State retirees to see bump in pension checks with Governor Edwards' COLA approval

Mark Ballard

The Advocate

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.

Original article here.

Pension increase for retired state workers, teachers passes

Mark Ballard

The Advocate

Retired state workers can plan on seeing a little bit more in their monthly pension checks as the state Senate, as expected, approved minor changes in two of the three bills that allow for a cost of living adjustment.

Senate Bills 2, 5 and 18 were approved with little discussion Wednesday and now head to Gov. John Bel Edwards, who is expected to sign the measures.

Nearly 125,000 retirees, who are over the age of 60 and have been retired for a year, will receive a modest boost on the first $60,000 of benefits. Most of the state’s retirees live in Baton Rouge and New Orleans areas.

The percentages are based on 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 2 percent; and retired State Police troopers and staff would receive at least 2 percent.

The average monthly increase would be about $30, but the exact amounts could vary widely depending the circumstances of individual retirees.

It’s been two years since some of the state pensioners received a cost of living adjustment, called a COLA. That bump came with passage of a law aimed at tackling a $20 billion debt the four state retirement systems have incurred over the years of granting COLAs and of legislators not putting enough money into the systems to cover the promises made to state employees.

Act 399 set triggers for when cost of living allowances could be given. The check-offs include waiting every other year, ensuring enough money was in an account that collects excess earning on investments, and the systems hit a predetermined level of funding. Another criterion is whether there was inflation in the previous year. There wasn’t. But proponents argued that was because the price of energy fell so dramatically and threw calculation off. But the prices consumers paid for health care and groceries rose.

And the funds where excess earnings are parked — and from which COLAs will be paid — are full and cannot be used for other state government expenses. The COLAs granted in the legislation will cost $385 million.

The cost would not come from the state budget, which is $600 million in the red.

Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport, sponsored the three bills. Senate Bill 2 awards the COLAs. 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.

Original article here.

A plan to boost monthly pension checks for retired state employees, public school workers and teachers is headed to the governor's desk

THE ASSOCIATED PRESS

BATON ROUGE, Louisiana — A plan to boost monthly pension checks for retired state employees, public school workers and teachers is headed to the governor's desk.

The cost-of-living increase is part of a package of bills by Shreveport Sen. Barrow Peacock, chairman of the Senate Retirement Committee.

The pension hike is tied to adjustments in how the retirement systems pay for raises and administrative costs, aimed at lessening long-term debts.

All three bills won final legislative passage this week.

Nearly 125,000 retirees over the age of 60 will see increases, ranging from 1.5 percent for retired state workers and teachers to as much as 4 percent for retired state troopers. The average monthly increase will be about $30.

The increases are estimated to cost $383 million.

Senate Bills 2, 5 and 18: http://www.legis.la.gov

Benefits bump for Louisiana state retirees gets closer to Gov. John Bel Edwards' desk

Mark Ballard

The Advocate

Retired state workers are a step away from receiving cost-of-living increases after the Louisiana House approved Monday a benefits bump bill and two other linked measures that tweak the state retirement systems.

Two of the bills have minor amendments whose wording needs to be approved by the state Senate, but that consent is expected. The measures then would go to Gov. John Bel Edwards, who is expected to sign them into law.

The cost-of-living adjustments, called COLAs, would increase the monthly benefits checks of 124,741 pensioners over the age of 60, who have been retired for at least a year. Most live in the Baton Rouge and New Orleans areas.

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 2 percent; and retired State Police troopers and staff would receive at least 2 percent.

The average monthly increase would be about $30 but could vary based on the circumstances of individual retirees.

State Sen. Barrow Peacock, R-Shreveport, chairman of the Senate Retirement committee, had linked the benefits increase to passage of two other measures that alter the way the state retirement systems operate.

In quick succession, the House approved Senate Bill 2, which awards retirees COLAs; 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 Senate Bill 18, which would reduce the amortization period — paying off debt on a fixed schedule — from 30 years to 20 years.

In the dozen votes held in committees and before the full House and full Senate, only one lawmaker cast a no vote. That was Rep. Barry Ivey, R-Central, in committee and he said he did so to make a point about the size of the state systems’ debt, which is about $20 billion. The money for the COLAs comes from an account where excess investment earnings were deposited and the $385 million ultimate cost would not come from the state budget, which is $600 million in the red.

House Retirement Committee Chairman Kevin Pearson, R-Slidell, said the three measures were the product of much negotiation and would provide needed improvements in the retirement systems as well as a needed boost for retirees who have seen their spending abilities decrease with rising costs of health care and groceries.

Democratic Rep. Sam Jones, of Franklin, sponsored another COLA measure — House Bill 32 — but it was not linked to any other legislation. His straight-up increase-the-benefit bill passed the House without a single objection and also is awaiting action in the Senate.

As representative last year, Edwards had voted on the COLA that was vetoed by then-Gov. Bobby Jindal. As governor, Edwards asked Jones, his House floor leader, to sponsor legislation that would increase monthly benefits payments to retirees.

Original article here.

House Bills Voluntarily Deferred

The House Retirement Committee met yesterday to consider five bills sponsored by Rep. Barry Ivey which would have an impact on LASERS if passed.

The following bills were opposed by the LASERS Board:

• HB 52 in its original form would have added four new members to the Public Retirement Systems' Actuarial Committee (PRSAC). Before discussing the bill, the author amended it to only add two members. After lengthy discussion about the role of PRSAC, the motion to report the bill favorably failed by a vote of 3 to 6. The author then voluntarily deferred the measure.

• HB 1092 would have required state retirement systems to use a uniform inflation assumption adopted by PRSAC in their annual actuarial valuations. Three actuaries representing the various state and statewide retirement systems explained the complicated process of setting the many assumptions used by the systems. The author voluntarily deferred the bill.

• HB 48 would have added five citizen members to the LASERS Board of Trustees. The author voluntarily deferred this bill without discussion.

• HB 917 would have removed the authority of the Board of Trustees to invest system assets, establish asset allocations, and set actuarial assumed rates of return. It would have created a Consolidated State Investment Committee. This bill was also voluntarily deferred without discussion.

HB 62 would have set a minimum employer contribution rate and created a funding deposit account for each state retirement system. The LASERS Board was neutral on this bill. The author indicated his intention to present this bill at a future meeting.

House Retirement Committee to Meet

The House Retirement Committee is scheduled to meet Thursday, May 5, 2016 at 9:00 a.m. There are currently five bills on the agenda, sponsored by Rep. Ivey, which would impact LASERS if passed.

• HB 48, would add five members to the LASERS Board of Trustees.  The members and their immediate families shall not be active or retired members of the System.  Two members shall be appointed by Speaker of the House, two by the President of the Senate and one by the Legislative Auditor. The only qualification for the new members is that they shall have filed state income tax returns for the previous five consecutive years.
  
  The LASERS Board opposes this bill since it would interfere with the composition of the Board without corresponding benefit. In addition to active and retired LASERS members, there are currently four ex-officio members of the Board; the Chairs of the Senate and House Retirement Committees, the State Treasurer, and the Commissioner of Administration. Additionally, all members of the Board are tasked with fiduciary duty that requires them to act solely in the best interest of the members.

• HB 52 would add four members to the Public Retirement Systems Actuarial Committee (PRSAC) - the Chairman of the House Committee on Retirement, or his designee; and an additional member appointed by that Chairman; and the Chairman of the Senate Committee on Retirement, or his designee; and an additional member appointed by that Chairman.
  
  The LASERS Board opposes this bill because it would change the nature of PRSAC from an actuarial committee to a policy committee.

• HB 62 would set a minimum employer contribution rate of 20 percent if the System is less than 100 percent funded or if the System reaches 100 percent funded status and the funded ratio later drops below 90 percent, and creates a funding deposit account. The LASERS Board is neutral on this bill.

• HB 917 would remove the authority of the Board of Trustees to invest system assets, establish asset allocations, and set actuarial assumed rates of return. It would create the Consolidated State Investment Committee to make investment decisions for all state retirement systems. The LASERS Board is opposed to this bill due to constitutional reasons.

• HB 1092 would require state retirement systems to use a uniform inflation assumption adopted by PRSAC in their annual actuarial valuations. The LASERS Board is opposed to this bill due to constitutional reasons.

Please note that meeting schedules and agendas 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.

House committee approves Senate COLA bills

Jim Beam

American Press

Three Senate bills tied together with a cost-of-living increase for members of four state retirement systems were approved Thursday by the House Retirement Committee.

Sen. Barrow Peacock, R-Bossier City, is sponsor of Senate Bills 2, 5 and 18. All three were approved unanimously by the full Senate and move to the full House.

Rep. Sam Jones, D-Franklin, has House Bill 32, which is similar to Peacock’s. However, his isn’t linked to the other two measures.

The House approved Jones’ bill unanimously, and it is awaiting action in the Senate Retirement Committee.

The four systems in both bills are the Louisiana State Employees’ Retirement System, or LASERS; the Teachers’ Retirement System of Louisiana; the Louisiana School Employees’ Retirement System; and the State Police Retirement System.

The increase would only be paid on the first $60,000 of a retiree or beneficiary’s benefit. The maximum amount would be 1.5 percent of the benefit for LASERS and the TRSL and 2 percent for LSERS and the SPRS.

The two COLA bills override current law for one year and provide a larger increase than what recipients would have otherwise received on July 1. Under current law, retirees on July 1 would have received only a 0.124 percent COLA.

The increase is linked to passage of S.B. 5, which would require the retirement systems to timely pay administrative costs rather than rolling them over. S.B. 18 would reduce the time for paying off retirement debt from 30 to 20 years.

Each state system board of directors would grant the COLA provided for under S.B. 2 on July 1 of this year. Funds would come from the systems’ experience accounts.

If the balances in the experience accounts on June 30 are less than the cost of the COLAs, the percentage increase would be reduced accordingly. LSERS is the only one affected. It has $23 million in its experience account, and its increase will cost $25.1 million.

Eligible under current law for the COLA are any regular retiree who has received a benefit for at least one year and who has attained at least age 60; any beneficiary of a regular retiree, beneficiary or both combined who has received a benefit for at least one year and if the deceased member would have attained age 60; and any disability retiree or any beneficiary who receives benefits based on the death of a disability retiree if benefits have been received by the retiree, beneficiary or both combined for at least a year.

LASERS has 33,575 regular retirees, 5,834 survivors and beneficiaries, and 2,457 disabled retirees. Total cost of its COLA would be $123.1 million. The TRSL has 58,751 retirees, 6,771 survivors and beneficiaries, and 4,121 disabled retirees. Total coast of its increase would be $224.7 million.

LSERS has 10,146 retirees, 1,662 survivors and beneficiaries, and 331 disabled retirees. Total cost of its increase would be $25.1 million. The SPRS has 696 regular retirees, 335 survivors and beneficiaries, and 62 disabled retirees. The cost of its increase would be $6.8 million.

Original article here. 

Louisiana House OKs cost of living increase for state retirees, but there's still another hurdle

Mark Ballard
The Advocate

Not a single Louisiana representative and senator has voted against raising the monthly pension checks for most of the state’s retirees.

But the bill that passed the full House on Monday 92-0 is not the same as the version that passed the Senate 35-0 on April 13.

The differences between the House and Senate measures would have to be worked out — both chambers must agree on the exact language — before any cost of living adjustments could be approved and sent to the governor for his signature.

The cost of living adjustment, for about 125,000 retirees beginning on July 1, in Senate Bill 2 is conditioned on the passage of two other bills that tweak how the retirement system funds retirements and pays for administrative costs. House Bill 32 carries no conditions and would simply raise the benefits.

“The key point,” said Rep. Sam Jones, the Franklin Democrat who sponsored HB32, “is we have consensus to pass a COLA.”

HB32 and SB2 would give retired state workers and public school teachers over the age of 60 a 1.5 percent increase. Retirees in the systems that handle the pensions for State Police employees and public school workers over the age of 60 would receive an increase of about 2 percent.

The average monthly increase would be about $30 but could vary based on the circumstances of individual retirees and the retirement systems to which they belong. It would be the first cost of living adjustment in two years for many retirees. For others, it’ll be the first raise in benefits in at least eight years, Jones said.

The state is in a fiscal crisis and is still looking at a budget deficit of about $600 million for the fiscal year that begins July 1, without any real plan to bridge that gap short of draconian cuts to hospitals, higher education institutions and possibly not funding the college tuition-paying Taylor Opportunity Program for Students, or TOPS, for more than 30,000 students already qualified for the scholarships.

But the money would come from an account where excess investment earnings were deposited and the $385 million ultimate cost would not impact the state budget. The money in the funds cannot legally be used for other state expenses.

Part of the reason for the $20 billion debt issue involving retirement accounts is the COLAs granted over the years. Generally, the additional dollars were tacked onto the debt, which state government didn’t adequately fund.

Two years ago, Act 399 set criteria that allowed cost of living adjustments every other year, provided enough money was in the excess investment accounts and the systems hit predetermined levels of funding. Part of the criteria is inflation, which last year was below the amount needed to trigger the increased benefit.

Both Jones and Sen. Barrow Peacock, who sponsored SB2, acknowledge that the federal consumer price index last year wasn’t high enough. However, they argue, the cost of health care and food, on which seniors spend most of their money, rose last year, while the collapse of energy prices drove down the official inflation rate. If looking at the rise in consumer prices over the past two years, the inflation rate is plenty high enough, both Jones and Peacock said.

While Jones’ House bill puts no conditions on the adjustment, Peacock’s Senate Bill 2 would grant a COLA only if two other measures also are approved.

A Shreveport Republican who chairs the Senate retirement panel, Peacock said during an interview moments before the House vote that he still wants to link the cost of living adjustment to his two other bills. Senate Bill 18 would tinker with how the retirement systems are funded, and Senate Bill 5 would require administrative costs to be paid annually rather than rolled into the long-term debt.

“The important thing is to help the long-term soundness of the retirement system,” Peacock said.

Jones said he is OK with the two measures attached to Peacock’s cost of living adjustment bill. But the two of them haven’t yet met to decide how best to proceed.

All three Senate bills are scheduled for a hearing Thursday before the House Retirement Committee.

HB32 now goes to the Senate, where it’ll likely be assigned to Peacock’s committee for a hearing.

Original article here.

Bills to Change Plans for New Hires to be Heard in House Retirement Committee

The House Retirement Committee is scheduled to meet Thursday, April 21, 2016 at 9:00 a.m. The following bills, sponsored by Rep. Ivey, are on the agenda:

• HB 45 (Constitutional Amendment) would modify existing constitutional guarantees to provide that only benefits annuitized by a state retirement system will be guaranteed by the State and that the accrued benefits of members that are annuitized and calculated based on accrual rate and average compensation shall not be diminished or impaired. Current constitutional language provides that the "state shall guarantee benefits payable to a member of a state retirement system or retiree or to his lawful beneficiary upon his death." And, that "accrued benefits ... shall not be diminished or impaired."

• HB 46 (Constitutional Amendment) would apply for new hires on or after July 1, 2017, whose benefits are guaranteed by the Constitution. The bill specifies that member and employer shall share equally in the normal cost of the member's benefit and any Unfunded Accrued Liability (UAL) associated with an augmentation of the member's benefit.

• HB 50 would create a new retirement plan with tiered accrual rates for new hires on or after July 1, 2018. 
  
• HB 65 would create a new hybrid retirement plan for new hires on or after July 1, 2018.

The LASERS Board of Trustees opposes HBs 45, 46, 50, and 65 since our members do not contribute to Social Security and the Board recognizes the importance of retirement security. In addition to being deemed a qualified plan by the IRS, the existing defined benefit plan has an extremely modest normal cost of four percent of pay. The Board is also aware that over the past decade, the legislature has adopted significant pension reform that, for LASERS alone, is expected to reduce costs by $3 billion.

 

Also on the agenda is:

• HB 49 (Ivey) which would stipulate that rather than a set rate, contribution rates for new hires on or after July 1, 2017, shall be calculated each year to 50 percent of the normal cost, plus that year's amortization payment of any Unfunded Accrued Liability (UAL) associated with benefit augmentations, plus that year's amortization of overpayment or underpayment of employee contributions. The change is contingent upon passage of a constitutional amendment.

The LASERS Board of Trustees opposes HB 49 as it recognizes that members who obtain refunds would be repaid funds that should be applied to the Unfunded Accrued Liability (UAL). It could also result in a member paying the UAL of another member, for no corresponding benefit, thereby constituting a tax. The Board also noted that since members would be unsure of the amount of their contribution, they would be unsure of their amount of compensation.

Please note that meeting schedules and agendas 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.

Experts to Provide Testimony at House Retirement Committee Meeting

Keith Brainard

Keith Brainard, Research Director for the National Association of State Retirement Administrators (NASRA) is expected to testify at the House Retirement Committee meeting on Thursday, April 21. Mr. Brainard collects, prepares and distributes to NASRA members news, studies, and reports pertinent to public retirement system administration and policy. 

 

Mr. Brainard is co-author of The Governmental Plans Answer Book, Third Edition, and he created and maintains the Public Fund Survey, an online compendium of public pension data sponsored by NASRA. He created the State & Local Pension Exchange, predecessor to the Public Fund Survey and recipient of the Award for Excellence in Government Finance from the Government Finance Officers Association. He has discussed public pension issues before Congress, state legislative committees, public pension boards of trustees, and on multiple media outlets.

 

He is an appointed member of the Texas Pension Review Board and an elected member of the Georgetown, Texas, city council. Mr. Brainard previously served as manager of budget and planning for the Arizona State Retirement System and as a fiscal analyst for the Texas and Arizona legislatures. He holds a B.A. and an M.P.A. from the University of Texas at Austin.

Robert Klausner

Robert D. Klausner, principal in the law firm of Klausner, Kaufman, Jensen & Levinson, is also expected to testify at the House Retirement Committee meeting on Thursday, April 21.  For 39 years, he has been engaged in the practice of law, specializing in the representation of public employee pension funds.  The firm represents state and local retirement systems in more than 20 states.

 

Mr. Klausner has assisted in the drafting of many state and local laws on public employee retirement throughout the United States. He is a frequent speaker on pension education programs and has also published numerous articles on fiduciary obligations of public employee pension trustees.  He is co-author of the book State and Local Government Employment Liability, published by Thomson-Reuters West Publishers and is the author of the first comprehensive book on the law of public employee retirement systems, State and Local Government Retirement Law: A Guide for Lawyers, Trustees, and Plan Administrators, originally published in April 2009, and an expanded version which was published in November 2014. 

 

Mr. Klausner graduated Phi Beta Kappa from the University of Florida with a Bachelor of Arts and from the University Florida College of Law with the degree of Juris Doctor.  For more than 15 years, Mr. Klausner has been listed in the publication The Best Lawyers in America and holds an "AV pre-eminent" rating, the highest rating for competence and ethics, from Martindale Hubbell national lawyer rating service. In 2008, Mr. Klausner successfully represented the Commonwealth of Kentucky and the Kentucky Retirement Systems in the United States Supreme Court in Kentucky Retirement Systems v. Equal Employment Opportunity Commission, 128 S. Ct. 2361 (2008).

Retirement COLA bill passes House committee

Jim Beam

American Press

The House Retirement Committee approved a measure Thursday to provide for a cost-of-living adjustment for retirees and beneficiaries of four state retirement systems.

House Bill 32 moves to the full House. A similar measure passed the Senate and is awaiting a House committee hearing.

The four systems are the Louisiana State Employees’ Retirement System, the Teachers’ Retirement System of Louisiana, the Louisiana School Employees’ Retirement System and the State Police Retirement System.

The increase would only be paid on the first $60,000 of a retiree’s or beneficiary’s benefit. The maximum amount would be 1.5 percent of the retiree’s benefit for LASERS and the TRSL, 1.9 percent for LSERS and 2 percent for the SPRS.

H.B. 32 is by Rep. Sam Jones, D-Franklin. His measure would override current law for one year and provide a larger COLA than what recipients would have otherwise received July 1. Each state system board would grant the COLA provided for under H.B. 32 on July 1 of this year. Funds would come from the systems’ experience accounts.

If the balances in the accounts on June 30 are less than the cost of the COLAs, the percentage increase would be reduced accordingly.

Eligible under current law for the COLA are any regular retiree who has received a benefit for at least one year and who has attained at least age 60; any beneficiary of a regular retiree, beneficiary, or both combined have received a benefit for at least one year and if the deceased member would have attained age 60; and any disability retiree or any beneficiary who receives benefits based on the death of a disability retiree if benefits have been received by the retiree, beneficiary or both combined for at least one year.

LASERS has 33,575 regular retirees, 5,834 survivors and beneficiaries, and 2,457 disabled retirees. Total cost of their COLA would be $123.1 million. The TRSL has 58,751 retirees, 6,771 survivors and beneficiaries, and 4,121 disabled retirees. Total coast of their increase would be $224.7 million.

LSERS has 10,146 retirees, 1,662 survivors and beneficiaries, and 331 disabled retirees. Total cost of their increase would be $23.8 million. The SPRS has 696 regular retirees, 335 survivors and beneficiaries, and 62 disabled retirees. The cost of their increase would be $11.2 million.

Sen. Barrow Peacock, R-Bossier City, is sponsor of the similar retirement measure. His Senate Bill 2 was approved 35-0 by the full Senate and is awaiting a hearing in the House Retirement Committee.

Peacock’s measure has one major difference from Jones’ bill. Peacock’s is linked to passage of two other bills. S.B. 5 would require the retirement systems to timely pay administrative costs rather than rolling them over. S.B. 18 would reduce the time for paying off retirement debt from 30 to 20 years.

Original article here.

Louisiana House panel backs benefits hike for state retirees

Mark Ballard
The Advocate

Officials representing retired government employees voiced optimism that their charges may actually get a cost of living bump in monthly benefits checks — despite worries over the state’s precarious fiscal situation — after a Louisiana House committee Thursday approved legislation granting an increase for most state pensioners.

“It looks really good,” said Rodney R. Watson, executive director of the Louisiana Retired Teachers Association, articulating the sentiment being voiced by his colleagues in a State Capitol hallway moments after the House Retirement Committee favorably recommended House Bill 32 for consideration by the full House.

The measure is virtually identical to legislation the full Senate approved Wednesday night, meaning that the cost of living adjustment, or COLA, is near the end of its legislation journey. Gov. John Bel Edwards has indicated he would sign the legislation, which passed last year but was vetoed by then Gov. Bobby Jindal.

The only difference between the House and Senate versions of the increase is that the Senate bill attaches the success of the COLA with the passage of two other measures aimed at tweaking the system. But Maureen Westgard, executive director of the Teachers’ Retirement System of Louisiana, said the four retirement systems and the associations that represent retirees have said they support the two revamp bills attached to the Senate’s cost of living increase measure.

Nobody voted against Senate Bill 2 as it went through two committees and a vote by the full Senate. Only one legislator has voted against the idea of COLA, so far, — Central Republican Rep. Barry Ivey, a member of the House Retirement Committee — voted against the bump in monthly benefit checks for about 125,000 retired state workers, teachers, school employees, troopers and others, who are over the age of 60 and have been retired for at least a year.

The four systems covering the pensions of state workers and public teachers would receive a 1.5 percent increase. Retirees in the systems that handle the pensions for State Police employees and public school employees would receive a 2 percent bump.

The average monthly increase would be about $30, but could vary based on the circumstances of individual retirees and the retirement systems to which they belong.

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.

Original article here.

Senate committee OKs pay boost for state retirees

Jim Beam
American Press

The Senate Finance Committee approved a measure here Monday that provides for a cost-of-living adjustment (COLA) for retirees and beneficiaries of four state retirement systems. Senate Bill 2 moves to the full Senate.

The four systems are the Louisiana State Employees Retirement System (LASERS), the Teachers Retirement System of Louisiana (TSRL or Teachers), The Louisiana School Employees’ Retirement System (LSERS) and the State Police Retirement System (SPRS or Troopers).

The increase would only be paid on the first $60,000 of a retiree or beneficiary’s benefit. The maximum amount would be 1.5 percent of the retiree’s benefit for LASERS and Teachers and 2 percent for LSERS and Troopers.

S.B. 2 is by Sen. Barrow Peacock, R-Bossier City, chairman of the Senate Retirement Committee. His measure overrides current law for one year and provides a larger COLA than what recipients would have otherwise received on July 1. Under current law retirees on July 1 would have received only a 0.124 percent COLA.

Peacock’s measure is linked to passage of two other bills. S.B. 5 would require the retirement systems to timely pay administrative costs rather than rolling them over. S.B. 18 would reduce the time for paying off retirement debt from 30 to 20 years.

Each state system board of directors would grant the COLA provided for under S.B. 2 on July 1 of this year. Funds would come from the systems’ experience accounts.

If the balances in the experience accounts on June 30 are less than the cost of the COLAs, the percentage increase would be reduced accordingly. LSERS is the only one affected. It has $23 million in its experience account and its increase will cost $25.1 million.

Eligible under current law for the COLA are any regular retirees who have received a benefit for at least one year and who have attained at least age 60; any beneficiary of a regular retiree who has received a benefit for at least one year and if the deceased member would have attained age 60; and any disability retiree or beneficiary who receives benefits based on the death of a disability retiree if benefits have been received for at least one year.

LASERS has 33,575 regular retirees, 5,834 survivors and beneficiaries and 2,457 disabled retirees. Total cost their COLA would be $123.1 million. Teachers’ has 58,751 retirees, 6,771 survivors and beneficiaries and 4,121 disabled retirees. Total coast of their increase would be $224.7 million.

LSERS has 10,146 retirees, 1,662 survivors and beneficiaries and 331 disabled retirees. Total cost of their increase would be $25.1 million. Troopers’ has 696 regular retirees, 335 survivors and beneficiaries and 62 disabled retirees. The cost of their increase would be $6.8 million.

Original article here.

State retiree cost of living adjustment goes to full Senate for a vote

Mark Ballard

The Advocate

A cost of living increase for state retirees cleared its second legislative hurdle Monday and can now be presented to the full Louisiana Senate for a vote.

The Senate Finance Committee vetted Senate Bill 2 and voted without objection to recommend the $349 million cost of living adjustment, or COLA, for nearly 125,000 retired teachers, agency employees, teachers, public school employees, troopers and State Police staffers.

The money, which would cover the additional dollars added to monthly retiree checks from here on, would come from a fund where excess investment income is parked, rather than from state revenues. Under the state Constitution, the money could not be used to chip away at the state’s revenue shortfall, which is now about $800 million.

If approved by the state Senate and by Louisiana House, then signed into law by the governor, it would be the first. Another cost of living adjustment would not be available until the fund, called the Experience Account, is refilled.

The four systems covering the pensions of state workers and public teachers would receive a 1.5 percent increase. Retirees in the systems that handle the pensions for State Police employees and public school employees, based on the latest calculation, would receive a 2 percent bump, according the latest fiscal impact note attached to SB2.

“This is a reasonable COLA. We’re following the guidelines,” said Shreveport Republican Sen. Barrow Peacock, who as chairman of the Senate Retirement committee is sponsoring the cost of living increase.

Peacock noted that the permanent increase in benefits had met almost all of the triggers in a process put together by the Louisiana Legislature two years ago to revamp the way COLAs are granted to state retirees. Act 399 requires the four retirement systems meet set funding percentages and have enough money in their Experience Accounts.

The exception from coming into full compliance with Act 399 is that inflation is not high enough. But, Peacock said, the inflation numbers, if considered over the two years since the last increase, would meet the standard necessary.

Also, looking at aspects going into the calculation of the official inflation rate shows that food and healthcare cost more, but the dramatic drop in energy prices has lowered the percentage, Peacock said.

The four systems are about $20 billion short of the money needed to pay its commitments to present retirees and the future ones who are currently working. The systems were revamped to ensure COLAs, but to also chip away at that UAL, or the unfunded accrued liability.

Cindy Rougeou, the executive director of the Louisiana State Employees’ Retirement System, said LASERS and Teachers’ Retirement System of Louisiana, alone, had paid down $1.3 billion through the Act 399 revamp.

Original article here.

Legislative Update for April 8, 2016

The House and Governmental Affairs Committee met Wednesday, April 6 and reported HB 78 favorably. Two bills passed unanimously on the Senate Floor:   SB 14, sponsored by Sen. Morrish, would add employees of the Chenier Plain Coastal Restoration and Protection Authority to LASERS. The LASERS Board of Trustees is neutral on this bill.   SB 18, sponsored by Sen. Peacock, passed after three sets of technical amendments were adopted. This bill clarifies provisions created in Act 399 of 2014; reduces the amortization period for actuarial gains and losses from 30 years to 20 years once the System is 70 percent funded (rather than 85 percent funded); and provides for the re-amortization of schedules of gains and losses for the 2019-2020 fiscal year and every fifth fiscal year thereafter. The LASERS Board of Trustees supports this bill, as amended.   SBs 14 and 18 now move to the House Retirement Committee for consideration.

Upcoming Meetings  The Senate Revenue and Fiscal Affairs Committee is scheduled to meet Monday, April 11 at 1:30 p.m. There will be a discussion regarding the tax exemptions for retirement benefits paid by public retirement systems. The House Retirement Committee is scheduled to meet Thursday, April 14 at 9:00 a.m.  Four bills are on the agenda that would impact LASERS if passed:   HB 14, sponsored by Rep. Pearson, replaces the chairmen of the House and Senate committees on retirement with the speaker of the House of Representatives and the president of the Senate as trustees on each state and statewide retirement system board. The LASERS Board of Trustees has not yet taken a position on this bill.   HB 32, sponsored by Rep. Jones, 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 LASERS retirees and beneficiaries and provides for the order in which credits and debits shall be applied to the Experience Account (the Experience Account will not be refilled in years when a COLA is granted). The LASERS Board of Trustees has not yet taken a position on this bill. HB 33, sponsored by Rep. Jones, authorizes the LASERS Board of Trustees to grant Cost of Living Adjustments (COLAs) without legislative approval when the COLA conditions are met. COLAs shall be based on the first $60,000 of the retiree's annual benefit and the $60,000 limit shall increase based on any increase in the CPI-U beginning July 1, 2028. The LASERS Board has not yet taken a position on this bill.                                         HB 910, sponsored by Rep. Talbot, prohibits membership in LASERS for employees of a primary health center established under federal law whose first date of employment is on or after September 1, 2016 (Excelth is the impacted LASERS entity). The LASERS Board of Trustees is neutral on this bill.   The Senate Retirement Committee is not scheduled to meet next Monday, April 11. Please note that 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.

Pension hikes for Louisiana retirees clear first legislative hurdle

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.

Original article here.