Legislation that would put the state’s $11 billion retirement debt load on a new payment schedule passed a House committee Wednesday.
Senate Bill 296 would consolidate the two systems’ debts to date and level the debt payment schedule, which is now increasing. It is projected to reduce the state’s overall payment by $556 million.
Senate attorney Laura Gail Sullivan said the legislation would clear the balances of three funds, two of which were set up to pay retirement debts, which would result in $1 billion toward the pay-off.
More than $400 million of that would come from an account set aside primarily to fund pension benefit increases. SB296 would also redirect a certain amount of future money going into the account toward the debt.
Legislators and retiree association groups raised concern that retirees would be left without pension increases for years to come.
Sullivan said that based on state law, which says the increases cannot be more than the consumer price index, it is likely they would not have been granted for several years anyway. The index this year is less than 1 percent.
“We have to think of the greater good,” said Bill Baker, a member of the Teachers’ Retirement System of Louisiana board.