State Pension Boards Approve Change

Marsha Shuler

The Advocate

Louisiana’s two largest statewide retirement systems took a step that could reduce their long-term debts and ultimately lower the costs paid for state government retirements.

The Louisiana State Employees Retirement System and the Teachers Retirement System of Louisiana boards voted to reduce their projected annual investment returns from 8 percent to 7.75 percent.

The investment returns are used in the calculation of the rates that government employers contribute toward funding the system.

Any earnings about the 7.75 percent return on the investments made by the pension systems go to paying down the “unfunded accrued liability,” said Legislative Auditor Daryl Purpera. 

More commonly called the UAL, it is the amount of money that has not been set aside to cover the cost of pension benefits promised in the future. The UAL for the four statewide retirement systems now hovers near $19 billion.

State agencies and schools, the employers, are making additional payments to help lower the UAL, but those mandatory payments put a strain on the budgets for other expenses.

The change in interest rates approved by LASERS and Teachers, combined with a recently passed law, could relieve some of the budget pressures caused by the big payments.

“We have a severe problem with underfunding. If we have an opportunity to accelerate repayment of the UAL, we ought to be taking advantage of it,” said Purpera, who chairs the Public Retirement Systems Actuarial Committee.

LASERS Deputy Director Maris LeBlanc said: “Because we expect to earn less, then the more money we make over that is money to put toward the debt.”

The rate reduction under normal circumstances would trigger an increase in state and school systems’ contributions because the systems would count on less earnings from investments.

But the state and schools will end up paying the same or a little less because the reduction will go into effect at the same time as a law which directs more of the pension systems’ excess investment earnings into debt reduction, said Maureen Westgard, executive director of the Teachers system.

The Teachers board voted to lower the expected return because “any impact that would have been felt would be offset,” said Westgard.

“The way we presented it to our board is ‘the planets are aligned for us,’ ” said LASERS Executive Director Cindy Rougeou. “Based on things that happened during the legislative session and what we expect our investment returns will be ... we are expecting to reduce (the state contribution) by 1.5 percent.”

Rougeou said the calculation is based on a 14 percent investment return, “and we expect that’s going to be closer to 18 percent.”

Westgard said Teachers is anticipating a return of more than 17 percent during the fiscal year which ended June 30.

Both systems are chalking up big investment returns today, but the 30-year average return is 8.2 percent for LASERS and 8.54 percent for Teachers.

Westgard and Rougeou said the new 7.75 percent assumption is realistic. Both referred to a new National Association of State Retirement Administrators report which looked at 126 different public pension plans. More than half reduced their investment assumptions since 2008. The average is 7.72 percent — right at the 7.75 percent adopted by Teachers and LASERS.

Lowering the rate will help bring more funds into the system, said Rougeou. “You try to find that perfect balance,” she said. “If you lower the rate more than you need to, you are going to put a burden on current taxpayers they should not have to pay.”

COLA Becomes Reality; Update on LASERS Supported Bills

Governor Jindal signed HB 1225 into law yesterday, which was the final hurdle in making the 1.5 percent COLA a reality for eligible state retirees.The bill, sponsored by Representative Robideaux, will change the way in which future COLAs are granted. 

LASERS Executive Director Cindy Rougeou said, "This legislation ensures a much needed COLA for our retirees coupled with billions of dollars in expected savings for our System. This is significant pension reform. On behalf of LASERS I want to thank Representative Robideaux and Senator Guillory who authored the bill and Governor Jindal for making it official."

The Governor also ceremonially signed Act 102 (SB 18) yesterday, the piece of legislation which provides the 1.5 percent COLA for eligible retirees, survivors, and beneficiaries in LASERS. He had officially signed this bill last week. The COLA will go into effect July 1, 2014 for those retirees who are eligible.

SB 13, sponsored by Senator Peacock and supported by the LASERS Board of Trustees, awaits the Governor's signature. This bill will change LASERS actuarial funding method from projected unit credit to entry age normal.

Act 226 (HB 38), which changes the retirement eligibility for new hires only to five years of service at age 62, was signed by Governor Jindal. This bill applies to those hired after July 1, 2015 and excludes Hazardous Duty Service Plan members.

The 2014 Legislative Sessions ends at 6:00 p.m. today. Please check the LASERS website for the final outcome of retirement bills. The next issue of The Beam will feature additional information about significant legislation during this session. 

COLA revamp goes to Jindal

Capitol News Bureau

The Advocate

Cost-of-living benefit increases are on the horizon for more than 100,000 retired state employees, teachers, school employees and State Police.

The Louisiana Senate voted 36-0 on Monday for the final piece of a legislative package that triggers the 1.5 percent benefit increases effective July 1. The vote sent the House-passed measure to Gov. Bobby Jindal’s desk for his promised signature.

Jindal has already signed separate bills granting the cost-of-living adjustments, or COLAs, to retirees of all four statewide retirement system. But the raises could not go into effect without passage of House Bill 1225. The legislation revamped the system through which the benefit increases would be awarded in the future. The Senate provided that vote Monday.

State Sen. Elbert Guillory, R-Opelousas, said the package of bills provided “a much needed” COLA while “reforming” the system to save taxpayer dollars.

HB1225 would divert more of the retirement systems’ excess investment earning toward reducing the systems long-term liabilities which currently sit at $19 billion-plus. The diversion reduces the funds going into special accounts that pay for COLAs.

The state is making large extra payments on the oldest of the systems’ debt, which stems from past administrations and legislatures failing to properly fund benefits granted.

The legislation will allow the state to pay off the oldest debt six year sooner than anticipated and will save $5 billion over the next 30 years by cutting down on interest payments, Guillory said.

Legislature looking to increase monthly state retiree pensions

Marsha Shuler

The Advocate

A Louisiana Senate panel endorsed a revamp Tuesday of the system used to provide benefit increases for about 100,000 state pension system retirees.

House Bill 1225 will reduce the debts of Louisiana’s four statewide pension systems. It ties future cost-of-living increases to the systems’ financial health.

The committee action leaves the measure one step away from final legislative passage by the full Senate.

Passage of HB1225 guarantees a 1.5 percent cost-of-living adjustment to retired state employees, teachers, school employees and State Police.

COLA bills for each group contain language that ties the raises to passage of the revamp. Those Senate-passed measures gained final legislative passage late Tuesday in the Louisiana House.

The Jindal administration has said it supports the COLA package.

“It’s one of the biggest cost-saving bills around here,” said Public Affairs Research Council president Robert Travis Scott. Scott called it a “level-headed approach.”

Louisiana State Employees Retirement System executive director Cindy Rougeou said Robideaux and others had “come up with a product that will save billions.”

The legislation, sponsored by state Rep. Joel Robideaux, would steer more excess investment earnings into reduction of the systems unfunded accrued liability.

Today, there is a $19 billion-plus liability.

The extra excess earnings would be steered away from special accounts that fund cost-of-living adjustments, making it more difficult to provide them for the foreseeable future. Some excess investment earnings would still flow into the COLA accounts but the hurdle would be higher before they did.

In addition, the amount of future COLA would be tied to the funding status of the system.

If a system was 55 to 65 percent funded, the COLA would be limited to 1.5 percent. As the systems’ funded status improved the amount of potential COLA would rise to a maximum 3 percent when 85 percent funding is achieved.

Robideaux said he became concerned with COLAs being proposed in the current session.

“We don’t have the dollars in the system to make the benefits we are currently obligated to make,” said Robideaux, R-Lafayette.

But he said he recognized the need for retirees to get a benefits increase which had not been granted in six years.

“This bill does put us on the path of where we need to be with consistent, predictable COLAs (while) at the same time not jeopardizing the funding ratio of the system,” Robideaux said.

Legislative Update for May 9

HB 38, which changes retirement eligibility for new hires only to five years of service at age 62, has passed both the House and Senate. The bill applies to those hired after July 1, 2015, except for members in the Hazardous Duty Services Plan. The LASERS Board of Trustees supports this bill. HB 38 now moves back to the House Floor for concurrence on Tuesday, May 13.

SB 18, which provides a 1.5 percent COLA for eligible retirees, survivors, and beneficiaries, has passed on the Senate Floor and has been approved by the House Retirement Committee. The LASERS Board of Trustees supports this bill. SB 18 now moves to the House Floor, where it is scheduled for debate on Tuesday, May 13.

HB 1225, which changes the mechanism of how funds are applied to the Experience Account, pays down System debt more quickly, and sets future COLAs based on the funded level of the System on an every-other-year basis in amounts ranging from 1.5 to 3 percent, has been unanimously approved by the House. The LASERS Board of Trustees is neutral on this bill. HB 1225 is tentatively scheduled to be heard in a special Senate Retirement Committee on Tuesday, May 13 at 1:00 p.m.

HB 1278, which provides for enrollment of new hires of the Harbor Police Department of the Port of New Orleans in the Hazardous Duty Services Plan and for administration of the Harbor Police Retirement System by LASERS, has passed on the House Floor.  The LASERS Board of Trustees supports this legislation with certain amendments. HB 1278 will next be considered in the Senate Retirement Committee meeting on Monday, May 12, at 12:30 p.m.

Upcoming House Retirement Committee Meeting

The House Retirement Committee is scheduled to meet Thursday, May 15 upon adjournment and two bills are on the agenda that would impact LASERS if passed:

• SB 13, sponsored by Senator Peacock, was requested by the LASERS Board of Trustees to change the System's actuarial funding method from projected unit credit to entry age normal. The legislation would also make changes regarding excess earnings to be applied to the Unfunded Accrued Liability (UAL) and the Experience Account; and regarding the payment of cost-of-living adjustments (COLAs).
• SB 30, sponsored by Senator Cortez, would make technical corrections regarding spousal consent, survivors' benefits, and post-Deferred Retirement Option Plan (DROP) contribution rates. The LASERS Board of Trustees supports this bill.

SCR 5, sponsored by Senator Guillory, is also on the agenda to be heard. This resolution memorializes congress to reduce or eliminate the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). SCR 5 passed unanimously on the Senate Floor.

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

Legislative Update for April 29

The Senate Retirement Committee met Monday, April 28, 2014 and reported HB 38 favorably. Amendments adopted on the bill would make the age 62 retirement eligibility with five years of service applicable to new hires only on or after July 1, 2015, rather than the original date of July 1, 2014. HB 38, which excludes the Hazardous Duty Services Plan, will now move to the Senate Floor for consideration. The LASERS Board of Trustees supports this bill.

The House Retirement Committee is scheduled to meet Wednesday, April 30 and four bills are on the agenda that would impact LASERS if passed: 

• HB 30, sponsored by Representative Jones, provides a 1.5 percent COLA for eligible retirees, survivors, and beneficiaries. The LASERS Board of Trustees supports this bill.
• HB 34, by Representative Jones, provides a supplemental benefit increase (amount is to be determined) payable from the Experience Account. The LASERS Board of Trustees supports this bill.
• HB 84, by Representative Jackson, provides a supplemental benefit increase (amount is to be determined) payable from the Experience Account. The LASERS Board of Trustees supports this bill.
• HB 85, by Representative Jackson, provides a 1.5 percent COLA for eligible retirees, survivors, and beneficiaries. The LASERS Board of Trustees supports this bill.

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

Legislative Update for April 25

The House Retirement Committee met Thursday, April 24 and took action on the following bills that would impact LASERS if passed:

• SB 18, sponsored by Senator Guillory, was reported favorably and now moves to the House for consideration. This bill, which passed unanimously on the Senate Floor, would provide a 1.5 percent COLA for eligible retirees, survivors, and beneficiaries. In order for the COLA to be effective, COLAs for the three other state retirement systems must also be approved. Additionally, the Senate added another contingency to granting of the COLA: passage of HB 1225 by Representative Robideaux (see below).
• HB 64, by Representative Havard, was reported favorably with amendments. This bill now provides that therapeutic corrections guards and officers in the forensic program at the Eastern Louisiana Mental Health System are eligible for membership in the Hazardous Duty Services Plan. The LASERS Board of Trustees is neutral on this bill.
• HB 78, by Representative Montoucet, failed to pass. This bill would have provided for additional and retroactive retirement benefits for adult probation and parole officers employed on or before December 31, 2001. The LASERS Board of Trustees opposed this bill.
• HB 79, by Representative Pearson, was reported by substitute, and will therefore have a new bill number going forward. This bill provides for enrollment of new hires of the Harbor Police Department of the Port of New Orleans in the LASERS Hazardous Duty Services Plan and for the future administration of the Harbor Police Retirement System as a new subplan in LASERS. The LASERS Board of Trustees supports this bill.

HB 1225, by Representative Robideaux, was reported favorably with amendments. This bill changes the mechanism of paying funds into the Experience Account, uses additional investment earnings to pay system debt, and modifies when future COLAs may be paid. The LASERS Board of Trustees voted to take a neutral position on this legislation at its April 25 meeting.

The Senate Retirement Committee is scheduled to meet Monday, April 28, 2014 at 1:00 p.m. HB 38 is the only bill on the agenda that would impact LASERS if passed. This measure changes retirement eligibility for new hires only on or after July 1, 2014, (excluding the Hazardous Duty Services Plan) to five years of service at age 62. HB 38 has already passed on the House Floor with a vote of 91-3. The LASERS Board of Trustees supports this bill.

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

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.

Next Beam Issue is Electronic Only: Sign up for the Paperless Beam Today!

This is a sample copy of
the current Paperless Beam
issue. Click the image to
open the PDF.

In an effort to keep our members informed during the 2014 Legislative Session in a timely manner, LASERS will release an electronic-only version of The Beam mid-session to members. This upcoming issue of The Beam, to be released in May, will primarily be an update on the progress of retirement bills in the 2014 Session. This will be the only electronic issue of The Beam in 2014. 

By signing up for an electronic subscription, you will help LASERS save the cost of printing and postage. 

The Paperless Beam is sent directly to subscribers' inbox ahead of the mailed copy. We will provide you with a link to the PDF document located on our website. 

To sign up for the Paperless Beam now, please click here.

Legislative Update for April 22

House Passes HB 38:

HB 38, sponsored by Representative Pearson, passed in the House by a vote of 91-3. This bill, which excludes the Hazardous Duty Services Plan, would change retirement eligibility for new hires only on or after July 1, 2014 to five years of service at age 62. The LASERS Board of Trustees supports this legislation. The measure now moves to the Senate for action.

Upcoming Legislative Meeting Schedule:

The House Retirement Committee is scheduled to meet Thursday, April 24 upon adjournment. Five bills are on the agenda that would impact LASERS if passed:

• SB 18, sponsored by Senator Guillory, provides a 1.5 percent COLA for eligible retirees, survivors, and beneficiaries. SB 18 passed unanimously on the Senate Floor. In order for the COLA to be effective, COLAs for the three other state retirement systems must also be approved. Additionally, the Senate added another contingency to granting of the COLA: passage of HB 1225 by Representative Robideaux (see below).
• HB 64, by Representative Havard, provides that certain employees of the Eastern Louisiana Mental Health System are eligible for membership in the Hazardous Duty Services Plan. The LASERS Board of Trustees is neutral on this bill, if certain amendments are adopted.
• HB 78, by Representative Montoucet, provides for additional and retroactive retirement benefits for adult probation and parole officers employed on or before December 31, 2001. The LASERS Board of Trustees opposes this bill.
• HB 79, by Representative Pearson, provides for enrollment of new hires of the Harbor Police Department of the Port of New Orleans in the Hazardous Duty Services Plan and for administration of the Harbor Police Retirement System by LASERS. The LASERS Board of Trustees supports this bill with the addition of certain amendments.
• HB 1225, by Representative Robideaux, provides relative to payment of system liabilities, credits to the Experience Account, and payment of COLAs.

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

Retirees eye debate over COLA’s link to pensions

By: Marsha Shuler

The Advocate

More than 100,000 retired state employees, teachers, school employees and State Police find themselves in the middle of a political squeeze play.

A 1.5 percent increase in their pension checks — the first in six years for most — got tied to a revamp of the system that grants cost-of-living adjustments.

The changes being proposed would limit both the frequency and amount of future COLA increases.

Lawmakers have made it plain: Either accept the COLA system change, or there will be no 1.5 percent bump, the equivalent of an average $29 a month increase for most.

It’s not as if the legislative debate over COLAs, and how they are funded, was not anticipated.

In fact, the leaders of the largest agencies handling government retirees — Louisiana State Employees Retirement System and the Teachers Retirement System of Louisiana — had long predicted COLAs would be the big retirement topic of the year.

COLAs are funded through special “experience accounts” into which are deposited pension system investment gains above a certain specified amount.

The trigger is different, depending on which of the four statewide retirement systems is involved. The Legislature established the accounts not so long ago.

But pension system debts exceed $19 billion, and some legislators want to change the rules.

The liability is largely because of past administrations and Legislatures providing pension benefits without adequately funding them and escalating interest on that debt.

State Rep. Joel Robideaux, R-Lafayette, and other legislators familiar with retirement plans are pushing legislation that would require more of the systems’ investment earnings to go into reduction of their unfunded accrued liability, the money needed to meet pension commitments over time.

The legislation also would link the maximum cost-of-living adjustment that could be awarded to the financial health of each of the government retirement systems.

As each becomes better funded, the potential for COLAs above 1.5 percent increases to a maximum of 3 percent. A system would have to be at least 85 percent funded to get the highest amount. In addition, the age eligibility for COLAs would rise from 60 to 62.

As the push is occurring, the Public Affairs Research Council of Louisiana issued a report encouraging the Legislature to take the opportunity “to make larger and needed changes” in the process.

“The Experience Account takes funds that otherwise would be used to reduce the debt of the retirement system and applies them toward permanent benefit increases,” wrote PAR’s Stephen Procopia. “This method is particularly troublesome for Louisiana’s systems that have only about 60 percent of the funds needed to meet their liabilities, one of the most severe liability shortfalls in the nation.”

PAR reurged a 2005 recommendation: Abolish the experience accounts. It further stated, “Planned COLAs for existing retirees should be funded through employer contributions, while planned COLAs for active employees should be funded by both employer and employee contributions.”

So far, the state employee and teachers retirement systems have not taken positions on the proposed changes. The retirement systems were not blindsided by the Robideaux bill. Officials of each were involved in negotiations over provisions in advance of the bill filing and got some concessions. They are hoping for more concessions.

Meanwhile, state employee and teacher retiree groups’ top priority is the COLA for their members whose only income is their pension checks.

Legislators have not wanted to appropriate funds for cost-of-living increases so, instead, they tapped some “excess” investment earnings.

That decision, as PAR noted, runs counter to efforts to improve the systems’ debt — a debt in large part from past Legislatures and administrations’s failing to properly fund the benefits they approved.

Now, legislators want to modify the plan so more dollars go toward debt reduction and cost-of-living increases become harder to come by.

And the retirees are caught in the middle wishing and hoping for what PAR called “a realistic, affordable, predictable and carefully defined COLA policy.”

Original article here.

Senate puts conditions on retiree COLAs

Marsha Shuler

The Advocate

The Louisiana Senate advanced legislation Wednesday to give a cost-of-living raise to more than 100,000 retired state employees, teachers, school employees and State Police.

Before approving the measure, senators linked the 1.5 percent increase in retiree pension checks to passage of separate House legislation that would limit the amount and frequency of future increases.

Bills granting cost-of-living adjustments — the first in six years for many — sailed through the Senate without a dissenting vote.

The fate of cost-of-living adjustments for all four groups had already been tied to each other. If one group’s COLA did not make it through the process, no group would get one.

When the bill hit the floor, senators without debate tied the COLAs to a proposed revamp of the policy governing the awards which are funded through “experience accounts.” State Rep. Joel Robideaux, R-Lafayette, proposed the change in recently filed House Bill 1225.

Retirement system investment earnings over an amount set in law go into the special accounts the Legislature set up for the purpose of COLA granting.

Robideaux’s bill would require more of the systems’ investment earning to go into reduction of their unfunded accrued liabilities — money required to fill commitments made to retirees and current members over time.

The systems have more than $19 billion in liabilities — most of it in the Teachers Retirement System of Louisiana and the Louisiana State Employees Retirement System.

“There have been some people who felt like we needed to be a little more responsible to make sure the UAL is paid down,” said state State Sen. Elbert Guillory, R-Opelousas, author of the COLA bills.

Guillory said Robideaux’s bill “does the proper balancing act and does the right thing. It puts some mild reforms into effect.”

Some argue that putting “excess” investment earnings into the COLA accounts creates additional liabilities on the system.

They argue there cannot be “excess” investment earnings as long as the systems are so underfunded.

State Sen. Page Cortez, R-Lafayette, who sponsored the change to each COLA bill, said the legislation would build in “certain benchmarks” that would have to be achieved.

For instance, the House bill would link the maximum COLA that could be awarded to the financial health of each of the systems.

If the system is less than 55 percent funded, no benefit increase would be granted. If it’s 55 percent but less than 65 percent funded, and the Legislature hasn’t granted an increase in the prior year, a 1.5 percent raise could be granted.

The systems would have to be 85 percent or greater funded to get a 3 percent benefit increase.

The COLA bills now move to the House for debate. Two-thirds votes are required for passage.

The Robideaux legislation has not yet been scheduled for a House committee hearing.

Legislative Session Update for April 1

The Senate Retirement Committee met Monday, March 31 and four bills were on the agenda that would impact LASERS if passed:

·   SB 13, by Senator Peacock, advanced favorably. The LASERS Board of Trustees requested the change in the System's actuarial funding method from projected unit credit to entry age normal promoted through this bill. The legislation would also make changes regarding excess earnings to be applied to the Unfunded Accrued Liability (UAL) and the Experience Account; and regarding the payment of cost-of-living adjustments (COLAs).

·      SB 26, sponsored by Senator Guillory, advanced favorably. This bill would provide for the assessment of employer contributions to fund projected non-investment related administrative expenses for each of the state retirement systems. The LASERS Board of Trustees is neutral on this bill.

·        SB 27 was voluntarily deferred by Senator Walsworth. SB 27, which is supported by the LASERS Board of Trustees, would provide a supplemental benefit increase (amount is to be determined) payable from the Experience Account. 

·   SCR 5, sponsored by Senator Guillory, advanced favorably. This legislation would memorialize Congress to reduce or eliminate the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO).

The Senate Finance Committee met Monday, March 31 and voted to advance SB 18. This bill, supported by the LASERS Board of Trustees, would provide a 1.5 percent COLA for eligible retirees, survivors, and beneficiaries.

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

State pension boost wins support

Marsha Shuler

The Advocate

Legislation advanced Monday that would provide more than 100,000 retired state employees, teachers, school employees and State Police with a 1.5 percent increase in their pension checks.

The Senate Finance Committee quickly signed off on legislation that would grant 1.5 percent cost-of-living adjustments — the first in six years for many retirees.

The 1.5 percent would amount to an average $29 a month increase in state employee and teacher pension checks.

Earlier in the day, legislative sponsors sidelined proposals aimed at giving retired state employees and teachers the possibility of a boost in their pension checks above the 1.5 percent.

Both legislators had their eyes set on using money left over in system “experience accounts” after the 1.5 percent proposed cost of living adjustment is implemented.

Excess investment earnings flow into the special accounts set up to fund cost-of-living adjustments .

Other legislation has been filed that would grab the remaining funds and use them to pay toward each system’s long-term liabilities, which are substantial.

State Sens. Mike Walsworth, R-West Monroe, and Gerald Long, R-Winnfield, asked the Senate Retirement Committee to defer action on their bills.

Walsworth said he pulled Senate Bill 27 to allow the retirement committee to decide whether sufficient funds would be available to grant the supplemental benefit for retired state employees.

“We know the situation our retirees are in. They have had a tough time,” Walsworth said. But he said he would leave its fate up to the “wisdom of the committee."

The State Employee “experience account” has $196 million in it. The 1.5 percent cost-of-living raise would cost $106 million.

Benefit increases Ok’d for retirees

By Marsha Shuler

The Advocate

Cost of living increases appear to be on the horizon for some 100,000 state employee, teacher, school employee and state police retirees.

The proposed 1.5 percent increases — the first in six years for some — cleared the Senate Retirement Committee on Monday.

The raise must be approved by a two-thirds vote of the Legislature and the governor before it can be implemented.

Money to fund the cost of living adjustment comes from special “experience accounts” of each of the four statewide retirement systems. The accounts are funded from excess investment earnings of each of the pension systems.

State Sen. Elbert Guillory, R-Opelousas, linked the fate of the four system COLAs together. Under the change, if one group’s COLA does not garner sufficient votes, no one would get a COLA.

“We are all in the same canoe and we want these COLAs to be above any political games that may be played through the system,” Guillory said.

Guillory said pensions have been “eroded by time and inflation” for retirees. He said the COLA is “far from a giant step,” but one made possible through pension systems’ prudent investments and good market returns.

The COLA would mean about a $29 a month increase in the pension checks of some 35,000 retirees of the Louisiana State Employees Retirement System. Retirees must be at least age 60 and retired for a year. It will take $105 million of the $196 million in LASERS experience account to cover the cost. The COLA is in Senate Bill 18.

The Association of Retired State Employee executive director Frank Joubert said there has been a 13 percent increase in the consumer price index since 2008 — the last time retirees got a pension increase. “The cumulative effect for six years is very devastating,” said Jobert, noting the rising cost of food, medicine and gasoline.

Some 64,000 retirees of the Teachers Retirement System of Louisiana would also be eligible for a $29 per month pension check increase via Senate Bill 21. The increase will cost $203 million and is funded through an experience account that has a $219 million in it.

About 11,000 Louisiana School Employees Retirement System retirees would get an average $14 a month increase through SB19. The system’s experience account contains $31 million and $15.9 million will be used to fund the increase.

Senate Bill 16 funds the same 1.5 percent increase for retired State Police.

The four bills now move to the Senate floor for debate.

Senate Retirement Meeting Outcome; What's on the Agenda for Thursday's House Retirement Meeting?

The Senate Retirement Committee met March 17 and took action on one bill impacting LASERS. SB 30, which was favorably reported, provides for LASERS technical corrections regarding spousal consent, survivors' benefits, and post-Deferred Retirement Option Plan (DROP) contribution rates. The LASERS Board of Trustees supports this bill.

Sen. Guillory announced that the committee's agenda for Monday, March 24 will include the proposed 1.5 percent COLA bills. 

The House Retirement Committee is scheduled to meet Thursday, March 20, upon adjournment. Five bills impacting LASERS are currently on the agenda:

• HB 25 prohibits membership in LASERS for employees of Excelth hired on or after September 1, 2014 and also prohibits membership in TRSL of certain employees. The LASERS Board of Trustees is neutral on this bill.
• HB 38 changes retirement eligibility for new hires on or after July 1, 2014, (excluding the Hazardous Duty Services Plan) to five years of service at age 62. The LASERS Board of Trustees supports this bill.
• HB 40 zeroes out the Experience Account after payment of the July 1, 2014, COLA. Any funds remaining in the Experience Account will be applied to the Original Amortization Base. The LASERS Board opposes this bill.
• HB 86 changes the allocation investment earnings in excess of the LASERS actuarially assumed rate of return. The LASERS Board of Trustees supports this bill with amendments.
• HB 90 requires occasional supplemental payments to retirees and beneficiaries of state retirement systems from funds available in the Seniors' Supplement Fund. The LASERS Board of Trustees is neutral on this bill.

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