The Louisiana Senate advanced legislation Wednesday to give a cost-of-living raise to more than 100,000 retired state employees, teachers, school employees and State Police.
Before approving the measure, senators linked the 1.5 percent increase in retiree pension checks to passage of separate House legislation that would limit the amount and frequency of future increases.
Bills granting cost-of-living adjustments — the first in six years for many — sailed through the Senate without a dissenting vote.
The fate of cost-of-living adjustments for all four groups had already been tied to each other. If one group’s COLA did not make it through the process, no group would get one.
When the bill hit the floor, senators without debate tied the COLAs to a proposed revamp of the policy governing the awards which are funded through “experience accounts.” State Rep. Joel Robideaux, R-Lafayette, proposed the change in recently filed House Bill 1225.
Retirement system investment earnings over an amount set in law go into the special accounts the Legislature set up for the purpose of COLA granting.
Robideaux’s bill would require more of the systems’ investment earning to go into reduction of their unfunded accrued liabilities — money required to fill commitments made to retirees and current members over time.
The systems have more than $19 billion in liabilities — most of it in the Teachers Retirement System of Louisiana and the Louisiana State Employees Retirement System.
“There have been some people who felt like we needed to be a little more responsible to make sure the UAL is paid down,” said state State Sen. Elbert Guillory, R-Opelousas, author of the COLA bills.
Guillory said Robideaux’s bill “does the proper balancing act and does the right thing. It puts some mild reforms into effect.”
Some argue that putting “excess” investment earnings into the COLA accounts creates additional liabilities on the system.
They argue there cannot be “excess” investment earnings as long as the systems are so underfunded.
State Sen. Page Cortez, R-Lafayette, who sponsored the change to each COLA bill, said the legislation would build in “certain benchmarks” that would have to be achieved.
For instance, the House bill would link the maximum COLA that could be awarded to the financial health of each of the systems.
If the system is less than 55 percent funded, no benefit increase would be granted. If it’s 55 percent but less than 65 percent funded, and the Legislature hasn’t granted an increase in the prior year, a 1.5 percent raise could be granted.
The systems would have to be 85 percent or greater funded to get a 3 percent benefit increase.
The COLA bills now move to the House for debate. Two-thirds votes are required for passage.
The Robideaux legislation has not yet been scheduled for a House committee hearing.