State agencies and local school boards won’t have to pay as much next fiscal year to cover pension costs for active employees after action Wednesday by a special panel.
All told, the Public Retirement Systems’ Actuarial Committee, called PRSAC, approved a $120 million reduction.
The committee must sign off on financial evaluations of the four statewide retirement systems, which among other things, sets the benchmark for investment earnings as well as required employer contribution rates.
Healthy investment earnings — and to some degree — reductions in work force contributed to the coming budget relief on employers.
State agency contributions to the Louisiana State Employees Retirement System, better known as LASERS, are projected to decline by $62.8 million in the fiscal year that starts July 1, 2015.
Meanwhile, school boards’ contributions to the Teachers Retirement System of Louisiana are anticipated to drop by $46 million and to the Louisiana School Employees Retirement System by $13 million.
The Louisiana State Police Retirement System remains flat.
“This is good news for the state as we begin the budgeting process for the next fiscal year,” Commissioner of Administration Kristy Nichols said in a statement issued by her office. “Saving money here helps free up funding for other areas.”
Louisiana School Boards Association executive director Scott Richard, who attended the meeting, praised the committee action. “The fact that school board contribution rates will go down for 2015-16 is welcome news - at a time when the costs to educate students in Louisiana continues to rise,” Richard said.
“The reduction in costs reverses the trend of recent increases that negatively affected local district budgets,” he added.
School systems have been hit by increases in health insurance costs for the teachers and other of their employees as well as Affordable Care Act changes that are expected to add to the expense.
“We look forward to continued collaboration with legislators and the retirement systems to ensure costs of pensions are reasonable and to avoid spikes in costs that take dollars out of the classroom,” Richard said.
The government employers are still on the hook for payments to defray the pension systems long-term debt known as the unfunded accrued liability, or UAL. The debt developed because past administrations did not contribute sufficient funds to cover benefits granted. A constitutional amendment requires the initial UAL to be paid off by 2020. The UAL has grown because of interest that piles up on that debt.