Times Picayune editorial blasts special retirement legislation

The editorial board of the New Orleans Times Picayune speaks out against unearned, upaid-for retirement benefits for select, politically-connected groups of state employees.

Choices and consequences

When it comes to retirement, most people would agree that workers who put in the most time and money should get the largest benefit.

But apparently the Legislature believes that such personal sacrifice should not be a factor.

Responding to very narrow constituencies, legislators have approved new shortcuts in the state's retirement system so that public employees who made the wrong choice years ago can now reap higher benefits without having paid their dues. Gov. Kathleen Blanco needs to veto these bills.

One of the most egregious ideas is in House Bill 845 by Rep. Sydnie Mae Durand of Parks. The bill would boost retirement pay for almost 450 probation and parole officers who chose not to upgrade to a more lucrative retirement plan in 2002.

Rep. Durand wants to allow those employees to join the new plan retroactively, and that's unfair to other state workers who chose wisely and had to pay their own money to upgrade to the plan.

To eliminate the discrepancy, Sen. Walter Boasso amended the bill to give workers who previously upgraded their plan the choice to get reimbursement for some of their contributions. So instead of fixing one costly mistake, the bill would now extend it to all probation and parole officers, raising the cost of the legislation to more than $9.1 million just in the next five years.

But it gets worse. Instead of requiring that the workers who will reap the extra benefit pay for the cost, legislators want to stick the bill to the public by creating a $65 fee on anyone who goes on probation or parole starting next week.

Many of the people affected would have to pay the fine as they exit prison and go on parole, a time when they are basically indigent. The proponents of the fee see no problem in this. The fee could be collected, they argue, from wages that people may have earned through prison jobs that often pay pennies an hour.

This is heartless. And it's bad fiscal policy.

The board of the Louisiana State Employee's Retirement System is strongly opposing this bill. Yet only one legislator, Sen. Cleo Fields, voted against its final passage.

Another bad idea that has made it to the governor's desk is House Bill 818 by Rep. Alex Heaton of New Orleans. The bill would increase retirement benefits for 21 retired judges, and for 38 spouses of deceased judges, who chose not to become members of the state's retirement system. Cost for taxpayers: $1.1 million in the next five years.

Those judges chose to remain in a noncontributory plan, and they should not be given benefits for which other employees have had to make contributions.

Both of these ill-conceived proposals reflect the disparate retirement scenarios created by changes to the state's retirement system in years past. The system's officials want to address those problems in a comprehensive and fair manner, and that would be a better way to evaluate whether any corrections are needed.

Otherwise, taxpayers will end up funding unfair benefits such as the ones Reps. Durand and Heaton sponsored. And that's as fiscally unsound as one can get.

The LASERS Board of Trustees has submitted a formal request to Governor Blanco that she veto House Bill 845. The text of the letter, accompanied by documentation of LASERS attempts to educate lawmakers about the dangers posed by HB 845, can be viewed here.

LASERS-Did you know?

A member of the Louisiana State Employees Retirement System who is placed on or who voluntarily takes leave without pay is entitled to purchase service credit for each day that the member was on leave without pay.


The member must pay the system an amount, which on an actuarial basis, totally offsets the increased liability of the system, resulting from the service credit being purchased.

Governor receives request to veto retirement bill

The Louisiana State Employees’ Retirement System Board of Trustees Wednesday asked Gov. Kathleen Blanco to veto a bill that would give a group of 450 probation and parole officers’ retirement benefits they didn’t pay to receive according to this article from Thursday’s Legislative Briefs section of The Advocate.

Lawmakers approved the bill over the objections of the board of the Louisiana State Employees' Retirement System, which sent the letter to Blanco asking her to reject the legislation.

To pay for the benefits, people on probation and parole would have to pay a new $65 fee after July 1, under House Bill 845 by Rep. Sydnie Mae Durand, D-St. Martinsville.

The measure would apply to Department of Public Safety and Corrections officers who chose not to upgrade to a more lucrative retirement plan in 2002. Durand's bill would allow them to get into the plan retroactively, with the cost of the increased benefits financed by the fee. Durand said that would create fairness by treating all corrections officers equally.

LASERS officials said the bill was unfair to officers who paid their own money to upgrade to the newer plan, so lawmakers decided to let those employees get reimbursed for the payments.

But Louis Quinn, with the LASERS board, said that only worsened the bill and threatened to add million of dollars in debt to the retirement system because the probation and parole fee wouldn't cover all the costs of the increased benefits.

LASERS Board opposes House Bill 845

With the passage of House Bill 845, the Louisiana senate voted to place an enormous and completely unjustifiable financial burden on the LASERS trust fund, says Louis Quinn, Legislative Committee Chair of the LASERS Board of Trustees.

HB 845, by Rep. Sydnie Mae Durand, won approval Monday night on the floor of the senate. When debate on HB 845 began, the measure would have granted special retirement benefits to a select group of LASERS members at no cost to the recipients. It made 450 Adult Probation & Parole officers eligible for free service upgrades which would allow them to retire with larger pensions at an earlier age. Hundreds of their correctional officer colleagues had previously paid tens of thousands of dollars each for similar benefits under the two-tiered retirement plan available to many corrections personnel.

“HB 845 was a bad bill when it went to the full senate,” Quinn says. “But the version that won final passage is a train wreck. The select few can continue to enrich themselves, and the retirement system is left to pick up the tab.”

Under an amendment offered by State Sen. Walter Boasso, HB 845 now provides that:

“Any member who is a probation and parole officer in the office of adult services of the Department of Public Safety and Corrections, who is employed before January 1, 2002, who elected to transfer from the primary component to the secondary component and who upgraded his service credit as permitted pursuant to Subparagraph (B)(2)(b) of this Section, may elect to be reimbursed and to have his benefit calculated as provided in R.S. 11:444(A)(2)(c) for all creditable service in the system earned before the date the member transferred to the secondary component."

According to LASERS actuary Charles Hall, this means that LASERS, in addition to bearing the cost of providing unpaid-for retirement benefits to a select group of probation & parole officers, will also have to reimburse this special, select group of Adult Probation & Parole officers who paid to upgrade prior service in a similar fashion.

“The bottom line,” Quinn says, “is that a privileged group will receive free, unearned service credit from LASERS, and the cost will be subsidized by every other hard-working member of LASERS.”

HB 845

UPDATED BELOW

A meeting of the Senate Committee on Retirement is scheduled for the evening of Thursday, June 21, 2007.

NOTICE OF MEETING
June 21, 2007
Upon Adjournment
Senate Committee Room A

LEGISLATION TO BE CONSIDERED

HB 845 DURAND RETIREMENT/STATE EMPS Provides for a higher benefit accrual rate for certain adult probation and parole officers and for actuarial funding for such benefit

UPDATE

The meeting of the Senate Committee on Retirement previously scheduled for Thursday, June 21 was re-scheduled. The meeting is now set to take place at 12:45 p.m. on Friday, June 22. As of this writing, the agenda is unchanged.

Governor signs supplemental COLA bill

Governor Blanco has signed into law Senate Bill 116 [Sen. Theunissen], which authorizes the boards of trustees of LASERS and the Teachers' Retirement System of Louisiana (TRSL) to grant a supplemental cost-of-living adjustment (COLA) of 0.5 percent from their respective experience accounts beginning July 1, 2007.

The supplemental raises the total COLA for eligible retirees from 2.5 percent to three percent.

State Employee Cost-of-living increase wins final legislative approval

A $29.7 billion state budget for next year including pay raises and new education spending received final legislative passage on Wednesday.

After months of partisan wrangling about spending priorities, the bill providing for money to operate state government in the year that begins July 1 received little debate in its final stop before heading to Blanco's desk.

Blanco can strip individual items out of the budget bill with her line-item veto
power — though the bill keeps intact the governor's spending recommendations, including millions of dollars in new spending on education and health care and in pay raises for state workers, public school teachers, prison guards, police officers and support workers.

Spending will be increased in nearly all major areas. More than 1,100 new
jobs will be added to state government. Average public school teacher pay
in Louisiana will reach the Southern regional average with the $2,375
salary hike included in the budget and a state employee pay raise of
$1,500.

Legislative Update-HCR 7

The Louisiana Senate approved House Concurrent Resolution 7 [Rep. Schneider], which grants a 2.5 percent cost-of-living adjustment (COLA) to the pensions of eligible LASERS retirees. The resolution now heads to the Senate floor for debate.

Legislative Update--Act 50 (HB 439)

Legislative Update—Act 50 (HB 439)

House Bill 439 signed by Governor Blanco has been designated as Act 50 [Rep. Doerge], which permits repayments of some DROP disbursements by eligible members of LASERS and the Teachers’ Retirement System of Louisiana (TRSL).

Under the provisions of Act 50:

Any retiree who received a qualified hurricane distribution prior to January 1, 2007, pursuant to the Katrina Emergency Tax Relief Act of 2005 or the Gulf Opportunity Zone Act of 2005, may contribute all or part of such qualified hurricane distribution within three years from the date on which such qualified hurricane distribution was received, but only to the extent that such qualified hurricane distribution was eligible for tax-free rollover treatment.

Legislative Update--HB 580

The Senate Committee on Retirement approved House Bill 580 [Rep. LaBruzzo], allows certain participants in the Deferred Retirement Option Plan [DROP], whose post DROP employment was interrupted due to hurricanes Katrina or Rita, to have this service period adjusted as though the interruptions never occurred. The adjustment does not include the period of unemployment

Legislative Update

The Louisiana House of Representatives passed Senate Bill 116 [Sen. Theunissen], which authorizes LASERS and TRSL to grant a supplemental cost-of-living adjustment of 0.5 percent beginning July 1, 2007, from their respective experience accounts for a COLA of three percent, which would otherwise be limited to 2.5 percent.

Legislative Update

The Senate Committee on Finance approved House Concurrent Resolution 7 {Rep. Schneider}, which grants a 2.5 percent cost-of-living adjustment (COLA) to the pensions of eligible LASERS retirees. The resolution now heads to the Senate floor for debate.

HB 439

The Governor's Office announced Tuesday that Governor Blanco has signed into law House Bill 439 [Rep. Doerge], which permits repayments of some DROP disbursements by eligible members of LASERS and the Teachers' Retirement System of Louisiana (TRSL).

Under the provisions of HB 439:

Any retiree who received a qualified hurricane distribution prior to January 1, 2007, pursuant to the Katrina Emergency Tax Relief Act of 2005 or the Gulf Opportunity Zone Act of 2005, may contribute all or part of such qualified hurricane distribution within three years from the date on which such qualified hurricane distribution was received, but only to the extent that such qualified hurricane distribution was eligible for tax-free rollover treatment.

Legislative Update

The House Committee on Civil Law and Procedure approved Senate Bill 127; {Sen. Boasso}, which requires a funding source for any increase in benefits for members of a state retirement system. The measure is a proposed constitutional amendment.

Kentucky Pension Plan under Review for Possible Changes

The Louisville Courier-Journal reports a blue-ribbon commission studying the state's pension crisis will review the benefits contract with current employees and retirees, despite repeated assurances by elected officials that only the benefits of future employees were under scrutiny.

Courts across the country — including the Kentucky Supreme
Court — have given states little room to change what commonly are referred
to as "inviolable contracts" with public employees.

And some members of the Blue Ribbon Commission on Public Employees Retirement Systems wonder why the review is being undertaken.

"I think we have a pretty good understanding of what the contract should be already," said commission member Gary Harbin, executive secretary of the Kentucky Teachers' Retirement System. "We shouldn't be trying to find some way to make changes in those benefits."

As things stand now, state and local governments and school systems are nearly $12
billion short of meeting future pension obligations to their employees.

The concept of "inviolable contracts" means that retirement benefits in place when the state hires workers — including health-care benefits — cannot later be diminished for those workers.

John Farris, the commission's chairman, confirmed that an
attorney would examine the contract. But he said the purpose is not
to find a way to break the state's contractual promise to current employees
and retirees.

Farris, secretary of the Finance and Administration Cabinet, said the commission simply wants to ask an attorney questions such as whether the state could offer current employees a $10,000 pay increase in exchange for reduced retirement benefits.

LASERS-Did you know?

A Repay Refund Estimator located on LASERS Website gives a member an idea of how much it might cost to repay those years that were refunded from the retirement system.

Any repay refund or purchase of service must be completed before any Retirement/DROP application has been processed. All calculations are merely estimates.

Legislative Update

The Senate Committee on Retirement approved legislation {HB 864, Rep. Schneider} which permits a public retirement system to divest itself of holdings in a company having facilities or employees, or both in a prohibited nation.

In other action, the committee deferred action {HB 456, Rep Arnold} which would have continued the requirement that state retirement systems, including LASERS, direct 10 percent of commissions on certain domestic equity trades, and 10 percent of commissions on certain fixed-income trades through certain Louisiana broker-dealers and extend the sunset to 2010.

AFSCME- 'The Truth About Public Employee Retirement Plans'

The American Federation of State, County, and Municipal Employees (AFSCME) has developed a useful fact sheet on Defined Benefit (DB) and Defined Contribution (DC) pension plans.

The Truth About Public Employee Retirement Plans explains numerous ways in which DB plans are superior to 401k-style DC plans, and indentifies the myths that it says lead people to believe otherwise.

For example, the fact sheet tackles the misconception that public DB plans are funded entirely, or even mostly, by taxpayers' dollars:

Q: Aren’t defined benefit pensions
a financial burden to taxpayers?

A: No. Employee contributions and investment
earnings cover the bulk of defined benefit
costs while government contributions only
cover 26 percent of the total costs. The truth is
that the median pension contribution rate of
public employees covered by Social Security is
5 percent of their pay, while the median pension
contribution rate of public employees not
covered by Social Security is 8.6 percent of
their pay. In the private sector on the other
hand, 90 percent of plans don’t require any
employee contribution.

And as AFSCME points out, contrary to popular belief, DC plans are actually more expensive to administer.

Q: Aren’t defined contribution plan
fees and expenses lower than those
of a defined benefit plan?

A: No. For a defined contribution plan, you
have to deal with an average of $1.35 mutual
fund charge for “load” and administrative
expenses on every $100 invested, plus additional
record keeping and participant education
costs. This amounts to an annual cost of
2 percent of your assets. In reality, this is ten
times higher than the cost of administering a
defined benefit plan. So even if defined contribution
plan participants earn the same rate as
defined benefit plan participants, they’d still
receive a smaller benefit! Where does that
extra money go? Wall Street.

Read more here, at AFSCME.org.

Legislative Update

The House Committee on Retirement approved legislation {SB 116, Sen. Theunissen} which authorizes the boards of trustees of LASERS and TRSL to grant a supplemental COLA of 0.5 percent, beginning July 1, 2007, from their respective experience accounts for a maximum of 3.0 percent, which would otherwise be limited to 2.5 percent.

In other action, the committee took no position and recommitted to the House Appropriation Committee {HB 845, Rep Durand}, which would increase the benefit accrual rate for certain adult probation and parole officers to 3.33 percent. The measure provides for a fee on probation and parole cases to offset any actuarial cost to LASERS.

Legislative Update

The House Committee on Retirement approved legislation {SB 116, Sen. Theunissen} which authorizes the boards of trustees of LASERS and TRSL to grant a supplemental COLA of 0.5 percent, beginning July 1, 2007, from their respective experience accounts for a maximum of 3.0 percent, which would otherwise be limited to 2.5 percent.

In other action, the committee took no position and recommitted to the House Appropriation Committee {HB 845, Rep Durand}, which would increase the benefit accrual rate for certain adult probation and parole officers to 3.33 percent. The measure provides for a fee on probation and parole cases to offset any actuarial cost to LASERS.

Legislative Update

The House Committee on Retirement approved legislation {SB 116, Sen. Theunissen} which authorizes the boards of trustees of LASERS and TRSL to grant a supplemental COLA of 0.5 percent, beginning July 1, 2007, from their respective experience accounts for a maximum of 3.0 percent, which would otherwise be limited to 2.5 percent.

In other action, the committee took no position and recommitted to the House Appropriation Committee {HB 845, Rep Durand}, which would increase the benefit accrual rate for certain adult probation and parole officers to 3.33 percent. The measure provides for a fee on probation and parole cases to offset any actuarial cost to LASERS.

LASERS-Did you know?

LASERS recommends that members request an estimate of their retirement benefits one year before they plan to retire.

If a member is more than one year away from retirement, the benefit calculator, located on the LASERS web site should be used to calculate a regular benefit.

2007 LASERS Board of Trustee Nominations Being Accepted

LASERS is accepting nominations for three trustee positions representing active members on the Board of Trustees and two trustee position representing retired members.

Active and Retired Candidate packets and the election schedule are available on the LASERS website at www.lasersonline.org.

If you choose to participate in this election, you should be aware of the importance of a complete petition for candidacy. It is very important that you understand that individuals signing the petition must also include the final four digits of their Social Security numbers. LASERS will certify that the individuals who sign the petitions are LASERS members.

It is extremely important that all completed candidate petitions, qualifications, platforms and photos are due to LASERS no later than 4:30 p.m. (C.D.T.), July 10, 2007.

For additional information about the 2007 LASERS Board of Trustees Election, please contact Public Information Director, Byron Henderson, by email at bhenderson@lasersonline.org , or by telephone at (225) 925-7590 (Baton Rouge area).

Legislative Update

The Senate Committee on Retirement approved legislation {HCR 7, Rep Schneider} which grants approval of a 2.5 percent cost-of-living adjustment (COLA) to the pensions of eligible LASERS retirees.

The measure was referred to the Senate Finance Committee.

LASERS-Did you know?

A LASERS member cannot use sick and annual leave credit to attain eligibility for any benefits provided by LASERS.

Once retirement eligibility has been attained you may convert unused leave to service credit.

Civil Service Career Day

Civil Service is hosting the Bi-Annual State Agency Career Day at the Baton Rouge Testing and Recruiting Center on Tuesday, June 19, 2007, from 1:00 pm to 4:00 pm.

State agencies will be on hand to recruit for Healthcare, Healthcare Support, Social Services, Auditing and Accounting and Law Enforcement Vacancies.

There will be no Civil Service testing in Baton Rouge on that day. The Career Day will be held at the Louisiana Department of Agriculture and Forestry building located at 5825 Florida Blvd. Please direct all calls to (225)925-1911 or visit the Civil Service at http://www.civilservice.louisiana.gov/

Louisiana Senate Retirement Committee Meeting

The Louisiana Senate Committee on Retirement is scheduled to meet on Monday June 11, 2007, at 1:30 p.m. in Senate Committee Room A-B

Items on the agenda include:

HCR7 Schneider – Retirement/COLA - Grants approval of a cost-of-living increase requested by the board of trustees of the Louisiana State Employees' Retirement System

HB456 Arnold – Retirement/State Systems - Continues requirement that state retirement systems direct ten percent of commissions on certain domestic equity trades and ten percent of certain domestic fixed income investments through certain Louisiana broker-dealers and extends the sunset of this provision to 2010

Legislative Update

The House Committee on Retirement approved legislation on Thursday on a bill {HB 864, Rep Schneider} which permits a public retirement system to divest itself of holdings in a company having facilities or employees, or both, in a prohibited nation.

In other action, the committee approved {HB 878, Kleckley} to increase the benefit accrual and employee contribution rates for certain enforcement personnel employed by the Department of Revenue, Office of Alcohol and Tobacco Control (ATC)

Trouble predicted for corporate pension plans

A global consulting firm that monitors the pension industry predicts a troubled future for an overwhelming percentage of private-sector pension plans in the United States.

A new study has reportedly predicted up to 75% of US corporate pension plans could be frozen or terminated within the next five years.

The findings from McKinsey & Company said the return of private defined benefit plans to health fund levels would rapidly boost the number of companies opting to freeze or terminate their plans from the current level of 25%.

New CIO at TRSL

The Teachers' Retirement System of Louisiana has hired a new Chief Investment Officer, the magazine Global Pensions reports.

Robert Leggett has been named chief investment officer of the Teachers’ Retirement System of Louisiana (TRSL).

He will take charge on 1 August 2007 and be responsible for the strategic direction of the TRSL portfolio.

Leggett has 18 years of senior management experience with public pensions, most recently serving as executive director of the New Hampshire Retirement System, which holds US$5.4 billion in assets.

Prior to that, he served as chief investment officer at the Kentucky Retirement Systems, overseeing $13 billion in assets.

LASERS-Did you know?

Payments from LASERS, including benefits and refunds of accumulated contributions, are exempt from garnishment or seizure.

There are exceptions for child support, IRS levy and court-ordered community property divisions with former spouses of members.

Legislative Update

The House Committee on Retirement killed legislation on Wednesday on a bill {HB 788, Rep Doerge} to allow a group of employees who completed DROP on or before December 31, 2002 to rescind their participation.

In other action, the committee approved {SB 127, Senator Boasso} a constitutional amendment to require increases in benefits for state retirement systems to also provide a funding source.

Louisiana House Retirement Meeting

The Louisiana House Committee on Retirement is scheduled to meet on Wednesday, June 6, 2007, at 9:30 a.m. in House Committee Room 4

Items on the agenda include:

SB 116-Theunissen-Authorizes the LASERS and Teachers' boards of trustees to grant a supplemental cost-of-living increase of 0.5 percent beginning July 1, 2007, from their respective experience accounts for a maximum of 3.0 percent which would otherwise be limited to 2.5 percent.

SB 127-Boasso- Constitutional amendment to require increases in benefits for state retirement systems to also provide a funding source.

HB 788-Doerge- Allows certain participants in the Deferred Retirement Option Plan to rescind participation in the plan and regain membership in LASERS.

LASERS-Did you know?

A member of the Louisiana State Employees Retirement System who is placed on or who voluntarily takes leave without pay is entitled to purchase service credit for each day that the member was on leave without pay.

The member must pay the system an amount, which on an actuarial basis, totally offsets the increased liability of the system, resulting from the service credit being purchased.

Meeting Cancelled

A meeting of the Senate Committee on Retirement scheduled for 1:30 p.m. today has been cancelled.

Governor Blanco Announces New Emergency Preparedness Website

Louisianans have a new Web site for hurricane season intended to link the public with emergency preparedness information according to this story from Associated Press.

The site - http://www.emergency.louisiana.gov - offers information on hurricane evacuation, preparation, shelters and traffic routes, and will serve as a source of information after a storm hits, Blanco's office said. The site also has links to state agencies, FEMA and the federal homeland security office.

The state also offers free copies of evacuation guides, with different versions of southeast and southwest Louisiana. Those pamphlets are available in the New Orleans, Lafayette and Lake Charles areas as well as smaller coastal towns, at Wal-Mart, Lowes, The Home Depot, state police offices, emergency management offices and state transportation department offices.

Senate Retirement Committee

The Louisiana Senate Committee on Retirement is scheduled to meet on Monday, June 4, 2007, at 1:30 p.m. in Senate Committee Room A.

Items on the agenda include:

HCR 135 TRAHAN RETIREMENT/STATEWIDE SYSTEMS Urges and requests the thirteen public retirement systems to meet semi-annually to share investment strategies

HB 456 ARNOLD RETIREMENT/STATE SYSTEMS Continues requirement that state retirement systems direct ten percent of commissions on certain domestic equity trades and ten percent of certain domestic fixed income investments through certain Louisiana broker-dealers and extends the sunset of this provision to 2010

State Employee Pay Raise approved by House

The Times Picayune reports the House on Thursday overwhelmingly approved a $29.6 billion budget bill for the 2008 fiscal year that provides for increased fire and police supplemental pay by $125 per month, a special pay package for correctional officers to reduce high turnover rate of $6,000 per officer and a modest state employee pay raise of $1,500.

Lawmakers approved House Bill 1 by a 96-6 vote after nearly eight hours of sometimes-rollicking debate and several failed attempts by Republicans to scale back the broad spending increases proposed Gov. Kathleen Blanco and her legislative allies. The budget bill, by Rep. John Alario, D-Westwego now heads to the Senate.

The bill includes virtually all the major spending requested by Blanco and $410 million added last week by the Appropriations Committee.