Rougeou Named President Elect on NASRA Board

LASERS Executive Director
Cindy Rougeou

Cynthia Y. Rougeou, Executive Director of the Louisiana State Employees’ Retirement System (LASERS), has been named President Elect of the Executive Board by members of the National Association of State Retirement Administrators (NASRA).

NASRA is a non-profit association whose members are the directors of the nation’s state, territorial, and largest statewide public retirement systems. NASRA members oversee retirement systems that hold more than $2 trillion in assets and that provide pension and other benefits to more than two-thirds of all state and local government employees.

Rougeou assumes the new position after serving as first Vice President of the Executive Board. Previously, she was Second Vice President of the Executive Board and prior to that, NASRA’s Region 4 Vice President, which includes Louisiana, Arkansas, Texas, Oklahoma, Missouri, Colorado, New Mexico, and Kansas.

“I am honored to be a part of NASRA and their mission to support and assist other public pension systems around the country,” said Rougeou. “In these challenging times, it is vital to communicate with decision makers about the importance of a sound public retirement system. NASRA provides the resources to assist in achieving this critical goal.”

For more information, contact Tonja Normand at 225.922.1131 or tnormand@lasersonline.org.

LASERS Responds to JR Ball Editorial

It is unfortunate that JR Ball’s last editorial column for Business Report was so blatantly ill-informed about public pensions. His conclusion that there is a “crisis” about which “nothing is being done” ignores the facts.

“Change” has been the status quo for public pensions for state employees since 1987 when a constitutional amendment required the State to pay its unfunded liability to the retirement system by the year 2029. The legislature has stuck to a payment plan that now starts to pay principal on that debt. In fact, the debt owed by the State to LASERS should decrease by $500 million in 2017, $1.4 billion in 2022, and by $4.4 billion in 2032.

Criticizing the legislature for “making the problem worse” by increasing benefits to make “public-sector voters happy on Election Day” ignores the fact that the legislature has, since 2005, decreased benefits for new public employees. Further, a 2007 Constitutional amendment requires any new benefits to have a funding source.

He argues that the assumed rate of return for public pensions is too high. However, LASERS average actuarial return over the past 29 years exceeds 8 percent.

Retirement benefits he described as “lavish” are earned by State employees, who do not have Social Security. Those benefits average $22,236 per year and are funded by contributions made by those employees, investment earnings by the retirement system, and contributions by the State agencies employing them.

An informed discussion about public pensions is welcome. The editorial was not informed.

Cindy Rougeou,

LASERS Executive Director

Jindal hopes to fix flaws in pension plan

Retirement groups seek year's delay

By Marsha Shuler

Capitol news bureau

The Jindal administration hopes to fix flaws in the new ''cash balance'' pension plan, while two major retirement systems are trying to get a year's delay in its planned July 1 implementation.

Although Gov. Bobby Jindal opposes any delay, the Louisiana State Employees Retirement System and the Teachers Retirement System of Louisiana have served legal notice that they will ask the Legislature to approve a resolution suspending the law.

Jindal cannot veto such resolutions.

A state district court judge last month ruled that the 401(k)-type plan, known as ''cash balance,'' did not receive the required votes for passage. Administration lawyers have filed for a suspensive appeal in 19th Judicial District Court, while the issue goes to the Louisiana Supreme Court where it will be decided.

''Cash balance,'' which affects new hires, was the only major piece of Jindal's proposed pension system revamp to clear the Louisiana Legislature, during the 2012 session. Other legislation making current members of the LASERS and TRSL work longer for less benefits failed to win passage.

A legal notice has been filed indicating that legislation would be filed in the upcoming 2013 legislative session that addresses the ''cash balance'' plan's administration and operation, membership, contributions and eligibility.

The Governor's Office confirmed the legislation in the legal notice is part of a package for the session that opens April 8.

''We are continuing to meet with legislators, as we plan for the upcoming session, and no final decisions have been made on retirement system legislation to pursue,'' Jindal's Chief of Staff Paul Rainwater wrote in an email statement. He would not agree to answer questions about the issue.

''However, we want to be ready to address any issues that might be raised by the courts,'' Rainwater stated.

If the Louisiana Supreme Court agrees with the lower court's ruling, the administration must go back to the Legislature on its ''cash-balance'' plan, and get a two-thirds vote of approval required by the constitution because it adds to pension costs.

If the administration wins the appeal, the new law still would need some alteration, said Maureen Westgard, the TRSL executive director. Westgard said the pension system has identified at least 13 issues that need to be resolved in how the plan is administered.

Cindy Rougeou, the LASERS executive director, said her board favors a delay in implementation ''due to the significant federal issues that have yet to be resolved'' involving the plan's Internal Revenue Service and Social Security status.

Adverse decisions from the IRS could subject employees' vested contributions and retirement system trust earnings to taxes. In addition, some employees would have to be enrolled in Social Security if the state benefit is not equivalent to Social Security's - adding to state employee and taxpayer costs. The costs would be levied retroactively from the plan's start, said Maris LeBlanc, LASERS deputy director.

TRSL also supports the delay ''given how many complications there are with the court case and Social Security equivalency,'' Westgard said. ''There appears there may be some interest in suspending that (law) ... probably not from the administration.''

House Retirement Committee Chairman Kevin Pearson, R-Slidell, said he doesn't see ''a tremendously active session'' in the pension arena.

''Legislators said 'don't bring another retirement bill back,' '' said Pearson, who sponsored the cash balance plan. He said cash balance clean up legislation is on the table.

Senate Retirement Committee Chairman Elbert Guillory said he's working on legislation that will guarantee cost-of-living raises to retirees but at the same time require an additional contribution by active employees and change how the pension benefit is calculated.

Companion legislation will provide revenue streams that can be used to pay for the COLAs, said Guillory, D-Opelousas.

''I really expect the (employee) contribution to be temporary. I expect and hope we will be able to get enough money, we will not need to ask people to make that extra sacrifice,'' Guillory said.

He said he has four ideas to pitch to Jindal including earmarking 2 percent of all state settlements, and 2 percent of the interest on unclaimed property, proceeds for tickets for driving in the left lane on multi-lane highways and taxes on games at ''racinos,'' a race track with casino gambling games.

LASERS and TRSL also served legal notice they will ask the Legislature to change the calculation method that determines employer payments to ''entry age normal.'' The proposal got nowhere last year.

The pension change could have saved state government about $40 million last year.

In projecting actuarial cost, the normal cost is a lower percentage of salary in early years of service. The normal cost increases annually as each member approaches retirement eligibility.

LASERS Returns 14.3 Percent for Calendar Year 2012

The Louisiana State Employees' Retirement System (LASERS) generated an investment return of 14.3 percent for the period January 1, 2012 to December 31, 2012. The 2012 calendar year-to-date performance is based on LASERS total plan, with a current market value exceeding $9.5 billion.

In addition to being recognized as one of the top ten performing pension systems in the nation for the past decade, LASERS has been nominated for the Mid-Sized Public Plan of the Year by Institutional Investor. Institutional Investor is a leading international business to business publisher, focused primarily on international finance. For more than 30 years, they have recognized people and firms in the financial services industry for excellence.

LASERS current fiscal year-to-date return for the period July 1, 2012 to December 31, 2012 is eight percent, with a three-year average return of 10 percent. LASERS was recently recognized by Wilshire's Trust Universe Comparison Service (TUCS), as one of the top public pension systems in the United States with a market value greater than $1 billion. Statistics reveal that LASERS is in the top nine percent in both the 10-year and three-year investment return categories.

LASERS Executive Director Cindy Rougeou said, "Throughout the turmoil in the markets over the past decade, LASERS has maintained a ‘stay the course' strategy as a defined benefit plan constructed to withstand the ups and downs of the market. Our returns reflect the soundness of our investment approach, making modest adjustments over time when appropriate, and never over-reacting to any one year market return."

LASERS Receives Prestigious National Award

The Public Pension Coordinating Council (PPCC) has awarded the Louisiana State Employees’ Retirement System (LASERS) with the Public Pension Standards Award for 2012. The PPCC presents this award to public employee retirement systems in recognition of their achievement of high professional standards in the areas of plan design and administration, benefits, actuarial valuations, financial reporting, investments, and membership communications.

This is the ninth consecutive year that LASERS has received this prestigious award. LASERS Executive Director Cindy Rougeou said, “We are proud to receive this honor and the recognition is directly attributable to the talented and professional staff at LASERS.”

The PPCC is a confederation of the National Association of State Retirement Administrators, the National Conference on Public Employee Retirement Systems, and the National Council on Teacher Retirement. 

LASERS investment returns up 11.1%

By Marsha Shuler

The Advocate

Capitol News Bureau

The Louisiana State Employees Retirement System registered 11.1 percent in retirement investment returns for the first nine months of 2012, pension system officials announced.

“Any time we get good numbers, we like to boast about it,” said Maris LeBlanc, deputy director of Louisiana State Employees Retirement System, or LASERS. “It’s good news in that we are posting positive investment returns. We are recognized as doing as well or better than our peers in comparison.”

LeBlanc said Tuesday LASERS started the year with $8.634 billion in investments. The system had assets of $9 billion.

As of the June 30, 2012, actuarial valuation, LASERS has 52,352 active state employee members and 42,722 retiree members.

In spite of a major market downturn during the decade’s “Great Recession,” the pension system earned a 9 percent annualized return for the 10-year period that ended Sept. 30, said Cindy Rougeou, LASERS executive director.

LASERS is ranked as one of the top public pensions systems in the U.S. that have a market value of more than $1 billion by Wilshire Trust Universe Comparison Service, which has the largest database of any peer-comparison service in the industry.

The pension system also has been recognized by Cliffwater LLC as one of the top 10 state pension plans in the U.S. based on an analysis of 10-year annualized investment returns. Cliffwater is an independent investment advisory firm.

“We are doing well in the market at the moment,” LeBlanc said.

The investment returns are going well across the board, whether handled in-house or by system money managers, LeBlanc said.

About 30 percent of the LASERS portfolio is handed in-house.

“It allows us to save money on fees that normally would be paid to money managers. We have the capability of handling some of those investments,” LeBlanc said.

Editorial: Doubtful cash-strapped retirees will get any relief

American Press

September 7, 2012

As if the state of Louisiana doesn’t have enough budgetary issues, state lawmakers are taking up the cause of retired teachers and state employees whose pensions are woefully low.

Last week, the Senate Retirement Committee learned that more than 34,000 such retirees in the state of Louisiana have pension benefits below the federal poverty level.

Thirty-nine percent of the retirees in the Teachers’ Retirement System — or more than 26,700 — receive less than $15,130 annually in retirement pay. That puts them below the federal poverty level for a family of two.

Another 7,400 retirees in the Louisiana State Employees’ Retirement System — about 18 percent of the 41,142 retirees — also receive less than the federal poverty level for a family of two.

State Sen. Elbert Guillory, D-Opelousas, called the situation a ‘‘nightmare.’’ Other committee members were equally sympathetic.

LASERS Executive Director Cindy Rougeau told the panel that cost-of-living rasies for retirees in the system lagged behind Social Security increases and inflation between 1999 and 2011.

Guillory said state lawmakers must decide how to fund cost-of-living increases.

‘‘It can’t be an afterthought,’’ he said. ‘‘It has to be something that will kick in pretty automatically.

‘‘And we have to decide how and when COLAs should be granted. Should they be granted to everyone, groups of special identities, charateristics, years of service, age?’’

State Sen. Page Cortez, R-Lafayette, said there should be a way to determine a retiree’s circumstances. He pointed out that a number of retired teachers worked for 30 years and had no other career. He said other retirees had other retirements they are drawing, like military.

Retired Teachers Association Executive Director said said some retirees have been drawing benefits for more than 30 years. He said there are 30 retired teachers who are at least 100 years old and nearly 1,400 between the ages of 90 and 99.

Retired State Employees’ Association Executive Director Frank Jobert said that the focus should be on those retirees who are earning the least amount in benefits. He also said there should be no deliniation between hazardous duty and non-hazardous duty job retirees.

Here’s the rub: A 1 percent COLA increase for the retirees in the Teachers’ system would cost the state $108 million. A 1 percent increase their counterparts in the LASERS system would cost about $55 million. A 3 percent increase for both systems would cost $500 million.

The sad fact is the state has had trouble balancing its budget over the past two years, meaning the odds aren’t very good that these strapped retirees will get any relief.

•••

This editorial was written by a member of the American Press Editorial Board. Its content reflects the collaborative opinion of the Board, whose members include Bobby Dower, Ken Stickney,Jim Beam, Dennis Spears, Crystal Stevenson and Donna Price.

2012 Legislative Session Wrap-Up

Have you seen our new video? Executive Director Cindy Rougeou shares the outcome of the 2012 Legislative Session with viewers. 

Rougeou Testifies Before IRS

LASERS Executive Director and NASRA Second Vice President Cindy Rougeou testified last week before the Internal Revenue Service (IRS) and Treasury in Washington, DC. Rougeou represented the National Association of State Retirement Administrators (NASRA) at the hearing on proposed rules addressing the definition of a governmental plan. Rougeou testified about the importance of certainty and flexibility for states in the application of the definition.

State Retirement Officials brief House Retirement Committee Members

State retirement officials gave legislators a lesson on the word “irrevocable” at the last House Retirement Committee meeting for 2007.

“The fundamental soundness of the retirement system depends on ‘irrevocable’,” said Louisiana State Employees’ Retirement System Executive Director Cindy Rougeou.

Rougeou said retirement officials try to ensure that workers understand the finality of their retirement plan decisions. But many employees later regret their choice and want to change plans.

Article describes unfunded liability as "growing problem"

An article in the Baton Rouge Business Report examines the unfunded accrued liabilities (UALs) of Louisiana's four statewide retirement systems. The UAL is the difference between the benefits that the system owes to its retirees and their beneficiaries and the money available to pay them.

The two largest systems that cover three-quarters of all state employees—the Teachers’ State Retirement System of Louisiana (TRSL) and the Louisiana State Employees’ Retirement System (LASERS)—were established in 1936 and 1946, respectively, and from day one both were underfunded. That’s because existing employees were grandfathered in and guaranteed a pension upon retirement, even though they had never contributed a portion of their earnings.

It might have been good politics, but it wasn’t good business and it set a precedent that fit well with the state’s laissez faire practice of putting off till tomorrow what it can’t pay for today. The debt grew larger over the years, as legislators generously added benefits for one favored group of employees or another—without ever identifying a funding source. In the mid-1980s, legislators realized they had to do something and proposed a constitutional amendment that voters passed in 1987. It requires that the state’s retirement systems be fully funded—but not until 2028, which at the time was 40 years away.

[...]

Officials at the major retirement systems say they’re concerned about the problem and are always trying to find solutions. Without much legislative support, however, that’s easier said than done.

“We can try to make the Legislature and the administration aware of the problem and we do,” says Cynthia Rougeou, executive director of LASERS. “But legally we cannot lobby, so we can only do so much.”