Thursday, May 26, 2011

House Committee Approves Second Proposal to Raise Employee Contributions -by- Robyn Ekings

The House Retirement Committee on Wednesday approved a bill by Slidell Representative Kevin Pearson, Chairman of the panel, which calls for a phased in increase of employee contributions for state employees over a two year period.

HB 530 was amended from its original language. The new proposal provides for a 1 percent increase in contributions for members of LASERS and some members of the Teachers’ Retirement System of Louisiana (TRSL). The plan calls for the increase to go into effect July 1, 2012, with another 1 percent hike beginning July 1, 2013.

It would also include a 5 year Final Average Compensation (FAC) calculation, up from the current 3 year average which applies to employees hired before 1986. Representative Pearson told the committee that the move would create $58 million in actuarial savings, and generate money that would be used to pay down the Unfunded Accrued Liability (UAL or debt) of the systems.

LASERS Executive Director Cindy Rougeou testified that she believes the measure faces several hurdles, including the fact that it “will not pass constitutional muster because it shifts employer obligations from the state to the employee.” Rougeou added that this plan “fits into the scope of a tax” requiring, in effect, a tax on state payroll. If there is agreement on the tax classification in the House and Senate, it would require a higher standard to pass the bill, a two thirds vote of both chambers.

The proposal was ultimately approved by the panel, and sent on to the full House where a bill for a larger increase in employee contributions for only LASERS members is pending. That plan, by River Ridge Representative Kirk Talbot, is part of the administration’s legislative package, and calls for a 3 percent increase in employee contributions for non-hazardous duty LASERS members. LASERS has taken the position that that measure is also unconstitutional for a variety of reasons. Representative Pearson said that if the Talbot plan (HB 479) is approved and sent to the governor, he will withdraw his bill. An amendment added to the bill would make it null and void if HB 479 is passed.

The administration took no position on the Pearson measure.

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