Friday, May 29, 2009

Senate clears proposal to reduce retirement system debt payments

A plan to help reduce state employee and teachers retirement systems debt payments cleared the Louisiana Senate on Thursday.

Approval came over the objection of some senators who worried that cost of living raises in the pension checks of retirees would be put in jeopardy.

State Sen. Butch Gautreaux, D-Morgan City, said his Senate Bill 296 would cost the state $436 million less as it pays off the $11 billion in unfunded liabilities of the Louisiana State Employees Retirement System and Louisiana Teacher’s Retirement Systems.

Senators questions surrounded the use of money in so-called “experience accounts” used to fund increases in retiree pension checks. Fifty percent of the retirement systems’ excess interest earnings go into the accounts. When retiree COLAs are granted, the money comes from the accounts.

Gautreaux said neither teachers nor state employee retirees would get cost-of-living adjustments, called COLAs, this year or next. “Even if we were able to grant a COLA it would small — somewhere around $25 a year” based on the rules governing their granting, he said.

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