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."

Get Answers in LASERS New Video

Click here to view the video.

With more than 20 LASERS retirement plans, how do you find your plan? And once you find it, how do you know when you are eligible for retirement? 

To find answers to these questions and much more, view our latest video,What is Your Retirement Plan and Retirement Eligibility? The video is formatted for closed captioning and is available on the LASERS YouTube channel and LEO. 

 

Please be aware that access may be denied to YouTube at your workplace because of filters put in place by your agency. LASERS has placed some educational videos on LEO in the event you are unable to view YouTube. Follow these instructions for the LEO Portal.

 

If you wish to be notified each time LASERS uploads a new video, we encourage you to subscribe to our channel by clicking the "subscribe"button located on the LASERS YouTube channel. 

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.

Louisiana House OKs cost of living increase for state retirees, but there's still another hurdle

Mark Ballard
The Advocate

Not a single Louisiana representative and senator has voted against raising the monthly pension checks for most of the state’s retirees.

But the bill that passed the full House on Monday 92-0 is not the same as the version that passed the Senate 35-0 on April 13.

The differences between the House and Senate measures would have to be worked out — both chambers must agree on the exact language — before any cost of living adjustments could be approved and sent to the governor for his signature.

The cost of living adjustment, for about 125,000 retirees beginning on July 1, in Senate Bill 2 is conditioned on the passage of two other bills that tweak how the retirement system funds retirements and pays for administrative costs. House Bill 32 carries no conditions and would simply raise the benefits.

“The key point,” said Rep. Sam Jones, the Franklin Democrat who sponsored HB32, “is we have consensus to pass a COLA.”

HB32 and SB2 would give retired state workers and public school teachers over the age of 60 a 1.5 percent increase. Retirees in the systems that handle the pensions for State Police employees and public school workers over the age of 60 would receive an increase of about 2 percent.

The average monthly increase would be about $30 but could vary based on the circumstances of individual retirees and the retirement systems to which they belong. It would be the first cost of living adjustment in two years for many retirees. For others, it’ll be the first raise in benefits in at least eight years, Jones said.

The state is in a fiscal crisis and is still looking at a budget deficit of about $600 million for the fiscal year that begins July 1, without any real plan to bridge that gap short of draconian cuts to hospitals, higher education institutions and possibly not funding the college tuition-paying Taylor Opportunity Program for Students, or TOPS, for more than 30,000 students already qualified for the scholarships.

But the money would come from an account where excess investment earnings were deposited and the $385 million ultimate cost would not impact the state budget. The money in the funds cannot legally be used for other state expenses.

Part of the reason for the $20 billion debt issue involving retirement accounts is the COLAs granted over the years. Generally, the additional dollars were tacked onto the debt, which state government didn’t adequately fund.

Two years ago, Act 399 set criteria that allowed cost of living adjustments every other year, provided enough money was in the excess investment accounts and the systems hit predetermined levels of funding. Part of the criteria is inflation, which last year was below the amount needed to trigger the increased benefit.

Both Jones and Sen. Barrow Peacock, who sponsored SB2, acknowledge that the federal consumer price index last year wasn’t high enough. However, they argue, the cost of health care and food, on which seniors spend most of their money, rose last year, while the collapse of energy prices drove down the official inflation rate. If looking at the rise in consumer prices over the past two years, the inflation rate is plenty high enough, both Jones and Peacock said.

While Jones’ House bill puts no conditions on the adjustment, Peacock’s Senate Bill 2 would grant a COLA only if two other measures also are approved.

A Shreveport Republican who chairs the Senate retirement panel, Peacock said during an interview moments before the House vote that he still wants to link the cost of living adjustment to his two other bills. Senate Bill 18 would tinker with how the retirement systems are funded, and Senate Bill 5 would require administrative costs to be paid annually rather than rolled into the long-term debt.

“The important thing is to help the long-term soundness of the retirement system,” Peacock said.

Jones said he is OK with the two measures attached to Peacock’s cost of living adjustment bill. But the two of them haven’t yet met to decide how best to proceed.

All three Senate bills are scheduled for a hearing Thursday before the House Retirement Committee.

HB32 now goes to the Senate, where it’ll likely be assigned to Peacock’s committee for a hearing.

Original article here.

Legislative Update for April 8, 2016

The House and Governmental Affairs Committee met Wednesday, April 6 and reported HB 78 favorably. Two bills passed unanimously on the Senate Floor:   SB 14, sponsored by Sen. Morrish, would add employees of the Chenier Plain Coastal Restoration and Protection Authority to LASERS. The LASERS Board of Trustees is neutral on this bill.   SB 18, sponsored by Sen. Peacock, passed after three sets of technical amendments were adopted. This bill clarifies provisions created in Act 399 of 2014; reduces the amortization period for actuarial gains and losses from 30 years to 20 years once the System is 70 percent funded (rather than 85 percent funded); and provides for the re-amortization of schedules of gains and losses for the 2019-2020 fiscal year and every fifth fiscal year thereafter. The LASERS Board of Trustees supports this bill, as amended.   SBs 14 and 18 now move to the House Retirement Committee for consideration.

Upcoming Meetings  The Senate Revenue and Fiscal Affairs Committee is scheduled to meet Monday, April 11 at 1:30 p.m. There will be a discussion regarding the tax exemptions for retirement benefits paid by public retirement systems. The House Retirement Committee is scheduled to meet Thursday, April 14 at 9:00 a.m.  Four bills are on the agenda that would impact LASERS if passed:   HB 14, sponsored by Rep. Pearson, replaces the chairmen of the House and Senate committees on retirement with the speaker of the House of Representatives and the president of the Senate as trustees on each state and statewide retirement system board. The LASERS Board of Trustees has not yet taken a position on this bill.   HB 32, sponsored by Rep. Jones, 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 LASERS retirees and beneficiaries and provides for the order in which credits and debits shall be applied to the Experience Account (the Experience Account will not be refilled in years when a COLA is granted). The LASERS Board of Trustees has not yet taken a position on this bill. HB 33, sponsored by Rep. Jones, authorizes the LASERS Board of Trustees to grant Cost of Living Adjustments (COLAs) without legislative approval when the COLA conditions are met. COLAs shall be based on the first $60,000 of the retiree's annual benefit and the $60,000 limit shall increase based on any increase in the CPI-U beginning July 1, 2028. The LASERS Board has not yet taken a position on this bill.                                         HB 910, sponsored by Rep. Talbot, prohibits membership in LASERS for employees of a primary health center established under federal law whose first date of employment is on or after September 1, 2016 (Excelth is the impacted LASERS entity). The LASERS Board of Trustees is neutral on this bill.   The Senate Retirement Committee is not scheduled to meet next Monday, April 11. Please note that 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.

Louisiana legislators want to increase monthly pension checks for state retirees

The Advocate

Mark Ballard

Even as lawmakers struggle with the possibility of deep cuts to state services, the road to a bump in the monthly pension checks for nearly 125,000 state retirees and their survivors — living mostly in the Baton Rouge and New Orleans areas — begins Monday when a Louisiana Senate panel is scheduled to take up a cost of living adjustment bill.

“They’ll get a COLA because there’s enough money, but the funding mechanism means different amounts,” said Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport.

In Peacock’s Senate Bill 2, pensioners over the age of 60, who have been retired for at least a year and are drawing checks from one of the four state systems, would receive, starting July 1, a 1.5 percent increase for state workers and teachers; 1.8 percent bump for public school employees; and 2 percent more for State Police. It calculates out to an average increase of about $30 per month for retirees, but the exact amounts are difficult to determine and depend on many variables.

If approved, it would be the first increase in two years.

The money initially won’t be coming from the state general fund, which pays the costs of government agencies, but out of a fund called the “Experience Account” that collects excess investment dollars. That money can’t legally be used to pay anything but COLAs, though part of it goes to paying down the $20 billion debt of the retirement systems.

There’s no reason to think the legislation will not win approval, as the money already is in the experience accounts and the current situation fits the recently enacted legal criteria for awarding a cost of living adjustment, Peacock said.

Franklin Democratic Rep. Sam Jones, who has his own COLA bill, agreed.

“I thought it was going to be a little bit of a fight but it appears that everyone is on board with it, and you’ve got a governor who’ll sign it,” Jones said.

The head of the House Retirement Committee, Slidell Republican Rep. Kevin Pearson, was out of the country last week and unavailable for an interview. However, he texted that he was “probably OK on a COLA,” but wanted to see additional revamps made.

The increased benefits will cost an estimated $380 million over time, according to fiscal estimates. Those costs will be picked up by the retirement systems, which receives its dollars from the contributions of employees and state agencies plus any gains made from the investment of those monies.

Retirement costs state government about $2 billion a year, but is not a line item in the $25 billion budget. Rather, each agency pays its portion out of its appropriation.

“The most prominent thing going on with pensions in this session, last session, and the next session is the cost of living increases,” said Robert Scott, who heads the Baton Rouge-based government policy research group called the Public Affairs Research Council.

“There will be money (in the experience accounts) and the timing of it might be OK, in terms of every other year. But we don’t have enough inflation to justify it, probably,” Scott said.

Part of the $20 billion debt issue involving the retirement accounts is that COLAs were granted pell-mell over the years. Generally, the additional dollars were tacked onto the debt, which state government didn’t adequately fund. All of this contributed to the unfunded accrued liabilities, or UAL, which is the money needed to fulfill the commitments made to retirees and current members of the retirement systems.

The system was revamped in 2014 to ensure COLAs would continue, but at a pace that was sustainable for state government. It also allowed for some of the monies to go toward helping to pay down the UAL.

Act 399 set criteria that allowed cost of living adjustments every other year, provided enough money was in the experience account and the systems hit predetermined levels of funding.

“The other critical piece you also need is inflation. That’s the whole rationale for a COLA in the first place is that you have an inflationary environment and people need an adjustment to keep up with the extra cost of living,” Scott said.

The Act 399 revamp calculates COLAs, provided the criteria is met, at 2 percent times the retiree’s current benefit or the increase in the CPI-U for the prior calendar year times the benefit — whichever is less.

The Consumer Price Index for All Urban Consumers is the federal calculation for the prices paid for goods and services paid by consumers. Over the past 12 months, the CPI-U increased 1 percent before seasonal adjustment, according to the U.S. Bureau of Labor Statistics in a February report. 

Though the cost of food, clothing, shelter and medical care grew, the index was offset by dramatic reductions in the costs for fuel.

Peacock’s SB2 would grant the COLA in accordance to the funding percentages of the various systems “without regard to the consumer price index.”

Jones’ House Bill 33, which has not been scheduled for hearing, would postpone the application of the consumer price index until 2028.

“The TRSL Board is committed to working with legislators to find a balance between the responsible funding of the retirement system and protecting the purchasing power of retiree pension dollars,” said Maureen Westgard, the head of the Teachers’ Retirement System of Louisiana.

The average retired teacher receives about $2,149 per month, so the average COLA increase would be $29.50.

“The average benefit for our rank-and-file members is very modest; and our Board of Trustees supports SB2, which will provide a much-needed COLA. The funds to pay for this COLA are already set aside from excess system investment returns,” said Cindy Rougeou, the executive director of LASERS, the Louisiana State Employees’ Retirement System.

The average LASERS rank-and-file benefit is $24,660 annually. If a 1.5 percent COLA is approved, the average increase per month would be about $27.

But an average increase is a little misleading, said Irwin Felps Jr., who heads the Louisiana State Police Retirement System.

The State Police is set up for retirees over the age of 60 to receive a 2 percent increase and those over the age of 65 to receive 4 percent.

The increase LSPRS retirees see depends a lot on their age, the work they did, how long they’ve been retired and at what benefit. It could range anywhere from about $30, maybe less, to about $100, maybe a little more, Phelps said.

“What we’re talking about is another half-trip to the grocery store,” Rep. Jones said, adding that he understands the need to keep the system sustainable so that it avoids a catastrophic fiscal collapse that could endanger future benefits.

“But this problem was caused by state government, yet 95 percent of the reforms are being paid by the retirees,” Jones said.

Original article here.

Voting in Board of Trustees Election Closes October 23

LASERS active and retired members have until 4:30 p.m. (CST), on Friday, October 23 to cast their votes in the 2015 Board of Trustees Election.

 

Election packets containing candidate platforms, unique voter IDs and Personal Identification Numbers (PINs), and complete voting instructions were mailed in September to all eligible voters in the LASERS member database.

 

Below is pertinent information on the voting options you will need to use in order to meet the deadline. 

• The Internet: Go to www.vres.us/lasers and follow the instructions on the screen. Active members and retirees must use the unique voter ID and PIN supplied in the election packet to vote via the Internet.

• Telephone: To vote by touch-tone phone, active and retired members call 1.800.218.3626 and follow the automated instructions. Active members and retirees must use the unique voter ID and PIN supplied in the election packet to vote by telephone.                               

Due to the quickly approaching deadline, we no longer recommend voting by mail.

For more information about the candidates and specific voting instructions, please visit the LASERS website. For LASERS general information, please call toll free 1.800.256.3000.

 

The Board of Trustees will certify and authorize publication of the ballot count at the November 15 regular Board meeting.

The Benefits of Unused Annual and Sick Leave

Do you know the benefits of unused annual and sick leave? Of course, you should take sick days and vacation when appropriate, but at the time of retirement, unused leave can put you in a better position financially! Here's a graphic explaining your options:
http://bit.ly/1UpoT6O

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 OK’d

Some 130,000 retired state employees and teachers could get a bump in their pension checks in July after all.

The only stumbling block could be a veto by Gov. Bobby Jindal.

In a last minute move, the Legislature reversed course and agreed to the 1.5 percent cost-of-living adjustment this year instead of next.

The reason: state Rep. Jack Montoucet.

The Crowley Democrat refused to bring up legislation he sponsored that would generate $100 million to help fill the state budget hole, holding out for reconsideration of the COLA vote.

“Jack said ‘I’m not leaving you without a COLA for those retirees,” state Rep. Sam Jones, sponsor of House Bill 42 which would provide an average $30 increase in retiree pension checks.

With budget pressure, House and Senate leaders agreed to let their members rescind an earlier vote on HB42 which would have delayed the COLA until 2016.

Montoucet proceeded with his revenue-raising measure.

Earlier in the afternoon, Jones had begrudgingly accepted the Senate rewrite of legislation in the face of Senate opposition and a potential Jindal veto. And the House agreed to go along.

The Senate version of the bill also added provisions aimed at shorting up the finances of the state’s four pension systems - state employees, teachers, school employees and State Police.

“It’s not the one I want. It is what it is,” the Franklin Democrat said, in regard to the COLA delay. He said other Senate changes are good for the pension systems.

“It’s the best we could do,” Jones said.

Money to cover the average $30 a month COLA is special accounts set up for the purpose in all four retirement systems.

Jones said the retirees are struggling with escalating costs of state health insurance.

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.

Gov. Bobby Jindal challenged on retiree cost-of-living increase

Marsha Shuler
The Advocate

Louisiana Rep. Sam Jones called on Gov. Bobby Jindal Tuesday to reconsider his threat to veto a cost-of-living raise this year for 130,000 retired state employees and teachers.

Jones said it is particularly important for retirees to get a 1.5 percent bump in their pension checks now because it could be the last chance for a while.

“If we don’t give one this year almost certainly we will not give one next year,” Jones said. “We are looking at the possibility of maybe three years.”

The money to provide the average $30 monthly increase is in special accounts set up for the cost-of-living-adjustments, or COLAs, at the four statewide retirement systems: State Employee, Teachers, School Employees and State Police. But a consumer price index benchmark must be met too, Jones said.

“We will meet it this year and probably not next year. Do we likely skip three years or try to do something more immediate to address the problems of 130,000 retirees?” Jones asked.

The Franklin Democrat told his House colleagues he wanted to talk to Jindal about the situation.

Earlier in the session, the Louisiana House approved 80-20 Jones’ House Bill 42 ,which would grant the COLA effective July 1. The House forced its Retirement Committee to release the bill for action.

Jones said retirees are facing escalating state health insurance costs and have had one 1.5 percent COLA in the last eight years.

The measure ran into problems in the Senate where its Finance Committee moved the COLA date to July 1, 2016. Absent the change, administration officials said the governor would veto the measure.

Jones postponed until Wednesday a House vote on whether to send the Senate version to a conference committee to try to restore the COLA this year.

Jones told the House the administration worried that granting the COLA now would hurt Louisiana’s bond rating as it broke faith with a law designed to improve pension system finances.

“I don’t necessarily agree with that,” Jones said.

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.


“I think it’s a shame we are taking that kind of position with our retirees,” said state Rep. Ed Price, D-Gonzales.

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.”

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.”