A lot of retired teachers, troopers, school workers and state government employees will start seeing slightly bigger monthly pension checks starting July 1.
Gov. John Bel Edwards on Thursday signed into law a cost-of-living adjustment for nearly 125,000 pensioners who are over the age of 60 and have been retired at least a year. Most live in the Baton Rouge and New Orleans areas. It’s the first increase in two years.
Senate Bill 2, now called Act 93, distributes the cost-of-living adjustments, called COLAs, based on calculations that rely on the funding levels of the individual retirement systems.
Members of the Louisiana State Employees’ Retirement System are in line for a 1.5 percent increase on the first $60,000 of their benefits. Teachers Retirement System of Louisiana members will receive a 1.5 percent hike.
Louisiana School Employees’ Retirement System members get a 2 percent raise as do those with the Louisiana State Police Retirement System. A number of State Police retirees over the age of 65 also are eligible for another 2 percent increase.
The average monthly increase would be about $30 but could vary widely based on the circumstances of individual retirees.
The average retired teacher receives about $2,149 per month in benefits, so the average COLA increase would be $29.50. The average retired state worker’s pension is $24,660 annually. At 1.5 percent, the average increase per month would be about $27.
Senate Bill 2 was sponsored by Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport.
Out of a half-dozen votes in committees and in both chambers, the legislation granting retirees a COLA received only one no vote. Central Rep. Barry Ivey, a Republican, opposed the measure in the House Retirement Committee as a gesture to remind his colleagues of the size of the debt being carried by the four retirement systems — $20 billion created partly because state government gave out COLAs in the past without setting aside enough money to pay for them.
The state constitution requires pensions be paid first, so if the systems go broke, taxpayers will be paying retirement benefits before buying books for public schools or repairing roads, he said.
Point made, Ivey voted for the COLA on the House floor.
COLAs ultimately will cost about $385 million. But that money doesn’t come from the state budget, which pays the costs of government agencies and currently has a $600 million deficit.
The money comes out of a fund called the “Experience Account” that collects excess investment dollars. That money can’t legally be used to pay anything but COLAs, though part of it goes to paying down the $20 billion debt of the retirement systems.
Retirement costs state government about $2 billion a year, but is not a line item in the $25 billion budget. Rather, each agency pays its portion out of its appropriation.
Another cost-of-living adjustment would not be available until the fund, called the Experience Account, is refilled.
Peacock linked the raise with two other bills that changed how the retirement systems operate.
Senate Bill 5 would require the retirement systems to timely pay administrative costs rather than roll those charges into the 30-year debt. Senate Bill 18 would reduce the amortization period — paying off debt on a fixed schedule — from 30 years to 20 years.
Edwards signed both of those measures on Thursday, too.