Pension bills still in negotiation

By Marsha Shuler
Capitol news bureau
May 21, 2012

Wednesday is “D-Day” on the fate of Jindal administration legislation that would raise the retirement age for some state employees, the Senate sponsor of the legislation said Friday.

Senate Retirement Committee Chairman Elbert Guillory said negotiations are continuing over the legislation, which is undergoing another revamp that would eliminate more employees from new age requirements.

“The big question is, do we need it given the fact that we have passed most of the rest of the (pension) reform package and we expect the savings to approach $100 million a year” when changes go into effect, Guillory said.

The savings would go toward paying the long-term liabilities of the pension systems whose employees are affected, which is a good thing, Guillory, D-Opelousas, said.

On Friday, the chief of the Louisiana State Employees Retirement System, called LASERS, disputed the Jindal-package savings.

“The ‘savings’ being generated by these proposals is so small as to be virtually inconsequential. In fact, they may result in a significant initial cost by triggering an early exodus of public servants and a flood of litigation,” LASERS Director Cindy Rougeou said.

Senate Bill 749 — the retirement age measure — is pending Senate floor debate.

Other legislation in Gov. Bobby Jindal’s pension revamp package has cleared at least one chamber including Senate bills by Guillory that would increase state employees’ contributions to their retirement and effectively reduce their benefits.

Another measure that would move future state employee hires into a new 401(k)-type system has cleared both chambers and is one step away from final legislative passage. The House has not yet concurred in Senate changes to the measure sponsored by House Retirement Committee Chairman Kevin Pearson, R-Slidell.

The bills affect members of LASERS, except hazardous-duty employees and judges, and higher education members of the Teachers’ Retirement System of Louisiana, or TRSL.

The pension systems and national experts in pension law contend the changes affecting current state employees are unconstitutional because they break employee contracts.

In addition, they argue that they are improperly being asked to contribute to paying off a pension debt that is the responsibility of state government.

The Jindal administration asserts that these contracts can be changed and that the liabilities must be brought under control because they threaten the state’s financial health and the sustainability of the system for future retirees.

SB749 has already changed dramatically from Jindal’s first proposal to raise state employee retirement age to 67. The Senate Retirement Committee and then its Finance Committee exempted more and more employees as it moved to a plan of different retirement ages based on years of employment. The current version, for instance, sets a four-tier range that run from age 55 at retirement for those with 15 years but fewer than 20 years of employment to an age 65 for those with fewer than five years.

Guillory said the new proposal would only set retirement ages for those with fewer than 10 years employment.

In its current form, the proposed law does not apply to anyone who is at least 55 years old on June 30, 2013 or anyone who has at least 20 years of employment on the same date. People with 30 years of employment can retire at any age.

Jindal’s deputy chief of staff Kristy Nichols said Friday the administration continues to work with legislators on moving the retirement age bill through the process. She said an effort is under way to get it in a posture that legislators and stakeholders can accept.

“We need to move it next week,” Nichols said.

“Obviously, we are extremely excited that we have moved the majority of the package already through the process,” she said.

Nichols said the Senate-passed legislation to phase in a 2 percent state employee contribution increase should be approved by the House Retirement Committee on Wednesday. The Louisiana House overwhelming refused Thursday to allow the last-minute addition of the measure to its Retirement Committee agenda for the day.