Retirement Pay Hike Studied

By: Marsha ShulerCapitol News Bureau

More than 34,000 retired teachers and state employees have annual pension benefits below the federal poverty level, a state Senate panel learned Tuesday.

The information surfaced as the Senate Retirement Committee launched a study on cost-of-living adjustments, including how to pay for them and under what circumstances they should be granted.

Thirty-nine percent of the Teachers’ Retirement System of Louisiana’s 68,475 retirees receive less than the $15,130 a year federal poverty level for a family of two.

About 18 percent of the 41,142 retirees in the Louisiana State Employees’ Retirement System are in the same shape.

LASERS executive director Cindy Rougeou presented senators with a chart showing that LASERS retiree cost-of-living adjustments between 1999 and 2011 have sorely lagged behind Social Security benefit increases and inflation over the same period.

State employees cannot collect federal Social Security benefits.

“This is a nightmare,” said committee chairman state Sen. Elbert Guillory, D-Opelousas. “I’m going to see this (chart) in my sleep tonight.”

“We have to decide how Louisiana is going to fund COLAs. It can’t be an afterthought ... It has to be something that will kick in pretty automatically,” said Guillory. “And we have to decide how and when COLAs should be granted. Should they be granted to everyone, groups of special identities, characteristics, years of service, age?”

A 1 percent COLA in the Teachers’ system would cost $108 million. In the state employee system, the cost of 1 percent COLA would be $54 million to $55 million. Cost of a 3 percent adjustment for both systems would approach $500 million.

Both systems have multibillion-dollar unfunded accrued liabilities.

State Sen. Page Cortez, R-Lafayette, said the panel should consider retiree circumstances, including age at retirement and how many years of employment.

“Thirty years as a teacher — that really was their career. There was no other income in the course of their life,” Cortez said.

For others, state employment may have been a second career and “they may have other retirement, like military,” he said.

Cortez said the easiest way to provide a COLA would be what is called “a 13th check” in which some retirees could get a flat one-time sum that could help them pay some bills.

Maureen Westgaard, executive director for Teachers’ Retirement System of Louisiana said states have adopted a variety of approaches to granting COLAs, including building their cost into the employee contribution rate.

However, Westgaard said that is hard to do when employees have not had raises.

Retired Teachers’ Association executive director Graig Luscombe said his association is most concerned about retired teachers with many years in the classroom who are getting up in age and living below the poverty line.

Luscombe said there are 30 retired teachers who are age 100 or above and another 1,389 who are age 90 to 99. Legislation in 2009 provided for a benefit increase of up to $1,250 a month to help them and other veteran teachers out, he said.

Frank Jobert, executive director of the Retired State Employees’ Association of Louisiana, urged the panel to consider “all the variables ... retirement age, number of years of work” as well as the size of the retirement benefit because some with big checks may not need an increase as badly.

If state employees received a pay raise, Jobert said they may be willing to consider putting half of it toward an account to cover cost of living increases. “I’m very much a fan of the 13th check. If we could give them that $200 or $300, maybe we could do something to help them on an immediate basis — a nice one-time check,” he said.

Jobert said the panel should not segregate hazardous and non-hazardous duty employees when considering COLAs. “The cost of living is the same for everybody,” he said.