COLA Bill Vetoed by Governor

HB 42, sponsored by Representative Sam Jones, was vetoed by the Governor today. The bill would have authorized a cost-of-living adjustment (COLA) of up to 1.5 percent (based on the amount of funds available in the Experience Account) for eligible retirees and beneficiaries payable July 1, 2015. The legislation also contained a number of pension reform provisions. HB 42 was supported by the LASERS Board of Trustees.

COLA Approved by 2015 Legislature

HB 42 by Representative Sam Jones, and 75 co-authors, authorizes a cost-of-living adjustment (COLA) of up to 1.5 percent (based on the amount of funds available in the Experience Account) for eligible retirees and beneficiaries payable July 1, 2015. A calculation of the amount of funds available will be made by the LASERS Actuary. The LASERS Board of Trustees is required to direct its Actuary to account for this COLA in the System's 2015 valuation.

House Bill 42 is subject to veto by the Governor. He has until July 5 to take action on the bill. If the legislation is approved, LASERS will make a retroactive payment for the July COLA amount. Eligible retirees will be notified of the timing of the payment and the month when they can expect that their monthly benefit will reflect their adjusted benefit amount.

The COLA is payable only on the first $60,000 of the retirement benefit. In order to be eligible for the increase:

• Retirees must be age 60 or older and must have received a benefit for one year as of June 30, 2015;
• Disability retirees must have received a benefit for one year as of June 30, 2015; or
• Beneficiaries of retirees, who would have attained age 60, are eligible if benefits have been paid to the retiree or the beneficiary, or both combined, for at least one year as of June 30, 2015.

The legislation also contains a number of pension reform provisions, such as:

• The Experience Account will not be refilled in years when a COLA is granted. This will apply more investment earnings to debt and less toward funding of COLAs. The result will likely reduce frequency of future COLAs.
• Certain amortization periods are changed from 30 to 20 years, through incremental reductions. This change will have a larger impact on future actuarial losses than it will on gains, which means money will come into the System sooner.
• The re-amortization of certain schedules which will result in a more balanced recognition of gains and losses and will serve to lower the employer contribution rate.
• COLAs will be funded within 10 years; more closely aligning the funding of COLAs cost with the expected lifetime payments to the recipients.

COLA for retired state employees, teachers up OK’d

Some 130,000 retired state employees and teachers could get a bump in their pension checks in July after all.

The only stumbling block could be a veto by Gov. Bobby Jindal.

In a last minute move, the Legislature reversed course and agreed to the 1.5 percent cost-of-living adjustment this year instead of next.

The reason: state Rep. Jack Montoucet.

The Crowley Democrat refused to bring up legislation he sponsored that would generate $100 million to help fill the state budget hole, holding out for reconsideration of the COLA vote.

“Jack said ‘I’m not leaving you without a COLA for those retirees,” state Rep. Sam Jones, sponsor of House Bill 42 which would provide an average $30 increase in retiree pension checks.

With budget pressure, House and Senate leaders agreed to let their members rescind an earlier vote on HB42 which would have delayed the COLA until 2016.

Montoucet proceeded with his revenue-raising measure.

Earlier in the afternoon, Jones had begrudgingly accepted the Senate rewrite of legislation in the face of Senate opposition and a potential Jindal veto. And the House agreed to go along.

The Senate version of the bill also added provisions aimed at shorting up the finances of the state’s four pension systems - state employees, teachers, school employees and State Police.

“It’s not the one I want. It is what it is,” the Franklin Democrat said, in regard to the COLA delay. He said other Senate changes are good for the pension systems.

“It’s the best we could do,” Jones said.

Money to cover the average $30 a month COLA is special accounts set up for the purpose in all four retirement systems.

Jones said the retirees are struggling with escalating costs of state health insurance.

COLA for retired state employees, teachers up in air

Capitol News Bureau
The Advocate

A dispute between the Louisiana House and Senate continued Thursday over a cost-of-living raise for some 130,000 retired state employees and teachers.

Earlier, the House voted to grant a 1.5 percent pension check boost effective July 1. But the Senate version of House Bill 42 would delay the average $30 a month bump until July 1, 2016.

Bill sponsor state Rep. Sam Jones asked the House to reject the Senate change and his colleagues complied on a 77-10 vote.

The action sends the cost-of-living adjustment issue to a House-Senate conference committee with only hours left in the 2015 legislative session.

If the raise is not granted this year, Jones argues that legal constraints in state law would prohibit one next year and potentially for the next three years.

The Franklin Democrat said the retirees are struggling with escalating costs of state health insurance.

The money to fund the COLAs is in special pension system accounts set aside for the purpose.


A COLA is not supposed to be granted until next year because of a 2014 state law aimed at improving pension system finances.

Gov. Bobby Jindal challenged on retiree cost-of-living increase

Marsha Shuler
The Advocate

Louisiana Rep. Sam Jones called on Gov. Bobby Jindal Tuesday to reconsider his threat to veto a cost-of-living raise this year for 130,000 retired state employees and teachers.

Jones said it is particularly important for retirees to get a 1.5 percent bump in their pension checks now because it could be the last chance for a while.

“If we don’t give one this year almost certainly we will not give one next year,” Jones said. “We are looking at the possibility of maybe three years.”

The money to provide the average $30 monthly increase is in special accounts set up for the cost-of-living-adjustments, or COLAs, at the four statewide retirement systems: State Employee, Teachers, School Employees and State Police. But a consumer price index benchmark must be met too, Jones said.

“We will meet it this year and probably not next year. Do we likely skip three years or try to do something more immediate to address the problems of 130,000 retirees?” Jones asked.

The Franklin Democrat told his House colleagues he wanted to talk to Jindal about the situation.

Earlier in the session, the Louisiana House approved 80-20 Jones’ House Bill 42 ,which would grant the COLA effective July 1. The House forced its Retirement Committee to release the bill for action.

Jones said retirees are facing escalating state health insurance costs and have had one 1.5 percent COLA in the last eight years.

The measure ran into problems in the Senate where its Finance Committee moved the COLA date to July 1, 2016. Absent the change, administration officials said the governor would veto the measure.

Jones postponed until Wednesday a House vote on whether to send the Senate version to a conference committee to try to restore the COLA this year.

Jones told the House the administration worried that granting the COLA now would hurt Louisiana’s bond rating as it broke faith with a law designed to improve pension system finances.

“I don’t necessarily agree with that,” Jones said.

The retirees got a COLA last year and were not supposed to receive one this year under a new law.

Under the 2014 law, more of the retirement systems’ excess investment earnings will go toward reduction of long-term debts before dollars are put into the special COLA accounts.

The changes limited both the frequency and amount of future retiree benefit hikes until systems hit certain unfunded accrued liability levels.


“I think it’s a shame we are taking that kind of position with our retirees,” said state Rep. Ed Price, D-Gonzales.

COLA Bill Update

HB 42, by Representative Sam Jones, was amended and passed in the Senate Finance Committee and on the Senate Floor. In its current form, the bill would authorize a COLA of up to 1.5 percent for eligible LASERS retirees and beneficiaries, starting July 1, 2016.

The date change for the COLA took into account testimony from the Governor's Office that paying two COLAs in a row would cause concerns for the State's bond rating agencies. Eligible LASERS retirees and beneficiaries received a 1.5 percent COLA in 2014.

The 2016 timing would be consistent with the reforms enacted last legislative session which only authorize a COLA every other year until the System is at least 85 percent funded. The amendments also make changes that positively impact the long-term funded status of the System.

HB 42 will next go back to the House of Representatives for concurrence in the Senate amendments.

Meeting schedules are subject to change. Check the LASERS website daily for updates and for detailed information about proposed retirement legislation that may impact LASERS if passed.

View Senate and House Retirement Committee meetings here.

Pension fixes added to COLA increase bill

Marsha Shuler
The Advocate

Some friendly hitchhikers added to an effort to boost the monthly pension checks of retired state employees and teachers should help ensure the bill’s passage, the legislation’s sponsor said Monday.

The Senate Retirement Committee amended House Bill 42, then agreed to the proposed 1.5 percent cost-of-living adjustment, or COLA, for about 135,000 retirees.

The measure now heads to the Senate floor for debate. If approved there, it would return to the House for concurrence in Senate changes.

“I feel really good about it,” said Rep. Sam Jones, D-Franklin, who is sponsoring HB42. “It’s an easier task to carry this back.”

Jones argued that retirees needed a pension increase this year because health care costs had more than eaten up last year’s average monthly benefits increase of less than $30 a month. The pension adjustment proposed by Jones would add another $30 per month to the average retiree’s check.

The Senate panel added some provisions aimed at shoring up the finances of the four statewide retirement systems to which the retirees belong. The two largest — teachers and state employees — have a combined $19 billion in long-term liabilities.

“It’s an incredible balancing act,” committee chairman Sen. Elbert Guillory said. “It’s a balancing of the idea and inclination of legislators who want to grant a COLA and other concerns about the long-term impact on the system.

“I guess you can call this a Christmas bill. There’s a little something for everybody in it,” the Opelousas Republican said.

The House approved the COLA measure on an 80-20 vote last week with opponents citing concerns over the pension systems finances. The same opposition initially bottled it up in committee, refusing to advance the bill.

The COLA covers retirees of the four statewide pension systems — state employees, teachers, school employees and State Police.

The new provisions would put more money into the retirement systems to more quickly to pay down what are called unfunded accrued liabilities, or UAL — the dollars needed to fulfill all the pension obligations to retired and current members. Instead of debts being paid off over 30 years, the period would gradually be reduced to 20 years by the year 2020.

“This will make our system a whole lot more actuarially sound,” Sen. Barrow Peacock, R-Shreveport, said.

Another change would help control the cost of employer contributions, which both state government and local school boards have been struggling to pay.

“This shores up some funding and will cause accelerated funding of the retirement system reducing the interest payments,” Legislative Actuary Paul Richmond told the panel.

The retirees got a COLA last year and were not supposed to receive one this year under a new law. Under the 2014 law, more of the retirement systems’ excess investment earnings will go toward reduction of long-term debts before dollars are put into the special COLA accounts.

The changes limited both the frequency and amount of future retiree benefit hikes until systems hit certain unfunded accrued liability levels.

The Senate committee adopted amendments allowing the 1.5 percent COLA for all groups as well as the potential for up to 2 percent for school employees and State Police if funds were available. School employees and State Police have hit the benchmark for a potential 2 percent COLA.

But the panel said there would be no adjustment in the following year because no money would be deposited in the special accounts from which COLAs are paid.

Retirement system officials had earlier testified that the $350 million to cover the long-term expense of a 1.5 percent permanent benefit adjustment was available.

The COLA would average $26 a month for state employee retirees and $28.72 for teacher retirees.

“You have provided a belt and suspenders ... granting a COLA but also improving the financial soundness of the system,” said Cindy Rougeou, executive director of the Louisiana State Employees Retirement System, better known as LASERS.

“We don’t see anything that would have great concerns for us,” Teachers Retirement System of Louisiana Executive Director Maureen Westgard said of the changes.


Retired State Employees Association lobbyist Frank Jobert called the changes “a fair trade-off to accelerate the COLA this year and forgo next.”

Legislative Update as of May 29, 2015

The COLA bill, HB 42, sponsored by Representative Sam Jones, was passed on the House Floor with a vote of 80 to 20. The bill is scheduled to be heard by the Senate Retirement Committee on Monday, June 1 at noon. If passed, HB 42 would authorize a Cost-of-Living Adjustment (COLA) of up to 1.5 percent for eligible LASERS retirees and beneficiaries. The LASERS Board of Trustees supports this legislation.

HB 46, sponsored by Representative Reynolds, has now passed on the Senate and House Floors. This bill provides for survivor benefits for children of wildlife agents in the enforcement division of the Department of Wildlife and Fisheries. The LASERS Board is neutral on this legislation.

HB 800, sponsored by Representative Fannin, passed on the House Floor with a vote of 75 to 22. This bill appropriates surplus funds to LASERS to be applied to the Initial Unfunded Accrued Liability (IUAL) of the system, as required by the State Constitution. HB 800 now moves to the Senate Finance Committee for consideration.

Meeting schedules are subject to change. Check the LASERS website daily for updates and for detailed information about proposed retirement legislation that may impact LASERS if passed.

View Senate and House Retirement Committee meetings here.

State employee, teacher retirees COLA heading to House vote

Marsha Shuler
The Advocate

The fate of a cost-of-living increase in some 100,000 retired state employees and teachers pension checks is now in the hands of the Louisiana House.

The House Retirement Committee on Thursday complied with a directive to release legislation it had bottled up on a 6-6 tie vote.

The full House voted 64-25 last week to order the committee to advance the bill which would grant a 1.5 percent cost-of-living adjustment, or COLA, to retirees in the four statewide pension systems: state employees, teachers, school employees and State Police. The average increase would be under $30 a month. Funds would come from special accounts set up in each system for the purpose of COLA granting.

The committee sent House Bill 42 sponsored by state Rep. Sam Jones, D-Franklin, to the House floor with an unfavorable report.

The parliamentary maneuver means that Jones will have to seek House approval to keep it alive and move it on to the agenda for later debate.

Jones has 73 House cosponsors of the COLA bill.

Reminder: COLA Bill on Agenda for House Retirement Committee Meeting

The House Retirement Committee is scheduled to meet tomorrow, May 14, and two bills will be considered that would impact LASERS if passed: 

HB 42, sponsored by Representative Sam Jones, is known as the COLA bill. On May 6 the House of Representatives voted to have the Retirement Committee report the bill to the House for consideration. The committee previously deadlocked, with a 6-6 vote on a motion to report HB 42 to the full House. This bill is supported by the LASERS Board of Trustees and if passed, would authorize a Cost-of-Living Adjustment (COLA) of up to 1.5 percent for eligible LASERS retirees and beneficiaries. Because testimony was previously heard on the bill, additional testimony is not expected to be taken at this meeting. 

SB 16, sponsored by Senator Elbert Guillory, passed on the Senate Floor with a vote of 33-1. SB 16 clarifies provisions created in Act 399 of 2014 regarding excess investment earnings, employer contributions, and COLAs. It is supported by the LASERS Board of Trustees.

Retirement Bill Updates: 

HB 33, sponsored by Representative Berthelot, passed unanimously on the House Floor and was reported favorably by the Senate Environmental Quality Committee. This bill would increase littering fines and distribute 50 percent of the fines to the retirement system of the law enforcement agency issuing the citation. The LASERS Board supports HB 33, insofar as it reduces debt.

HB 46, sponsored by Representative Reynolds, passed unanimously on the House Floor. This bill provides for survivor benefits for children of wildlife agents in the enforcement division of the Department of Wildlife and Fisheries. The LASERS Board is neutral on this legislation.

Meeting schedules are subject to change. Check the LASERS website daily for updates and for detailed information about proposed retirement legislation that may impact LASERS if passed.

View Senate and House Retirement Committee meetings here.

State Employee, Teachers Retiree COLAs Alive

Marsha Shuler

The Advocate

The Louisiana House has kept alive the potential of a cost-of-living increase in the pension checks of more than 100,000 retired state employees and teachers.

The House voted 64-25 to direct its Retirement Committee to send legislation granting a 1.5 percent increase to the full House for debate. The 1.5 percent amounts to less than an average $30 a month for the retirees.

The measure, sponsored by state Rep. Sam Jones, has 73 House cosponsors. But House Bill 42 could not get the majority vote to get it out of the retirement committee. The panel deadlocked 6-6.

Jones asked the House to force the committee to report the bill by Thursday and his colleagues complied.

“Everyone here deserves to hear the full debate,” the Franklin Democrat said.

Jones encountered opposition from some Retirement Committee members who argued that the cost-of-living adjustment, or COLA, runs counter to a law passed in 2014 designed to strengthen the finances of the retirement plans.

Under the 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 over the years.

Jones said the financial condition of retirees - many already living on limited fixed incomes - has changed for the worse because of increased health insurance premiums and copays. “They can’t pay for medicine,” he said.

He noted double digit increases in retirees state Group Benefits insurance plans caused by administration “mismanagement.”

Retirement Committee chairman Kevin Pearson said the teachers retirement system and the state employees system are far short of having the dollars to cover their long-term liabilities. Teachers is 57 percent funded and state employees, 59 percent, the Slidell Republican said. He also said the systems’ investment earnings are down for the current fiscal year.

“We are on target, have a trajectory” to improve those numbers, Pearson said, as he urged the House reject Jones’ motion.

“We have to think about the full pension payment for our future retirees,” said state Rep. Greg Miller, R-Norco.

*Note: Only eligible retired state employees received a cost-of-living adjustment last year. 

Legislative Update for April 23

The Senate Retirement Committee met Monday, April 20, 2015. LASERS Executive Director Cindy Rougeou and Teachers' Retirement System of Louisiana Maureen Westgard provided an educational overview of the Systems and fielded questions from committee members. 

One bill was heard that could impact LASERS if passed. SB 16, which clarifies provisions created in Act 399 of 2014 regarding excess investment earnings, employer contributions, and Cost-of-Living Adjustments (COLAs), was reported favorably with technical amendments.  This bill is supported by the LASERS Board of Trustees.           

SB 14, which includes non-investment related administrative expenses in calculating the required employer contribution rate, was voluntarily deferred. The LASERS Board of Trustees is neutral on this bill.

 

The Senate Retirement Committee is not scheduled to meet the week of April 27.

The House Retirement Committee met Wednesday, April 22, 2015 and Cindy Rougeou provided an update on the System's actuarial valuation and investments.

HB 45, which provides that membership is optional for persons age sixty-two or older at the time of employment, consistent with the age sixty-two retirement eligibility for new hires after July 1, 2015, was favorably reported. The LASERS Board of Trustees is neutral on this bill. 

Please note that meeting schedules are subject to change. Check the LASERSwebsite daily for updates and for detailed information about proposed retirement legislation that may impact LASERS if passed.

LASERS Board Takes Positions on Prefiled Retirement Bills

The LASERS Board of Trustees met on March 26 and voted to take positions on eight prefiled retirement bills that would directly impact LASERS if passed.

 

Trustees voted to support HB 42 by Representative Sam Jones to authorize a Cost-of-Living Adjustment (COLA) of up to 1.5 percent for LASERS retirees and beneficiaries. This COLA would be funded through the LASERS Experience Account which currently has a balance of $117 million.

Trustees also supported SB 16 by Senator Elbert Guillory which would clarify provisions created in Act 399 of 2014 regarding excess investment earnings, employer contributions, and Cost-of-Living Adjustments (COLAs).

Several measures were supported by the Board insofar as they would reduce system debt:

• HB 33 by Representative Berthelot would increase litter fines and distribute 50 percent of the fines to the retirement system of the law enforcement agency issuing the litter citation.
   
• HB 55 by Representative Ritchie and SB 15 by Senator Nevers are identical measures that call for a Constitutional Amendment that would levy a tax on the use of hydrocarbon processing facilities and dedicate a portion of the tax proceeds to payment of the Initial Unfunded Accrued Liability (IUAL) of LASERS. 

Trustees voted to take a neutral position on the following bills:

• HB 45 by Representative Pearson provides that membership is optional for persons age sixty-two or older at the time of employment, consistent with the age sixty-two retirement eligibility for new hires after July 1, 2015.

• HB 46 by Representative Reynolds provides relative to benefits for minor children of certain wildlife agents in the enforcement division of the Department of Wildlife and Fisheries.

• SB 14 by Senator Guillory includes non-investment related administrative expenses in calculating the required employer contribution rate.

The positions taken are based on the initial language of the legislation. For more information, visit the LASERS website.

The 2015 Legislative Session convenes April 13 and ends June 11. Progress on these proposed retirement bills will be tracked and updated on the LASERS website frequently. Check back often for updates.

Battle over Louisiana pension funds shaping up

Marsha Shuler

The Advocate

More than $300 million is sitting in state employee and teachers pension system accounts reserved for future cost- of-living raises for retirees.

A state senator wants the 90,000-plus retirees to get an immediate boost in their pension checks. But some of the Louisiana Legislature’s budget committee members are eyeing the dollars to help close a $1.4 billion — and growing — gap between spending and revenues in the state budget.

Cindy Rougeou, Louisiana State Employees Retirement System executive director, said it would not be the first time dollars were “swept” from the retiree cost-of-living accounts. She said it happened in 2009 with dollars going to payments on the systems’ unfunded accrued liability. Commonly called the UAL, the term refers to the amount of money necessary to pay out all promised future benefits. The state contributes extra dollars to pay down the immense debt.

“They are already giving us $63 million fewer dollars in employer contributions this coming year because our investment earnings have been so good,” Rougeou said.

The Teachers Retirement System of Louisiana has $218 million available in the accounts used to pay cost-of-living bumps. The Louisiana State Employees Retirement System has $117 million, which is sufficient to cover a 1.5 percent raise.

The money cannot legally be taken out of pension systems for use in funding other areas of the budget. But the dollars can be used toward reducing the pension systems’ long-term debts, which stand at $19 billion: $12 billion for teachers’ retirements and $7 billion for state government retirees. The payments toward the UAL would reduce the required state contribution. That would free up state dollars for other purposes.

“We have a long way to go. Some people already have designs on the money,” said Retired State Employees Association legislative liaison Frank Jobert. The large stash of cash is already getting the attention of some members of the Legislature’s budget committee who are “wondering if they can get access to it.”

Jobert said retirees want the money reserved for its intended purpose — cost-of-living adjustments to retiree pension checks.

The retiree group will publish the required public notice that legislation will be filed aimed at granting a cost-of-living increase, Jobert said.

Retirees will push for a 1.5 percent cost-of-living increase in the fiscal year that begins July 1 with help from Senate Retirement Committee Chairman Elbert Guillory, R-Opelousas. Retirees got a 1.5 percent adjustment during the current fiscal year. Under a 2014 law, retirees would be eligible for cost-of-living adjustments only every other year, meaning there would not be one in the new fiscal year, which begins July 1.

Neither Guillory nor House Retirement Committee Chairman Kevin Pearson, who are both LASERS board members, attended LASERS’s meeting on Friday.

During an interview later in the day, Guillory said he will file legislation to grant a $50 a month extra payment to retirees or a 1.5 percent cost-of-living raise.

Guillory said the increase would offset the cost of (state) health insurance because those premiums have skyrocketed. “This year is crucial because of those high insurance costs,” Guillory said.

The Jindal administration’s revamp of the state’s Group Benefits insurance program will require members to pay nearly 11 percent more in premiums beginning July 1.

Guillory said he has heard talk of using the cost-of-living or COLA accounts to help balance the budget.

“It’s one of my great concerns. It should be used for the purpose it was set up,” Guillory said. “It’s there to help retirees, not funnel money into the general fund in any way.”

Contacted Friday afternoon, Pearson, R-Slidell, said he has “severe reservations” about the COLA proposal and raiding the fund.

“It’s going to take a lot of will from some to take that money and put it toward the UAL,” Pearson said. “I don’t know that it’s good to make it a regular practice.”