LASERS Recognized Nationally

The Louisiana State Employees' Retirement System (LASERS) has been presented the 2016 Public Pension Standards Award for plan funding and administration excellence for the thirteenth consecutive year. Awarded by the Public Pension Coordinating Council (PPCC), an alliance of the National Association of State Retirement Administrators, the National Conference on Public Employee Retirement Systems, and the National Council on Teacher Retirement, public employee retirement system recipients are recognized for high professional standards in the areas of plan design and administration, benefits, actuarial valuations, financial reporting, investments, and membership communications.

LASERS was also recognized in a recent report from the Pew Charitable Trusts, which examined public pension plans' accounting assumptions and payment schedules to see if they were holding up over time. This analysis determined whether or not established contribution policies that are sufficient to pay down pension debt, were actually being followed. The report concluded that the top five plans in the best shape are West Virginia, New York, Indiana, South Dakota, and Louisiana. As noted in Governing magazine, "The Takeaway: This metric gets at the true health of a pension plan better than the annual funding status because it tells us in which direction a pension plan is going."

LASERS Executive Director Cindy Rougeou said, "We are proud that our System has once again been recognized by the PPCC for outstanding management among our peers and that the Pew report acknowledged our longevity for generations to come. Both positives on the national level convey to our members and state that LASERS Benefits Louisiana."

Louisiana in Top Five of State Pension Plans

This excerpt is taken from The Week in Public Finance in Governing magazine.

By Liz Farmer, August 26, 2016

Most Pensions Falling Behind

A new analysis of state public pension plans this week shows that only one in three states are actually on a path to reduce their unfunded liabilities.

The report, by the Pew Charitable Trusts, used a new metric called net amortization, which essentially measures whether a pension plan's accounting assumptions and payment schedule are holding up over time. Only 15 states are achieving positive amortization, according to Pew. In other words, they're following contribution policies that are sufficient to pay down pension debt. The remaining 35 states are facing negative amortization, or are following contribution policies that allow the funding gap to continue to grow.

Based on the measure, the plans in the worst shape are, in order: Kentucky, New Jersey, Illinois, Pennsylvania and California. The report does note that Pennsylvania has committed to large contribution increases and is projected to reach positive amortization by 2018. The top five plans in the best shape are West Virginia, New York, Indiana, South Dakota and Louisiana.

The Takeaway: This metric gets at the true health of a pension plan better than the annual funding status because it tells us in which direction a pension plan is going. Net amortization supplies the long view, which seems appropriate when talking about a program that's supposed to last for generations.

Case in point: 40 states reported decreased unfunded liabilities in 2014 thanks to stronger-than-expected investment returns. This is great news for the short term, but, according to the report, only a small number met the positive amortization benchmark. "Investment returns vary widely over time," the report said, "and most governments that sponsor pension plans made contributions that were not large enough to reduce debt based on expected long-term rates of return."

The measure helps explain why some plans -- such as Houston's or the state of Alabama's -- haven't made up ground even though governments have paid their full pension bills.

Letters: Optimism is alive in the form of Louisiana’s pension reform

In a guest column published June 7, Adam Crepelle calls for pension reform seemingly unaware that Louisiana has been a frontrunner across the country in reforming its public retirement systems. For almost 30 years, state legislators and the state retirement systems have partnered together on pension legislation that provides modest, reliable pensions for dedicated public servants at a sustainable cost.

In Louisiana, we’re so used to hearing bad news about our home. But, here’s some good news that we should all be aware of. To date, pension reforms associated with the state’s two largest retirement systems — Teachers’ Retirement System of Louisiana and the Louisiana State Employees’ Retirement System — have a projected $8 billion cost savings to the state. In fact, since Fiscal Year 2010, an additional $1.4 billion has been paid toward the debt as a result of these reforms. And, Louisiana, thanks to responsible pension reform, will be able to pay off long-term retirement liabilities before their required payoff date and provide economic relief to the employers of system members.

Just last year, the legislative actuary acknowledged this good news in a report that found TRSL and LASERS are positioned well to continue providing defined benefits far into the future. And recently, an Atlanta-based independent actuary said that the financial position of both TRSL and LASERS has improved faster than other systems in the country.

So, these reforms are working, and it’s important that we continue to allow them to work.

Switching to a different type of retirement plan, as Mr. Crepelle proposes, will not free Louisiana from its existing debt payments, but it will add uncertainty to the retirement security of many retirees who cannot participate in Social Security — as most private sector workers do.

Furthermore, the state has rigorous requirements in place that must be met before any COLA can be granted. First and foremost, the systems must have enough money to pay for the COLAs. And, by law, payment on retirement debt must be made before any money can be placed into accounts created to hold funds for COLA payments. On average, the COLAs granted this year will be enough to buy one tank of gas.

Louisiana has a solid track record of taking bold and important steps over the past 30 years to ensure the sustainability of its pension systems. We commend legislators, past and present, for the work that they have done, and look forward to continuing to work together to provide viable retirement systems that impact more than 332,000 lives as well as countless local economies across this state.

Maureen H. Westgard

TRSL director

Baton Rouge

Cindy Rougeou

LASERS executive director

Baton Rouge

Original article here.

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.

LASERS Sustainability Affirmed in Legislative Actuary Report

A new report, Sustainability of the Louisiana State Retirement Systems, was presented by the Legislative Actuary last week at the Public Retirement Systems Actuarial Committee (PRSAC) meeting. The conclusions in the report affirm the sustainability of LASERS. The most important findings include:

• The defined benefit plan administered by LASERS is inexpensive, about half the cost of Social Security;

• The debt payment (Unfunded Accrued Liability), makes up the lion's share of the state's employer contribution to LASERS; which means changing the type of benefit plan we offer would not improve the state's financial situation;
  
• The positive financial status of the LASERS plan, coupled with the difference that legislative reforms are making to reduce the debt payment, indicates there is a high likelihood that the UAL will be paid off early.

For details, view the Legislative Actuary's PowerPoint Presentation from the meeting.

Additional information is found in this report by The Advocate.

Despite debt, state pension plans for workers, teachers in a ‘relatively good financial position,’ analysis finds

Marsha Shuler
The Advocate

Despite a staggering debt, the state’s two largest pension plans — for state employees and teachers — are sustainable and are in a “relatively good financial position,” the Legislature’s retirement financial guru reports.

And the state government retirement systems are still cheaper than the cost of enrolling teachers and state workers in the federal Social Security program, according to the analysis.

About 250,000 people, actively employed and retired, are members of the Louisiana State Employees Retirement System, better known as LASERS, and the Teachers Retirement System of Louisiana, or TRSL.

“The problem with the retirement systems is not the plan design, but rather, it is the fact that ... debts have accumulated in the past that now must be paid,” legislative actuary Paul Richmond said.

Most of the hefty contributions state government makes to the systems are extra payments aimed at eliminating the systems’ combined $19 billion in unfunded accrued liability. UAL is an actuarial term that refers to the difference between the retirement benefits state government promised to pay its employees in the future and the amount of assets presently on hand. The state systems’ massive debt came because past Legislatures and governors did not provide sufficient dollars to cover promised benefits.

Richmond said the contributions to pay off that debt are “generally sustainable” and said there’s a 50-50 chance that LASERS and TRSL will be fully funded by 2029.

“If the UAL is out of the picture, what this says is that the cost of the current benefits for LASERS is 3.5 percent (of pay) and for Teachers 4.2 percent because of the reforms the Legislature has made,” Legislative Auditor Daryl Purpera said. “This is not a very expensive benefit structure. Anything less than 6.2 percent (the cost for Social Security) is really wonderful. It’s very sustainable.”

Louisiana is one of seven states that don’t have employees enrolled in federal Social Security, opting decades ago to instead run its own pension system.

LASERS and TRSL operate traditional defined-benefit plans that determine long-term pension commitments based on a formula that includes the number of years worked and salary earned.

The Legislature, with the pension systems’ support, has made a series of changes in recent years. Changes included increasing the retirement age for new hires; computing the pension benefit based on the final five — instead of three — years of employment; adopting laws to prevent major increases in salaries prior to retirement; and limiting cost-of-living adjustments for retirees.

All those factors played into Richmond’s analysis, which shows decreasing state and local contributions to cover normal costs of the pension systems.

“The reality is the people in the old plan over time will retire and be replaced by new people under new plans that are less costly,” TRSL Executive Director Maureen Westgard said. That is driving down costs year by year, she said.

LASERS Executive Director Cindy Rougeou said Richmond’s report reaffirms that the benefit structure is not the problem. “It’s the financing of the UAL,” Rougeou said. In the case of LASERS, the debt payment was $630 million out of $700 million in contributions.
Gov. Bobby Jindal attempted to extensively overhaul the system, saying it was too costly. He pointed to the escalating pension costs to the state.

“You could not create a benefit structure more economical for the state,” Rougeou said. “The legislative reforms are making a huge difference.”

Voters, decades ago, approved a constitutional amendment requiring the elimination of the UAL by 2029.

Extra payments are appropriated annually toward debt eradication.

A 2014 law is projected to save taxpayers $5 billion over time because pension debts will be paid off sooner. The legislation, sponsored by state Rep. Joel Robideaux, R-Lafayette, puts more retirement system “excess earnings” — those over 7.75 percent — toward debt retirement before dollars go into a special account through which retiree cost-of-living raises are funded.

LASERS and TRSL also reduced their projected annual investment returns from 8 percent to 7.75 percent. All the earnings above that mark go to paying off the debt.

Because the systems expect to earn less, the more money made over the 7.75 percent mark means the more money that can go toward paying off debt and thus end up lowering payments required of the state.

COLA Approved by 2015 Legislature

HB 42 by Representative Sam Jones, and 75 co-authors, authorizes a cost-of-living adjustment (COLA) of up to 1.5 percent (based on the amount of funds available in the Experience Account) for eligible retirees and beneficiaries payable July 1, 2015. A calculation of the amount of funds available will be made by the LASERS Actuary. The LASERS Board of Trustees is required to direct its Actuary to account for this COLA in the System's 2015 valuation.

House Bill 42 is subject to veto by the Governor. He has until July 5 to take action on the bill. If the legislation is approved, LASERS will make a retroactive payment for the July COLA amount. Eligible retirees will be notified of the timing of the payment and the month when they can expect that their monthly benefit will reflect their adjusted benefit amount.

The COLA is payable only on the first $60,000 of the retirement benefit. In order to be eligible for the increase:

• Retirees must be age 60 or older and must have received a benefit for one year as of June 30, 2015;
• Disability retirees must have received a benefit for one year as of June 30, 2015; or
• Beneficiaries of retirees, who would have attained age 60, are eligible if benefits have been paid to the retiree or the beneficiary, or both combined, for at least one year as of June 30, 2015.

The legislation also contains a number of pension reform provisions, such as:

• The Experience Account will not be refilled in years when a COLA is granted. This will apply more investment earnings to debt and less toward funding of COLAs. The result will likely reduce frequency of future COLAs.
• Certain amortization periods are changed from 30 to 20 years, through incremental reductions. This change will have a larger impact on future actuarial losses than it will on gains, which means money will come into the System sooner.
• The re-amortization of certain schedules which will result in a more balanced recognition of gains and losses and will serve to lower the employer contribution rate.
• COLAs will be funded within 10 years; more closely aligning the funding of COLAs cost with the expected lifetime payments to the recipients.

COLA for retired state employees, teachers up in air

Capitol News Bureau
The Advocate

A dispute between the Louisiana House and Senate continued Thursday over a cost-of-living raise for some 130,000 retired state employees and teachers.

Earlier, the House voted to grant a 1.5 percent pension check boost effective July 1. But the Senate version of House Bill 42 would delay the average $30 a month bump until July 1, 2016.

Bill sponsor state Rep. Sam Jones asked the House to reject the Senate change and his colleagues complied on a 77-10 vote.

The action sends the cost-of-living adjustment issue to a House-Senate conference committee with only hours left in the 2015 legislative session.

If the raise is not granted this year, Jones argues that legal constraints in state law would prohibit one next year and potentially for the next three years.

The Franklin Democrat said the retirees are struggling with escalating costs of state health insurance.

The money to fund the COLAs is in special pension system accounts set aside for the purpose.


A COLA is not supposed to be granted until next year because of a 2014 state law aimed at improving pension system finances.

COLA Bill Update

HB 42, by Representative Sam Jones, was amended and passed in the Senate Finance Committee and on the Senate Floor. In its current form, the bill would authorize a COLA of up to 1.5 percent for eligible LASERS retirees and beneficiaries, starting July 1, 2016.

The date change for the COLA took into account testimony from the Governor's Office that paying two COLAs in a row would cause concerns for the State's bond rating agencies. Eligible LASERS retirees and beneficiaries received a 1.5 percent COLA in 2014.

The 2016 timing would be consistent with the reforms enacted last legislative session which only authorize a COLA every other year until the System is at least 85 percent funded. The amendments also make changes that positively impact the long-term funded status of the System.

HB 42 will next go back to the House of Representatives for concurrence in the Senate amendments.

Meeting schedules are subject to change. Check the LASERS website daily for updates and for detailed information about proposed retirement legislation that may impact LASERS if passed.

View Senate and House Retirement Committee meetings here.

Pension fixes added to COLA increase bill

Marsha Shuler
The Advocate

Some friendly hitchhikers added to an effort to boost the monthly pension checks of retired state employees and teachers should help ensure the bill’s passage, the legislation’s sponsor said Monday.

The Senate Retirement Committee amended House Bill 42, then agreed to the proposed 1.5 percent cost-of-living adjustment, or COLA, for about 135,000 retirees.

The measure now heads to the Senate floor for debate. If approved there, it would return to the House for concurrence in Senate changes.

“I feel really good about it,” said Rep. Sam Jones, D-Franklin, who is sponsoring HB42. “It’s an easier task to carry this back.”

Jones argued that retirees needed a pension increase this year because health care costs had more than eaten up last year’s average monthly benefits increase of less than $30 a month. The pension adjustment proposed by Jones would add another $30 per month to the average retiree’s check.

The Senate panel added some provisions aimed at shoring up the finances of the four statewide retirement systems to which the retirees belong. The two largest — teachers and state employees — have a combined $19 billion in long-term liabilities.

“It’s an incredible balancing act,” committee chairman Sen. Elbert Guillory said. “It’s a balancing of the idea and inclination of legislators who want to grant a COLA and other concerns about the long-term impact on the system.

“I guess you can call this a Christmas bill. There’s a little something for everybody in it,” the Opelousas Republican said.

The House approved the COLA measure on an 80-20 vote last week with opponents citing concerns over the pension systems finances. The same opposition initially bottled it up in committee, refusing to advance the bill.

The COLA covers retirees of the four statewide pension systems — state employees, teachers, school employees and State Police.

The new provisions would put more money into the retirement systems to more quickly to pay down what are called unfunded accrued liabilities, or UAL — the dollars needed to fulfill all the pension obligations to retired and current members. Instead of debts being paid off over 30 years, the period would gradually be reduced to 20 years by the year 2020.

“This will make our system a whole lot more actuarially sound,” Sen. Barrow Peacock, R-Shreveport, said.

Another change would help control the cost of employer contributions, which both state government and local school boards have been struggling to pay.

“This shores up some funding and will cause accelerated funding of the retirement system reducing the interest payments,” Legislative Actuary Paul Richmond told the panel.

The retirees got a COLA last year and were not supposed to receive one this year under a new law. Under the 2014 law, more of the retirement systems’ excess investment earnings will go toward reduction of long-term debts before dollars are put into the special COLA accounts.

The changes limited both the frequency and amount of future retiree benefit hikes until systems hit certain unfunded accrued liability levels.

The Senate committee adopted amendments allowing the 1.5 percent COLA for all groups as well as the potential for up to 2 percent for school employees and State Police if funds were available. School employees and State Police have hit the benchmark for a potential 2 percent COLA.

But the panel said there would be no adjustment in the following year because no money would be deposited in the special accounts from which COLAs are paid.

Retirement system officials had earlier testified that the $350 million to cover the long-term expense of a 1.5 percent permanent benefit adjustment was available.

The COLA would average $26 a month for state employee retirees and $28.72 for teacher retirees.

“You have provided a belt and suspenders ... granting a COLA but also improving the financial soundness of the system,” said Cindy Rougeou, executive director of the Louisiana State Employees Retirement System, better known as LASERS.

“We don’t see anything that would have great concerns for us,” Teachers Retirement System of Louisiana Executive Director Maureen Westgard said of the changes.


Retired State Employees Association lobbyist Frank Jobert called the changes “a fair trade-off to accelerate the COLA this year and forgo next.”

Legislative Update as of May 29, 2015

The COLA bill, HB 42, sponsored by Representative Sam Jones, was passed on the House Floor with a vote of 80 to 20. The bill is scheduled to be heard by the Senate Retirement Committee on Monday, June 1 at noon. If passed, HB 42 would authorize a Cost-of-Living Adjustment (COLA) of up to 1.5 percent for eligible LASERS retirees and beneficiaries. The LASERS Board of Trustees supports this legislation.

HB 46, sponsored by Representative Reynolds, has now passed on the Senate and House Floors. This bill provides for survivor benefits for children of wildlife agents in the enforcement division of the Department of Wildlife and Fisheries. The LASERS Board is neutral on this legislation.

HB 800, sponsored by Representative Fannin, passed on the House Floor with a vote of 75 to 22. This bill appropriates surplus funds to LASERS to be applied to the Initial Unfunded Accrued Liability (IUAL) of the system, as required by the State Constitution. HB 800 now moves to the Senate Finance Committee for consideration.

Meeting schedules are subject to change. Check the LASERS website daily for updates and for detailed information about proposed retirement legislation that may impact LASERS if passed.

View Senate and House Retirement Committee meetings here.

Pension hike for state employees, teachers, school workers, State Police get Louisiana House endorsement; measure now moves on to Senate for debate

Marsha Shuler

The Advocate

The Louisiana House on Tuesday endorsed a cost-of-living increase in the pension checks of about 100,000 retired state employees, teachers, school workers and State Police troopers.

The House voted 80-20 for the measure, which now heads to the Senate for debate.

The bill would grant a 1.5 percent permanent benefit adjustment to retirees of the state’s four pension systems. The average increase would be under $30 a month.

Rep. Sam Jones said the pension plans have the money in special accounts set up for retiree cost-of-living adjustments, or COLAs. “It has a zero impact on the state general fund,” he said.

Jones said retirees are suffering now because of increased state health insurance program costs, with some premiums going up $58 a month and copays added. Retirees need the help now, instead of next year when they are scheduled to receive one.

“Reach way down and think about that 91-year-old retired teacher who doesn’t have $2,500 to contribute, no lobbyist, no association,” Jones said. “You and me are her lobbyist.”

Opposition came from House Retirement Committee chairman Kevin Pearson, R-Slidell, who said granting the COLA now would increase the state retirement systems long-term debt and lead to increased contributions from the state and local school districts toward pension costs.

“The systems are only about 60 percent funded. We have taken steps to get that on the right trajectory. House Bill 42 will undo that,” Pearson said.

Pearson said the COLA would alter the debt reduction plan approved last year and would send a bad signal to bond rating agencies. The law was aimed at strengthening the finances of the retirement plans.

Under that law, more of the retirement systems’ excess investment earnings will go toward reduction of long-term debts before dollars are put into the special accounts from which COLAs are granted. The changes limited both the frequency and amount of future retiree benefit hikes until systems hit certain unfunded accrued liability levels. Retired state employees, teachers, school employees and State Police got a cost-of-living increase last year, but under the new law were not to get one in the coming year.

The COLA accounts of the pension systems have the $350 million in them necessary to cover the pension check raise. The money would have to be replenished before another COLA could be granted.

“We’re only talking about $30 more a month. $30 is not a lot of money,” said Rep. James Armes, D-Leesville. He warned his House colleagues that the funds could be robbed if left sitting — like others have been as the state struggles with budget problems.

“These people need a break today,” said Rep. Kenny Cox, D-Mansfield.

But Rep. Barry Ivey, R-Central, said the state pension system’s unfunded liabilities keep rising because “we don’t stick to a plan for improvement.”

“We are never going to get anywhere,” Ivey said. “We are headed in the wrong direction.”

LASERS Launches New Initiative for Millennials

The month of May marks the launch of LASERS new initiative, Millennials Investing Now for Tomorrow or MINT, targeted to state employees in the early stages of their careers. MINT is designed to educate early-career LASERS members on the basics of the System and guide them in the direction of securing their financial future.

If you are a LASERS member between the ages of 20-35, the two-part question you should ask yourself is, “Do I understand my retirement system and am I saving enough for my retirement now?”

LASERS is a defined benefit plan, which means that your contributions to LASERS (automatically deducted from each paycheck) help to fund a benefit that is guaranteed to you monthly for life once you retire. Although the LASERS defined benefit plan offers a guaranteed retirement benefit, the average rank-and-file retiree’s benefits is modest at $24,204 annually. LASERS encourages you to be aware of ways you can supplement your LASERS retirement benefit and understand what options are available for you to take advantage of now, so you can reap the benefits at retirement age.

Do you know which LASERS retirement plan you are in? Do you know how a LASERS benefit is calculated? Do you contribute to the Deferred Compensation Plan? Do you know the benefits of preserving your annual and sick leave balances? Do you know the benefits of purchasing or transferring service credit early in your career? These are all questions that MINT is designed to answer, along with many more topics.

The MINT campaign will be a series of infographics based on specific topics that are beneficial to our MINT audience. Each infographic will be released via the LASERS Member Connection email service, the LASERS website, and our social media accounts. To keep up with the topics, check out the MINT web page on the LASERS website, subscribe to the email list, and follow us on Facebook and Twitter.  

If you have specific questions about MINT or would like to share your ideas for topics, please email us at lasersmint@lasersonline.org.

LASERS Board Takes Positions on Prefiled Retirement Bills

The LASERS Board of Trustees met on March 26 and voted to take positions on eight prefiled retirement bills that would directly impact LASERS if passed.

 

Trustees voted to support HB 42 by Representative Sam Jones to authorize a Cost-of-Living Adjustment (COLA) of up to 1.5 percent for LASERS retirees and beneficiaries. This COLA would be funded through the LASERS Experience Account which currently has a balance of $117 million.

Trustees also supported SB 16 by Senator Elbert Guillory which would clarify provisions created in Act 399 of 2014 regarding excess investment earnings, employer contributions, and Cost-of-Living Adjustments (COLAs).

Several measures were supported by the Board insofar as they would reduce system debt:

• HB 33 by Representative Berthelot would increase litter fines and distribute 50 percent of the fines to the retirement system of the law enforcement agency issuing the litter citation.
   
• HB 55 by Representative Ritchie and SB 15 by Senator Nevers are identical measures that call for a Constitutional Amendment that would levy a tax on the use of hydrocarbon processing facilities and dedicate a portion of the tax proceeds to payment of the Initial Unfunded Accrued Liability (IUAL) of LASERS. 

Trustees voted to take a neutral position on the following bills:

• HB 45 by Representative Pearson provides that membership is optional for persons age sixty-two or older at the time of employment, consistent with the age sixty-two retirement eligibility for new hires after July 1, 2015.

• HB 46 by Representative Reynolds provides relative to benefits for minor children of certain wildlife agents in the enforcement division of the Department of Wildlife and Fisheries.

• SB 14 by Senator Guillory includes non-investment related administrative expenses in calculating the required employer contribution rate.

The positions taken are based on the initial language of the legislation. For more information, visit the LASERS website.

The 2015 Legislative Session convenes April 13 and ends June 11. Progress on these proposed retirement bills will be tracked and updated on the LASERS website frequently. Check back often for updates.

LASERS Benefits Louisiana, New Facts Available

Two new LASERS informational pieces have been created to demonstrate how LASERS Benefits Louisiana.

The LASERS Infographic is a visual representation, showing the positive difference LASERS is making in Louisiana's economy, the cost-effectiveness of the System, and how we are implementing money-saving reforms.

The LASERS Fact Sheet gives a brief synopsis of the System's assets, returns, rankings, membership numbers, and more in an easy-to-read format.

LASERS Benefits Louisiana by providing over $1 billion in annual benefits to retirees and their beneficiaries. View the infographic and read the facts for a snapshot of LASERS economic impact on Louisiana.

The Facts about Retirement Changes

The following guest commentary by LASERS Executive Director Cindy Rougeou is in response to Jim Beam's column in the Lake Charles American Press on February 1.

The Facts about Retirement Changes

Several recent reports, containing inaccurate data, are challenging the sustainability of public retirement systems nationally and in Louisiana. By failing to note the multi-billion dollar pension reforms that have been enacted by our Legislature over the past 10 years, these reports do a great disservice.

It is important to recognize the work of the Louisiana Legislature over the past decade in adopting significant pension reforms that are expected to save LASERS nearly $3 billion; thereby reducing taxpayer costs while significantly improving LASERS sustainability.  It is surprising that the passage and immense impact of these reforms seem to be the best kept secret in our state. Those reforms enabled the LASERS Board of Trustees to approve and recommend additional reforms to our cost method and actuarially assumed rate of return that will provide greater budget stability going forward.

We reduced our actuarially assumed rate of return to 7.75 percent, a more fiscally responsible expectation.  Changing our cost method did result in a one-time increase in the unfunded accrued liability (UAL) but that cost was almost entirely offset by the decrease in the cost of the accruing benefit. The employer contribution to LASERS consists of the debt payment and the employer cost of the accruing benefit. For purposes of comparison, a private employer pays 6.2 percent to Social Security for the cost of the accruing benefit; next year the State will be paying 3.54 percent for the cost of the LASERS accruing benefit. And as you may recall, our members do not participate in Social Security.

It is the initial unfunded accrued liability (IUAL), not the total UAL that must be paid off by the year 2029. We are on track for this pay-off to occur; and with recent legislative changes, this pay-off may occur earlier than 2029.

Because of the 2014 reforms, the State will be paying LASERS $63 million less next year than was paid the year before and the employer contribution rate will be reduced. I am also proud that LASERS Benefits Louisiana by generating $1.27 billion in state economic activity. Louisiana has actually been on the leading edge of pension reform.  To say that nothing is being done, could not be further from the truth.

Battle over Louisiana pension funds shaping up

Marsha Shuler

The Advocate

More than $300 million is sitting in state employee and teachers pension system accounts reserved for future cost- of-living raises for retirees.

A state senator wants the 90,000-plus retirees to get an immediate boost in their pension checks. But some of the Louisiana Legislature’s budget committee members are eyeing the dollars to help close a $1.4 billion — and growing — gap between spending and revenues in the state budget.

Cindy Rougeou, Louisiana State Employees Retirement System executive director, said it would not be the first time dollars were “swept” from the retiree cost-of-living accounts. She said it happened in 2009 with dollars going to payments on the systems’ unfunded accrued liability. Commonly called the UAL, the term refers to the amount of money necessary to pay out all promised future benefits. The state contributes extra dollars to pay down the immense debt.

“They are already giving us $63 million fewer dollars in employer contributions this coming year because our investment earnings have been so good,” Rougeou said.

The Teachers Retirement System of Louisiana has $218 million available in the accounts used to pay cost-of-living bumps. The Louisiana State Employees Retirement System has $117 million, which is sufficient to cover a 1.5 percent raise.

The money cannot legally be taken out of pension systems for use in funding other areas of the budget. But the dollars can be used toward reducing the pension systems’ long-term debts, which stand at $19 billion: $12 billion for teachers’ retirements and $7 billion for state government retirees. The payments toward the UAL would reduce the required state contribution. That would free up state dollars for other purposes.

“We have a long way to go. Some people already have designs on the money,” said Retired State Employees Association legislative liaison Frank Jobert. The large stash of cash is already getting the attention of some members of the Legislature’s budget committee who are “wondering if they can get access to it.”

Jobert said retirees want the money reserved for its intended purpose — cost-of-living adjustments to retiree pension checks.

The retiree group will publish the required public notice that legislation will be filed aimed at granting a cost-of-living increase, Jobert said.

Retirees will push for a 1.5 percent cost-of-living increase in the fiscal year that begins July 1 with help from Senate Retirement Committee Chairman Elbert Guillory, R-Opelousas. Retirees got a 1.5 percent adjustment during the current fiscal year. Under a 2014 law, retirees would be eligible for cost-of-living adjustments only every other year, meaning there would not be one in the new fiscal year, which begins July 1.

Neither Guillory nor House Retirement Committee Chairman Kevin Pearson, who are both LASERS board members, attended LASERS’s meeting on Friday.

During an interview later in the day, Guillory said he will file legislation to grant a $50 a month extra payment to retirees or a 1.5 percent cost-of-living raise.

Guillory said the increase would offset the cost of (state) health insurance because those premiums have skyrocketed. “This year is crucial because of those high insurance costs,” Guillory said.

The Jindal administration’s revamp of the state’s Group Benefits insurance program will require members to pay nearly 11 percent more in premiums beginning July 1.

Guillory said he has heard talk of using the cost-of-living or COLA accounts to help balance the budget.

“It’s one of my great concerns. It should be used for the purpose it was set up,” Guillory said. “It’s there to help retirees, not funnel money into the general fund in any way.”

Contacted Friday afternoon, Pearson, R-Slidell, said he has “severe reservations” about the COLA proposal and raiding the fund.

“It’s going to take a lot of will from some to take that money and put it toward the UAL,” Pearson said. “I don’t know that it’s good to make it a regular practice.”

LASERS Awarded for 11th Straight Year

From The Advocate: 

The Louisiana State Employees Retirement System received the 2014 Public Pension Standard Award for the 11th consecutive year. The award for plan funding and administration excellence is presented by the Public Pension Coordinating Council.

LASERS Executive Director Cindy Rougeou said the award is “another example of how LASERS benefits Louisiana.”

LASERS administers a defined benefit pension plan that covers approximately 150,000 members. It pays more than $1 billion in annual benefits to retirees and their beneficiaries.

The full press release can be found here on the LASERS website. 

Pension debt reduction plan a no-go

Original article here.
Marsha Shuler, The Advocate

A proposal to borrow money to help reduce state pension system debts got shot down quickly Monday.

The idea was to borrow money that would be used to pay one lump sum and buy out the pensions of vested retirees who have not yet begun to draw their benefits. Waiting before drawing on a pension allows the retiree’s pension to increase in value. Paying off the benefits of those retirees would reduce the state’s $20 billion long-term debt obligations, called the unfunded accrued liability.

But a state treasury official, the Legislature’s actuary and two state retirement system chiefs all testified that the idea was plagued with problems.

Just how many vested retirees could take part in such a program, if approved, is unclear. However, the Teachers Retirement System of Louisiana has 6,336 vested but inactive members, and the value of their pensions is $283 million.

Maureen Westgard, executive director of the Teachers Retirement System, said her board “has viewed (the idea of borrowing) as highly risky” in the past.

The testimony came as the state House Retirement Committee took up a study resolution passed during the 2014 Legislature. Committee Chairman Kevin Pearson’s resolution involved offering an optional lump-sum pension buyout to certain vested, inactive members.

The state would borrow the money to cover the buyouts. “The borrowing costs to finance such buyouts would be less than the interest rate on the unfunded accrued liability associated with such benefits,” the resolution stated, thereby improving the pension system’s finances.

Goldman Sachs pitched the idea of “pension obligation bonds,” and he wanted to see if the idea was a viable one, said Pearson, R-Slidell.

“Pension obligation bond history has not been very favorable,” said legislative actuary Paul Richmond, who noted a disaster involving the New Orleans firefighters retirement system.

First Assistant State Treasurer Ron Henson said the state is restricted in its ability to issue debt by a limit on the money it can spend annually in debt payments.

Further, he said, borrowing is already planned for state and local projects that legislators and their constituents want. “Our debt capacity will not allow the luxury of issues like these,” Henson said.

Louisiana State Employees Retirement System Executive Director Cindy Rougeou said it’s uncertain whether the idea would produce a savings or a cost.

“The overall debt is not being reduced. It’s just restructuring part of the overall UAL debt for a hard bond debt,” she said. “It’s almost taking out a second mortgage.”

LASERS Finanical Reports Now Available

We are pleased to announce that the Comprehensive Annual Financial Report (CAFR) for LASERS fiscal year ending June 30, 2014, is now available on our website. 

LASERS investment return for the fiscal year was 18.8 percent, bringing the total asset value of the System to the highest in its history. 

The CAFR, along with the Summary Annual Report or Popular Annual Financial Report (PAFR) may be found here on our website.