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.

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.

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.

Louisiana legislators want to increase monthly pension checks for state retirees

The Advocate

Mark Ballard

Even as lawmakers struggle with the possibility of deep cuts to state services, the road to a bump in the monthly pension checks for nearly 125,000 state retirees and their survivors — living mostly in the Baton Rouge and New Orleans areas — begins Monday when a Louisiana Senate panel is scheduled to take up a cost of living adjustment bill.

“They’ll get a COLA because there’s enough money, but the funding mechanism means different amounts,” said Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport.

In Peacock’s Senate Bill 2, pensioners over the age of 60, who have been retired for at least a year and are drawing checks from one of the four state systems, would receive, starting July 1, a 1.5 percent increase for state workers and teachers; 1.8 percent bump for public school employees; and 2 percent more for State Police. It calculates out to an average increase of about $30 per month for retirees, but the exact amounts are difficult to determine and depend on many variables.

If approved, it would be the first increase in two years.

The money initially won’t be coming from the state general fund, which pays the costs of government agencies, but 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.

There’s no reason to think the legislation will not win approval, as the money already is in the experience accounts and the current situation fits the recently enacted legal criteria for awarding a cost of living adjustment, Peacock said.

Franklin Democratic Rep. Sam Jones, who has his own COLA bill, agreed.

“I thought it was going to be a little bit of a fight but it appears that everyone is on board with it, and you’ve got a governor who’ll sign it,” Jones said.

The head of the House Retirement Committee, Slidell Republican Rep. Kevin Pearson, was out of the country last week and unavailable for an interview. However, he texted that he was “probably OK on a COLA,” but wanted to see additional revamps made.

The increased benefits will cost an estimated $380 million over time, according to fiscal estimates. Those costs will be picked up by the retirement systems, which receives its dollars from the contributions of employees and state agencies plus any gains made from the investment of those monies.

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.

“The most prominent thing going on with pensions in this session, last session, and the next session is the cost of living increases,” said Robert Scott, who heads the Baton Rouge-based government policy research group called the Public Affairs Research Council.

“There will be money (in the experience accounts) and the timing of it might be OK, in terms of every other year. But we don’t have enough inflation to justify it, probably,” Scott said.

Part of the $20 billion debt issue involving the retirement accounts is that COLAs were granted pell-mell over the years. Generally, the additional dollars were tacked onto the debt, which state government didn’t adequately fund. All of this contributed to the unfunded accrued liabilities, or UAL, which is the money needed to fulfill the commitments made to retirees and current members of the retirement systems.

The system was revamped in 2014 to ensure COLAs would continue, but at a pace that was sustainable for state government. It also allowed for some of the monies to go toward helping to pay down the UAL.

Act 399 set criteria that allowed cost of living adjustments every other year, provided enough money was in the experience account and the systems hit predetermined levels of funding.

“The other critical piece you also need is inflation. That’s the whole rationale for a COLA in the first place is that you have an inflationary environment and people need an adjustment to keep up with the extra cost of living,” Scott said.

The Act 399 revamp calculates COLAs, provided the criteria is met, at 2 percent times the retiree’s current benefit or the increase in the CPI-U for the prior calendar year times the benefit — whichever is less.

The Consumer Price Index for All Urban Consumers is the federal calculation for the prices paid for goods and services paid by consumers. Over the past 12 months, the CPI-U increased 1 percent before seasonal adjustment, according to the U.S. Bureau of Labor Statistics in a February report. 

Though the cost of food, clothing, shelter and medical care grew, the index was offset by dramatic reductions in the costs for fuel.

Peacock’s SB2 would grant the COLA in accordance to the funding percentages of the various systems “without regard to the consumer price index.”

Jones’ House Bill 33, which has not been scheduled for hearing, would postpone the application of the consumer price index until 2028.

“The TRSL Board is committed to working with legislators to find a balance between the responsible funding of the retirement system and protecting the purchasing power of retiree pension dollars,” said Maureen Westgard, the head of the Teachers’ Retirement System of Louisiana.

The average retired teacher receives about $2,149 per month, so the average COLA increase would be $29.50.

“The average benefit for our rank-and-file members is very modest; and our Board of Trustees supports SB2, which will provide a much-needed COLA. The funds to pay for this COLA are already set aside from excess system investment returns,” said Cindy Rougeou, the executive director of LASERS, the Louisiana State Employees’ Retirement System.

The average LASERS rank-and-file benefit is $24,660 annually. If a 1.5 percent COLA is approved, the average increase per month would be about $27.

But an average increase is a little misleading, said Irwin Felps Jr., who heads the Louisiana State Police Retirement System.

The State Police is set up for retirees over the age of 60 to receive a 2 percent increase and those over the age of 65 to receive 4 percent.

The increase LSPRS retirees see depends a lot on their age, the work they did, how long they’ve been retired and at what benefit. It could range anywhere from about $30, maybe less, to about $100, maybe a little more, Phelps said.

“What we’re talking about is another half-trip to the grocery store,” Rep. Jones said, adding that he understands the need to keep the system sustainable so that it avoids a catastrophic fiscal collapse that could endanger future benefits.

“But this problem was caused by state government, yet 95 percent of the reforms are being paid by the retirees,” Jones said.

Original article here.

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.

Pension hike for state employees, teachers, school workers, State Police get Louisiana House endorsement; measure now moves on to Senate for debate

Marsha Shuler

The Advocate

The Louisiana House on Tuesday endorsed a cost-of-living increase in the pension checks of about 100,000 retired state employees, teachers, school workers and State Police troopers.

The House voted 80-20 for the measure, which now heads to the Senate for debate.

The bill would grant a 1.5 percent permanent benefit adjustment to retirees of the state’s four pension systems. The average increase would be under $30 a month.

Rep. Sam Jones said the pension plans have the money in special accounts set up for retiree cost-of-living adjustments, or COLAs. “It has a zero impact on the state general fund,” he said.

Jones said retirees are suffering now because of increased state health insurance program costs, with some premiums going up $58 a month and copays added. Retirees need the help now, instead of next year when they are scheduled to receive one.

“Reach way down and think about that 91-year-old retired teacher who doesn’t have $2,500 to contribute, no lobbyist, no association,” Jones said. “You and me are her lobbyist.”

Opposition came from House Retirement Committee chairman Kevin Pearson, R-Slidell, who said granting the COLA now would increase the state retirement systems long-term debt and lead to increased contributions from the state and local school districts toward pension costs.

“The systems are only about 60 percent funded. We have taken steps to get that on the right trajectory. House Bill 42 will undo that,” Pearson said.

Pearson said the COLA would alter the debt reduction plan approved last year and would send a bad signal to bond rating agencies. The law was aimed at strengthening the finances of the retirement plans.

Under that 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. The money would have to be replenished before another COLA could be granted.

“We’re only talking about $30 more a month. $30 is not a lot of money,” said Rep. James Armes, D-Leesville. He warned his House colleagues that the funds could be robbed if left sitting — like others have been as the state struggles with budget problems.

“These people need a break today,” said Rep. Kenny Cox, D-Mansfield.

But Rep. Barry Ivey, R-Central, said the state pension system’s unfunded liabilities keep rising because “we don’t stick to a plan for improvement.”

“We are never going to get anywhere,” Ivey said. “We are headed in the wrong direction.”

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.”

LASERS Finanical Reports Now Available

We are pleased to announce that the Comprehensive Annual Financial Report (CAFR) for LASERS fiscal year ending June 30, 2014, is now available on our website. 

LASERS investment return for the fiscal year was 18.8 percent, bringing the total asset value of the System to the highest in its history. 

The CAFR, along with the Summary Annual Report or Popular Annual Financial Report (PAFR) may be found here on our website. 

New Retirement Study Reveals Good News for Louisiana Economy

A 2014 study by the National Institute on Retirement Security (NIRS), Measuring the Economic Impact of DB Pension Expenditures, reveals that benefits paid by state and local pension plans had a total impact of $6.1 billion on Louisiana's economy.

$3.0 billion in direct economic impacts were supported by retirees' initial expenditures, followed by an additional $1.9 billion in indirect impact resulting when these businesses purchased additional goods and services.

For more information about Louisiana, view the NIRS study.

Retirees get creative to eat cheap at restaurants

Nanci Hellmich | USA TODAY

Retirees over the age of 65 bought an average of 193 meals at a restaurant last year up from 171 meals in 2009. 

Marie Langworthy, 68, and her husband, Bob, 75, of Columbia, Conn., love to dine out and usually do so at least twice a week, often for dinner or a late lunch.

Marie hates to cook and tries to avoid it at all costs. "My husband prefers anything to my cooking," she says. "The surest way to get your husband to take you out to eat is to be a lousy cook."

"We always spend more than we'd like to or anticipate, because Bob enjoys wine or hard liquor with his meal, and I always opt for dessert," says Marie, a retired school administrator and co-author of Shifting Gears to Your Life and Work After Retirement.

She says they could probably "save a bundle" if they ate more meals at home, but they have no plans to cut back on dining out anytime soon. "First of all, eating out has become a great American social pastime. Secondly, it allows each of us to pick and choose what we want without our needing to plan and prepare meals in advance."

Retirees over the age of 65 bought an average of 193 meals each at restaurants last year up from 171 in 2009, according to the latest data from the NPD Group, a market research firm that tracks eating trends. That's slightly less than adults over age 18 who bought an average of 203 meals at restaurants last year, down from 222 meals in 2009.

"In an industry that is suffering, retirees are a bright spot," says Harry Balzer, NPD chief industry analyst. The average restaurant check for a retiree is $8.05, vs. $7.33 for other adults.

Retirees frequent fast-food places 63% of the time; 37% of the time they go to places with waiters and waitresses, he says.
When it comes to spending money on dining out, retirees have to prioritize what matters to them and budget accordingly, says Gary Schatsky, a New York City financial planner and president of ObjectiveAdvice.com. For many people, dining out feels like a mini-vacation, and they really enjoy it, he says.

Some people think having alcohol at their meal is an important part of the experience, but if you don't buy alcohol, you can afford more dinners out, he says. Even not drinking sodas at several meals can save a lot of money over time, he says.

Mark Fried, president of TFG Wealth Management in Newtown, Pa., says when he reviews budgets with retirees, they often make dining out a line item. "How much money they have determines where they are going to eat out."

Some want to dine out occasionally, but others say they are "done with cooking forever and want to eat out every night."

Many retirees are price conscious, and they want the option to order half portions, says Reimund Pitz, chef and owner of Le Coq au Vin restaurant in Orlando. "These folks can't eat like they used to." So Pitz offers half portions at a reduced price.

There are creative ways to eat out frequently without busting the budget. Nelson Cooney 76, of Bethesda, Md., and his wife, Joan, 78, have dinner out two to three times a week, so he searches for discounts on LivingSocial and Groupon, and they sometimes go to happy hours at restaurants where the wine is less expensive and the bar food can serve as their dinner.

"I don't like to overspend when I don't have to. We only use them (discount coupons) to go to places we want to go to. We don't go places we don't care about. We're very selective," says Cooney, a retired trade association executive.

Carol Miller, 74, a retired schoolteacher in Terrell, N.C., likes to order takeout from a cafe in town and bring it home "to sit in my recliner and eat."

She spends about $12 or so on a takeout dinner, which lasts her two or three meals. It's very economical and tastes great, she says. "I could never replicate their food."

She also goes out to dinner regularly with several different groups of women, including some from her church, retired teachers and old friends. "For women my age, going out to eat is a sort of tribal thing that women do, and generally it's with people you love, so you can talk to them and complain to them.

"Sometimes I think, 'I just ate out yesterday,' but I go ahead and go again. I don't like to cook. It doesn't interest me."

Her husband did the cooking for their family, but he passed away three years ago. Eating out is a good "way for retired people to reconnect," Miller says. "You could very easily stay in your house and cook a grilled cheese or a TV dinner. You could become a hermit if you don't watch out."

Marie Langworthy says sometimes she and her husband go out for the early bird specials to save money, but they often pay the full freight. She loves eating outdoors in the summer at casual "shack-like" restaurants with high-quality food. "I also love to try different high-end restaurants, and would travel anywhere, any distance for a good meal and a new ambient experience."

Original article here.