Retirement cost-of-living increases clear House committee

By Marsha Shuler

The Advocate

A cost-of-living raise for retirees of Louisiana’s four statewide pension systems is nearing its final hurdle as legislation providing for the increase headed to the full House of Representatives for consideration.

The House Retirement Committee advanced Thursday the package of bills, which include the raises as well as tying future increases to financial health of the systems.

The bills’ legislative fates are tied together. If one fails, all of them tumble.

Headed to the House floor for debate are four Senate-passed measures that would provide a 1.5 percent cost-of-living increase for some 100,000 retired state employees, teachers, school employees and State Police. The boost in pension checks would be the first in five to six years for all of them.

Also on its way is a revamp of the system through which cost-of-living-adjustments are granted.

The changes, proposed in House Bill 1225, would limit both the frequency and amount of future benefit hikes so that more dollars can go toward reducing the $19 billion long-term retirement systems’ debt.

The COLAs are funded through investment earnings above a certain amount.

With pension debts so high, some legislators question the diversion of the funds to COLA accounts, particularly when the state and school boards are paying escalating employer contributions to pay down that debt.

The COLA revamp sponsor, state Rep. Joel Robideaux, said it became clear to him that the 1.5 percent benefit increase had to be tied to “some reform” in order to get the two-thirds vote required for legislative passage.

Robideaux’s proposal would divert more of the investment earnings to meeting pension liabilities, while still providing for COLA potential. As each system becomes better funded, COLAs could move above 1.5 percent to a maximum of 3 percent. In addition, the increase would apply only on the first $60,000 of annual benefits.

“We are in a difficult situation trying to figure out a way to satisfy a lot of folk,” said Robideaux, R-Lafayette.

His revamp is “an attempt to make the system a little more sound going forward, help create systems that are better funded ultimately,” Robideaux said.

Officials of the Louisiana State Employees Retirement System, the Teachers’ Retirement System of Louisiana, the Louisiana School Employees Retirement System and the State Police Retirement System said their boards remain neutral on the Robideaux’s proposed revamp.

However, Teachers Executive Director Maureen Westgard and St. Charles Parish schools Chief Financial Officer Jim Malone said they were concerned that a provision would result in school board contributions rising because of the basis of the debt calculations.

“The schools are really hurting now,” said Westgard.

“There are concerns that school districts have about the up-front cost of the bill,” Malone said.

Over the first five years, Malone said the extra cost could hit $174 million. He asked proponents to consider making “tweaks” to the bill.

Legislative actuary Paul Richmond’s analysis showed no difference in cost.

No committee member objected to sending Robideaux’s bill to the House floor.