A state district judge has set a May 18th hearing date in the case seeking to clarify questions involving House Bill 89 (Act 217 of 2008) by Representative Jean M. Doerge of Minden. 19th Judicial District Judge William Morvant will hear motions for summary judgment.
Act 714 allows members to choose whether their Deferred Retirement Option Plan (DROP) account will be managed by LASERS or by the third party provider (Great-West) during the interest accruing time of the account.
The bill also allows those who entered DROP on/after January 1, 2004 to elect to keep their DROP account in the self-directed plan through the third party provider or to move the account back to LASERS and earn interest at the System’s realized rate of return.
The Act also includes language that directs the System to file a lawsuit for declaratory judgment as to whether DROP accounts are protected by the Louisiana Constitution and whether a LASERS member who is eligible to participate in DROP may waive the applicable provisions in the constitution.
The issue arose from an Attorney General’s opinion that states funds in DROP accounts are retirement benefits and therefore are protected by the constitution. The constitution provides that retirement benefits shall not be diminished or impaired. As such, LASERS could not charge DROP accounts with a negative interest rate.
LASERS filed its petition for a declaratory judgment in August, as instructed by the legislature. Act 714 is effective on July 1, 2009, or 60 days after a final judgment, whichever is later.