The Advocate
Mark Ballard
A cost-of-living increase for retired state workers cleared its
first hurdle Monday, but only after a Louisiana Senate committee tied the raise
in monthly pension checks to two other bills that would revamp aspects of the
state retirement systems.
Senate Retirement Committee
Chairman Barrow Peacock, R-Shreveport, said all three bills would have to pass
the Legislature and be signed by the governor in order for retirees to see 1.5
percent to 2 percent more in their monthly pension checks. But he didn’t see that
as a problem.
“Right now, everybody’s in
favor,” Peacock said in an interview after the hearing.
Peacock amended his Senate
Bill 2, which awards retirees cost-of-living adjustments, called
COLAs, to the passage of Senate
Bill 5, which would require the retirement systems to timely pay
administrative costs rather than roll those charges into the 30-year debt; and
of Senate
Bill 18, which would reduce the amortization period — paying off
debt on a fixed schedule — from 30 years to 20 years.
“It ensures that we get the
proper funding mechanisms in place,” Peacock said.
In awarding the COLAs, Peacock acknowledged that the
inflationary trigger had not been met under state law. The other criterion that
allows lawmakers to increase the monthly pension checks have, he said.
“It’s true, in the last 12
months there has been virtually no inflation,” Peacock said. But during the
previous 24 months, inflation was enough to allow the COLA, and the chairman
says he chooses to interpret the law that way.
The Consumer Price Index for
All Urban Consumers, or CPI-U, is the federal calculation for the prices paid
for goods and services paid by consumers. Though the cost of food, clothing,
shelter and medical care grew during the past 12 months, the index was offset
by dramatic reductions in the costs for fuel.
Frank L. Jobert Jr., the
legislative and governmental affairs director for the Retired State Employees Association of Louisiana,
argued that the CPI-U was misleading and shouldn’t be included in the law that
allows for cost-of-living increases for retirees. Health care costs, for
instance, have gone up considerably and this is a cost important to the
elderly.
“I’m not sure the CPI-U is a
true measure,” he said.
Steven Procopio, policy
director at the Public Affairs Research Council of Louisiana, said he
understood the needs for COLAs and the reason for granting them this year. But,
the law, which specified inflation for the previous 12 months, was put in place
two years to provide some order and fiscal responsibility in granting the
increases.
Circumventing the criteria
was not prudent, he said. “It basically undoes what the law does,” Procopio
testified.
If SB2 — and the other two
measures — are ultimately approved, nearly 125,000 pensioners over the age of
60, who have been retired for at least a year, would receive a bump in their
monthly checks. Based on calculation of how well funded each of the state
systems are, retired state workers and retired public school teachers would
receive a 1.5 percent increase; retired school workers would get 1.9 percent;
and retired State Police troopers and staff would receive at least 2 percent
more.
The average monthly increase
would be about $30, but could vary based on the circumstances of individual
retirees.
The money comes from an
account where excess investment earnings were deposited and the $380 million
ultimate cost would not come from the state budget, which is $750 million in
the red.
The Senate Retirement
Committee, without objection, reported SB2 and SB18 favorably to the full
Senate.
SB5 already has been approved
by the Senate and has been assigned to the House Retirement Committee for
consideration.
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