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.