Wednesday, May 27, 2015

Pension hike for state employees, teachers, school workers, State Police get Louisiana House endorsement; measure now moves on to Senate for debate

Marsha Shuler

The Louisiana House on Tuesday endorsed a cost-of-living increase in the pension checks of about 100,000 retired state employees, teachers, school workers and State Police troopers.

The House voted 80-20 for the measure, which now heads to the Senate for debate.

The bill would grant a 1.5 percent permanent benefit adjustment to retirees of the state’s four pension systems. The average increase would be under $30 a month.

Rep. Sam Jones said the pension plans have the money in special accounts set up for retiree cost-of-living adjustments, or COLAs. “It has a zero impact on the state general fund,” he said.

Jones said retirees are suffering now because of increased state health insurance program costs, with some premiums going up $58 a month and copays added. Retirees need the help now, instead of next year when they are scheduled to receive one.

“Reach way down and think about that 91-year-old retired teacher who doesn’t have $2,500 to contribute, no lobbyist, no association,” Jones said. “You and me are her lobbyist.”

Opposition came from House Retirement Committee chairman Kevin Pearson, R-Slidell, who said granting the COLA now would increase the state retirement systems long-term debt and lead to increased contributions from the state and local school districts toward pension costs.

“The systems are only about 60 percent funded. We have taken steps to get that on the right trajectory. House Bill 42 will undo that,” Pearson said.

Pearson said the COLA would alter the debt reduction plan approved last year and would send a bad signal to bond rating agencies. The law was aimed at strengthening the finances of the retirement plans.

Under that law, more of the retirement systems’ excess investment earnings will go toward reduction of long-term debts before dollars are put into the special accounts from which COLAs are granted. The changes limited both the frequency and amount of future retiree benefit hikes until systems hit certain unfunded accrued liability levels. Retired state employees, teachers, school employees and State Police got a cost-of-living increase last year, but under the new law were not to get one in the coming year.

The COLA accounts of the pension systems have the $350 million in them necessary to cover the pension check raise. The money would have to be replenished before another COLA could be granted.

“We’re only talking about $30 more a month. $30 is not a lot of money,” said Rep. James Armes, D-Leesville. He warned his House colleagues that the funds could be robbed if left sitting — like others have been as the state struggles with budget problems.

“These people need a break today,” said Rep. Kenny Cox, D-Mansfield.

But Rep. Barry Ivey, R-Central, said the state pension system’s unfunded liabilities keep rising because “we don’t stick to a plan for improvement.”

“We are never going to get anywhere,” Ivey said. “We are headed in the wrong direction.”

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