Effort to Reduce Pensions Fails

By Marsha Shuler
The Advocate

A Senate panel Monday killed legislation that would have reduced the pension benefits of many current state employees, teachers and others in some state or statewide system retirement systems.

The Senate Retirement Committee voted 4-2 against passage of the legislation, which state Sen. Barrow Peacock, R-Shreveport, said he sponsored to improve the financial health of the pension plans.

“I’m doing this because I feel like we have to address our pension problems,” he said. “We have to make them sound.”

Opponents said the legislation had the same constitutional problem as pension revamp efforts Gov. Bobby Jindal failed to pass last year, changing current employees contracts with their employers.

“All this does is invite litigation,” said Robert Klausner, private attorney for the Louisiana State Employees Retirement System and the Teachers Retirement System of Louisiana. “What this bill is going to do is waste taxpayer money. ... What this bill says is we do not honor your service.”

The two major state retirement systems — the Louisiana State Employee Retirement System and the Teachers Retirement System of Louisiana — have unfunded accrued liabilities of $18 billion. Most of the debt relates to prior governors and legislators approving benefits without the dollars to pay for them.

Peacock’s Senate Bill 7 would have calculated pension benefits based on the final 60 months of employment instead of the final 36 months and would have limited excessive annual pay raises in those calculations. The changes would have effectively reduced the pension checks of the employees.

As voted on by committee, Peacock’s legislation impacted members of eight state or statewide retirement systems.

Peacock exempted the clerks of court, district attorneys, registrars of voters and municipal retirement systems, all of which have adopted the 60-month final average compensation for all their members. The committee agreed to add the sheriff’s pension plan to exempted plans, with Peacock saying it is in better fiscal shape than others.

The committee rejected an attempt to excise the State Police Retirement System and Department of Wildlife and Fisheries members of LASERS.

Pension systems have done many things to reduce future pension system costs, including adopting for new employees the 60-month final average compensation and implementing “anti-spiking” provisions limiting late career raises, retirement system executives said.

“We are doing the things we can do under the constitution,” said LASERS executive director Cindy Rougeou. “When you change in midstream ... it’s a disservice to them (employees),” said State Police Col. Mike Edmonson.

Voting FOR reducing pension: Sens. Peacock and Conrad Appel, R-Metairie.

Voting AGAINST SB7: Sens. A.G. Crowe, R-Slidell, Jonathan Perry, R-Abbeville, Gerald Long, R-Winnfield; and Page Cortez, R-Lafayette

Legislative Update on Bills Impacting LASERS, Week of April 15

On Monday, April 15, the Senate Retirement Committee held its first meeting of the 2013 legislative session. LASERS Deputy Director Maris LeBlanc made a presentation about the impact of the LSU hospital closures on members and the System. The PowerPoint presentation can be viewed on the LASERS website here.

Two bills impacting LASERS were on the agenda for consideration.

SB 4, which is supported by the LASERS Board of Trustees, was reported favorably with significant amendments. If passed, this bill would change the LASERS actuarial funding method from projected unit credit to entry age normal. Senator Guillory, Chair of the Senate Retirement Committee, committed to holding the bill on the Senate floor until LASERS has had the opportunity to analyze the amendments and respond to them.

SB 14 was favorably reported and will advance to the Senate floor. This bill, if passed, would allow members to upgrade accrual rates on transferred service. The LASERS Board is neutral on this bill.

  

The House Retirement Committee meets tomorrow upon adjournment. HB 35 was originally scheduled for consideration, but was removed from the agenda. No other bills impacting LASERS are scheduled for discussion.

Update to Legislative Committee Schedule for Week of April 15

Additional committee meetings have been scheduled for the week of April 15, which include discussion of bills with an impact on LASERS.

The Senate Retirement Committee is scheduled to meet Monday, April 15, at 2:00 p.m. Two bills impacting LASERS are on the agenda:

SB 4 changes the LASERS actuarial funding method from projected unit credit to entry age normal, and is supported by the LASERS Board of Trustees;

SB 14 allows a member to upgrade their accrual rate on transferred service to the accrual rate of the receiving system by paying the actuarial cost of the upgrade; also allows for reverse transfers in certain instances. The LASERS Board is neutral on this bill.

In addition to the bills being considered at this meeting, LASERS Deputy Director Maris LeBlanc will make a presentation about the proposed privatization of the public hospitals and the retirement impact on the employees and the System.

The House Ways and Means Committee is scheduled to meet Monday, April 15 at 9:00 a.m. and Tuesday, April 16 at 9:00 a.m. One bill on the agenda, HB 417, known as the tobacco tax bill, creates the Louisiana Healthier Families Fund and dedicates a portion of the Fund to the payment of the UAL of LASERS. The LASERS Board of Trustees has not yet taken a position on this bill.

The House Retirement Committee is scheduled to meet Thursday, April 18, upon adjournment. One bill on the agenda, HB 35, provides for a 25 years at any age retirement eligibility for certain state hospital employees subject to layoffs due to the privatization of hospitals operated as part of the LSU Health Sciences Center. The LASERS Board of Trustees opposes this bill because, as written, the retirement system would absorb the cost of this change.

Please note that meeting schedules are subject to change. Check the LASERS website daily for updates and for detailed information about proposed legislation which would impact LASERS. 

Senate Retirement Committee Meeting Scheduled

The Senate Retirement Committee will meet Monday, April 15, at 2:00 p.m. Two bills impacting LASERS are on the agenda:

SB 4 changes the LASERS actuarial funding method from projected unit credit to entry age normal, and is supported by the LASERS Board of Trustees; 

SB 14 allows a member to upgrade their accrual rate on transferred service to the accrual rate of the receiving system by paying the actuarial cost of the upgrade; also allows for reverse transfers in certain instances. The LASERS Board is neutral on this bill. 

In addition to the bills being considered, LASERS Deputy Director Maris LeBlanc will make a presentation about the proposed privatization of the public hospitals and the retirement impact on the employees and the System.

Please note that meeting schedules are subject to change. Check the LASERS website daily for updates and for detailed information about the proposed legislation which would impact LASERS.

Senate Retirement to Discuss COLAs at December 11 Meeting

The Senate Retirement Committee will meet Tuesday, December 11 at 10:00 a.m. in the John J. Hainkel, Jr. Room to continue a study of cost-of-living adjustments (COLAs) for retired members of public retirement systems. 

In previous meetings, Senator Elbert Guillory made a point of saying that false hope should not be given that a COLA was imminent. However, after seeing information provided by LASERS, comparing the LASERS COLAs to those paid by Social Security, he noted that the situation was "not acceptable." The comparative information showed that the value of LASERS benefits with COLAs was considerably lower than the Social Security benefits. Senator Guillory stated that a solid funding approach must be developed and funding cannot be an afterthought.

LASERS will provide information from the December 11 meeting as it becomes available. 

Senate and House Retirement Committees Hold Second Meeting on COLAs

The Senate and House Retirement Committees met jointly September 25 to continue discussion of funding methods for cost-of-living adjustments (COLAs) for retired members of the state retirement systems.

This second meeting primarily focused on statewide retirement systems with presentations from the Sheriffs Pension Relief Fund and the Louisiana School Employees' Retirement System. LASERS presented information at the first Senate Retirement Committee Meeting held on August 21.

Senate Retirement Committee Chair Guillory reiterated that the purpose of the hearings is to study solutions to problems in the granting of COLAs, in order to institute a rational state policy for establishing future COLAs.

In today's meeting, extensive information was provided by Paul Richmond, actuary for the Legislative Auditor's office. Richmond stated that a funding source must be provided in order to grant COLAs. When asked for ideas on how to pay for COLAs, he suggested identifying retirees with the most needs, and possibly increasing employee contributions. 

Representative Sam Jones asked if members in the new Cash Balance Plan, to be implemented July 1, 2013, would be eligible for future COLAs. Richmond responded that according to the new law, COLAs are not granted to members of this plan.

The next committee meeting will be held in November.

LASERS will provide additional information as it becomes available.