport, sponsored the three bills. Senate Bill 2 awards the COLAs. Senate Bill 5 would require the retirement systems to timely pay administrative costs rather than roll those charges into the 30-year debt. Senate Bill 18 would reduce the amortization period — paying off debt on a fixed schedule — from 30 years to 20 years.

Wednesday, May 11, 2016

A plan to boost monthly pension checks for retired state employees, public school workers and teachers is headed to the governor's desk

THE ASSOCIATED PRESS

BATON ROUGE, Louisiana — A plan to boost monthly pension checks for retired state employees, public school workers and teachers is headed to the governor's desk.

The cost-of-living increase is part of a package of bills by Shreveport Sen. Barrow Peacock, chairman of the Senate Retirement Committee.

The pension hike is tied to adjustments in how the retirement systems pay for raises and administrative costs, aimed at lessening long-term debts.

All three bills won final legislative passage this week.

Nearly 125,000 retirees over the age of 60 will see increases, ranging from 1.5 percent for retired state workers and teachers to as much as 4 percent for retired state troopers. The average monthly increase will be about $30.

The increases are estimated to cost $383 million.


Senate Bills 2, 5 and 18: http://www.legis.la.gov