Report calculates economic benefits of pensions

A report from the National Institute on Retirement Security indicates the spending of pension dollars by government retirees supported significant economic growth in Louisiana.

Beth Almeida, executive director of the institute, said defined benefit pensions — where the retirement benefit lasts a lifetime — allows retirees to maintain spending on basic needs, which in turn has a positive effect on the greater economy.

In 2006, more than 134,000 Louisiana residents received $2.44 billion in pension benefits from state and local government pension plans, the report states. By spending their pension checks, those retirees then supported $3.2 billion of economic activity.

Almeida said the focus on pensions, especially in tight financial times, tends to be on the cost to taxpayers. But the majority of pensions are paid for through employee contributions and investment earnings, she said.

State workers union cuts deal with Ohio to impose 10 furlough days for state employees

Ohio state employees wouldn't have to take an outright salary cut but would get 10 unpaid days off a year under a tentative contract agreement worked out between state and union negotiators.

The rank-and-file membership of OCSEA, representing 35,000 workers as the largest state employees union, would have to ratify the pact before it would take effect. The State Controlling Board, a bipartisan legislative panel that reviews major spending proposals, would act on the deal on behalf of the state.

State employees work 2,080 hours annually, so the loss of 80 hours of pay would be roughly equivalent to a pay cut of slightly less than 4 percent.

The union team rejected administration proposals to enact pay cuts up to 6 percent and reduce the paid workweek, opting instead for the 10 furlough days to "make the best of a very bad situation" and to "keep the harm to members to an absolute minimum."

Louisiana Director of Civil Service announces retirement

Anne Soileau, Director of State Civil Service, has announced plans to retire after 30 years of state service.

The Louisiana Department of Civil Service is the central personnel agency for State government and administers a comprehensive, merit-based personnel management program. Its function is to help state agencies manage their human resources so that they may provide the most effective service to the citizens of Louisiana.

"Under Anne’s leadership, the Department of Civil Service has made some remarkable strides in progressive, innovative human resources practices. Her contributions to the agency, particularly the development of a new performance appraisal system and the outstanding leadership demonstrated during the critical aftermath of Katrina and Rita, were invaluable. She has been an outstanding Civil Service Director," said James Smith, chairman of the State Civil Service Commission.

Oregon Governor seeks more days on furlough from workers

Governor Ted Kulongoski has asked unionized state workers to agree to 26 unpaid furlough days, up from an earlier request of eight days.

The governor wants workers to take two furlough days during this budget year, which ends June 30, and 24 furlough days during the 2009-11 budget cycle, said SEIU executive director Leslie Frane. State negotiators laid out this new demand during contract talks Monday with SEIU.

Kulongoski wants the workers to take two furlough days by June 30, and then 24 days, one a month, during the 2009-11 budget cycle, said Leslie Frane, director of Service Employees International Union Local 503.

“We are profoundly dis­appointed that instead of working with us to find the best way to continue to provide quality services to Oregonians in a time of optimal need, the state has instead opted for a politically expedient slash-and-burn approach to bargaining,” Frane said.

The counterproposal from state negotiators also calls for a total wage freeze during the next two years, Frane said. State workers would receive neither step increases nor cost-of-living increases.

LASERS has no funds involved in the Stanford Group

Two key Louisiana retirement systems managing billions of dollars checked their portfolios following news of the Stanford probe and found no exposure.

The Louisiana State Employees’ Retirement System, or LASERS, contacted its 20 public equity and debt managers and 40 private equity investment managers shortly after the SEC revealed its case against Stanford on Tuesday, said Troy Searles, deputy chief investment officer for the system. “We scoured through the holdings, and we don’t have any exposure to these guys,” Searles said. “No known investment and no known ties at this time.”

Half of LASERS’ $7 billion portfolio is invested in equities — publicly traded U.S. and international stocks — and about 10 percent is invested in private equity funds that control privately held firms, Searles said. Bonds and other investments make up the remainder.

At the Teachers’ Retirement System of Louisiana, 86,000 active school employees pay contributions into a $15 billion fund that covers more than 61,000 retirees, said Lisa Honore, a public information officer for the system.

“We don’t have any Stanford Group investment,” she said.

In Louisiana, the Office of Financial Institutions — which includes a securities division that investigates fraud and licenses stock brokers — hadn’t responded by the end of the day Wednesday after two calls for information about how Louisiana investors in Stanford are affected and what steps investors should take?

The office’s Web site — http://www.ofi.state.la.us — includes links to SEC documents outlining the federal government’s case against Stanford.

Governor Bobby Jindal Announces Proposal For Tax Amnesty Period

Governor Bobby Jindal is proposing legislation for a Tax Amnesty period during fiscal year 2009-2010 for a two-month period determined by the Secretary of Revenue. Based on collections from the last tax amnesty period in 2001, Governor Jindal believes that the state could collect up to $150 million in back taxes.

The Governor said under his proposed legislation, the tax amnesty program will generate one-time revenue to the long-term benefit of the state and as such, will not be incorporated into the 2009-2010 operational budget.

Applicable years for this amnesty will include all periods since the last amnesty in 2001 – July 1, 2001 through December 30, 2008. Based on accounts receivables as of September 2008, the state has around $297 million in outstanding collections since the last amnesty period in 2001. This estimate includes both interest and tax.

During the Governor’s proposed tax amnesty period, the state will waive 100 percent of the accrued penalties owed on unpaid taxes and 50 percent of the interest, if the taxpayer pays 100 percent of the owed tax and 50 percent of the accrued interest.

Many in Louisiana to see effects of federal stimulus law

About 1.7 million Louisiana workers and their families stand to benefit from the tax credits, worth $400 for individual filers and $800 for married couples from the giant stimulus bill signed into law Tuesday by President Barack Obama.

Employers should begin changing tax withholding from paychecks for most employees in the next few months; other employees will have to claim it when they file their 2009 tax returns. The benefit starts phasing out for individual taxpayers who earn $75,000 and couples who earn $150,000.

Taxpayers can get as much as $2,500 in tax credits to offset tuition at colleges and universities. The credit is equal to 100 percent of the first $2,000 in college costs, including textbooks, and 25 percent of the next $2,000 in costs. To get the maximum credit, a taxpayer will need to spend $4,000. Money would be recouped from 2009
tax filings.

First-time home buyers, defined as anyone who hasn't bought a home in the past three years or claimed a home they owned as their primary residence during those three years, would qualify for a refundable tax credit of as much as $8,000, based on a formula tied to 10 percent of the purchase price.

Louisiana's growing state payroll strains budget

As budget shortfalls and tough economic times strain the state's finances, the reality of a recent expansion in state jobs and salaries is sinking in for decision-makers trying to make ends meet in the public treasury.

The state has about 105,000 people on its payroll, with base salaries totaling $4.6 billion annually, the highest level in its history. Add retirement and benefit expenses and state supplements for teachers and other local public workers, and the state's overall annual obligation for personnel comes close to $8 billion. That is more than four-fifths of what the state general fund will get in taxes and other direct revenue this year.

The largest job gains were at higher incomes. While the number of state workers earning less than $40,000 per year declined last year, the number who make more than $40,000 grew by 4,334 jobs.

That does not necessarily mean that Louisiana's state workers are unusually overcompensated. The rank and file state salaries and group benefits in Louisiana are about average on a national scale, according to data from the Council of State Governments' Book of the States.

Some lawmakers and administration officials are considering changes to the state civil service system that could be introduced in the spring lawmaking session, ranging from seniority and job protection provisions to a new approval process for fresh hires.

State Police pension fund to get boost

State Police pensions will receive an additional $8.9 million in the coming year.

Changes to the State Police system’s schedule for paying off debt is the main cause for an increase in employer contribution rates, from 27.3 percent this year to 41.3 percent in the upcoming fiscal year, actuary Charles Hall said.

The rates for State Police and three other state retirement systems were approved last week by the Public Retirement Systems’ Actuarial Committee.

Every state retirement system has debt for unfunded benefits that it pays down over multiple years, usually a 30-year period. Most of the debts were initially paid off through increasing payment schedules but were eventually leveled off to save money in the long run, Hall said.

The employer contribution rates for the three other state retirement systems, which were put on level debt payment schedules in 2004, did not fluctuate by even a full percentage point.

The Louisiana State Employees’ Retirement System changes slightly from 18.5 percent this year to 18.6 percent in the upcoming year, which for most agencies starts on July 1, 2009. Teachers’ Retirement System of Louisiana employer rates remain the same at 15.5 percent. Louisiana School Employees’ Retirement System rates went down from slightly from 17.8 percent to 17.6 percent.

ERISA slaps Congress for failure to help DB sponsors

The failure of federal lawmakers to include provisions for funding relief to defined benefit plan sponsors in the pending $789 billion economic stimulus legislation has been criticized by the ERISA Industry Committee.

ERIC and other lobbying groups for employers have been arguing that cash-strapped plan sponsors are having trouble meeting new funding obligations under the Pension Protection Act of 2006.

Without some relief, representatives of the lobbying groups are contending that plan sponsors might have to lay off employees or cut back on employer contributions to 401(k) plans to pay their DB contributions.

“It is clear that Congress recognizes the dangerous nature of the economic downturn, but it missed an opportunity to provide a shot in the arm to the economy at no cost to taxpayers,” said Mark Ugoretz, ERIC president, in a news release.

Changes ahead for Job Searches at State Civil Service

On February 16, 2009 the implementation of LA Careers online application system will occur.

The LA Careers system will replace the current JOB SEARCH online vacancy posting system and all promotional and direct hire agreements.

It will involve implementation of new Civil Service rules, changes to application screening processes and changes to existing test scores and scoring formulas.

A major advantage of the new system is that it makes submitting an online application the primary method of applying.

2008 Louisiana Individual Income Tax Return forms reflect legislative changes

Louisiana taxpayers should be aware of several changes on the state’s 2008 Individual Income Tax Return forms; the changes comply with recent Acts of the Louisiana Legislature.

Important changes to the 2008 Louisiana Individual Income Tax Return include the Louisiana Earned Income Credit (La. R.S. 47:297.8), a refundable tax credit for Louisiana residents who are eligible for and have claimed a federal Earned Income Tax Credit (EITC). The Louisiana Earned Income Credit is equal to 3.5 percent of the federal EITC. Residents who are not required to file a state tax return can claim the state EIC by filing Form R-540EIC

These and other changes affecting Louisiana’s 2008 state tax returns are in effect for resident and nonresident filers. Please consult the information page specific to your filing status. The information is available for review online at the Individual Taxpayers page at www.revenue.louisiana.gov.

New Obama Administration brings renewed hope for repeal of WEP/GPO

The election of Barack Obama, as the 44th President of the United States, has brought a renewed hope to the thousands of members suffering under the Social Security Offset laws.

The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) reduce, or in some cases, eliminate the Social Security benefit of retired MA public employees.

A majority of public retirees from Illinois, Massachusetts, California, Colorado, Louisiana, Ohio, and Texas, are impacted by the WEP or GPO.

While most Washington observers do not expect Social Security reform to be an issue advanced by the new president or Congress in 2009, officials from the affected non-Social Security states continue coalition building and lobbying efforts.

Laws limit government pension COLAs for some systems

Louisiana laws guiding nine statewide pension systems for local government employees are hindering delivery of cost-of-living increases to retirees, retirement analysts said Wednesday.

The nine retirement systems are able to grant a cost of living adjustment, called a COLA, if investment returns exceed what is needed to fund benefits and are enough to pay for the adjustment.

But the systems also have to clear another funding hurdle, which has become more difficult because of poor stock market performance, actuaries Greg Curran and Charles Hall told a joint legislative committee on retirement.

The statewide systems cover tax assessors, clerks of court, district attorneys, firefighters, municipal employees, municipal police, parochial employees, registrars of voters and sheriffs.

Bill would freeze Virginia DB plan

There will be big changes ahead for future state employees in Virginia if a bill currently before the Virginia General Assembly becomes law.

The new defined contribution plan would also be open to current state employees who want to switch from the Virginia DB plan, according to a bill sponsored by Delegate Harry R. Purkey.

The new defined contribution plan would also be open to current state employees who want to switch from the Virginia DB plan, according to a bill sponsored by Delegate Harry R. Purkey

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GM to offer buyouts to all hourly employees

Troubled automaker GM continues to slash costs by offering employee buyouts.

GM spokesman Tony Sapienza said the buyouts will mainly target GM's 22,000 retirement-eligible hourly employees, though any union employee can take the offer.

A union official told The Associated Press then that GM would offer $20,000 in cash and a $25,000 car voucher for workers who retire early and those who simply leave the company.

Sapienza said employees will have until March 24 to decide whether to accept a buyout. Employees who accept the buyout will leave the company by April 1.

New tax breaks arrive in state

Louisiana taxpayers will find a few new breaks this year on state income tax returns due May 15, including a one-time break that lets residents recoup part of their homeowner’s insurance premium. Louisiana taxpayers can take a tax credit of 7 percent of the premium paid in 2008.

This year more of the excess itemized deductions on your federal income tax return can be taken off your income when filing your state income tax return. Taxpayers are allowed to take 65 percent of deductions for excess itemized deductions, or those that exceed the standard deduction of $4,500 for a single person or head of household and $9,000 for a married couple filing jointly.

The increase in the excess itemized deduction on state returns was phased in over three years, starting with a 57.5 percent allowance for 2007. The deduction will rise to 100 on returns filed for this year, reversing a change that began with the Stelly plan, which made sweeping changes to the tax law in Louisiana.

It's a bit early to say you won't have your return ready in time, but please be aware of a new requirement for obtaining a state filing extension. As of this year, taxpayers who need extra time to file their Louisiana individual income tax returns must request a specific state income tax filing extension or submit a copy of their federal
application on or before the state's May 15 due date.

For more on these and other state tax issues, visit the state Department of Revenue's Web site at www.rev.state.la.us.

Official: State pension plans effective

Private businesses could learn a few lessons about effective pension plans from state government, said the director of a national retirement institute.

Businesses gradually have been substituting employer-funded pensions for 401(k) plans, while those in public pensions, like many Louisiana state employees, enjoy the security of a professional investment team and guaranteed benefits, said Beth Almeida, executive director of the National Institute on Retirement Security.

Retirement experts talk about stable retirement as a stool with three legs — Social Security, pensions and 401(k)s, Almeida said.

In Louisiana, state employees do not receive Social Security. And if they earned Social Security at some point through a job in the private sector, that benefit will be reduced because of federal regulations.

Private pensions are similar to state systems in that employee benefits are based partly on time with the company and their earnings, and the benefit lasts a lifetime, Almeida said.

Defined contribution plans, such as 401(k) — where employees have a certain amount for their retirement years, not a defined benefit that lasts their lifetime — are meant to supplement pensions, Almeida said. “They don’t work well when they’re the only egg in your basket,” she said.

A survey commissioned by the institute, a nonprofit based in Washington, D.C., shows about 55 percent of workers without a pension said having one would ease their anxiety, and 65 percent of workers with a pension are confident in it.

The institute also researched how defined-benefit plans, such as state pensions, performed in the stock market compared with defined-contribution plans. Almeida said defined-benefit plans consistently did better by 1 percent to 2 percent per year.

That may not seem like a lot, Almeida said, but the name of the savings game is time and compounding. Over a lifetime, that small variance compounds to a 25 percent difference, she said.