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Despite Rising Pension Liabilities, Lawmakers Still Seek to Expand Benefits

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Sen. Gautreaux describes Jindal plan as “predatory” and calls for broader reform package

Even with accumulation of unfunded pension liabilities – $30 billion worth – some state lawmakers have introduced legislation that would expand government employee benefits.

For example, B.L. “Buddy” Shaw (R-Shreveport) has introduced the Teachers Retirement bill (SB 10), which “provides for permanent benefit increases for retirees payable from the experience account.” Shaw’s legislation calls for cost-of-living adjustments (COLAs) within the Teachers’ Retirement System of Louisiana (TRSL) not permitted under current law. The “experience account” is a separate fund that accommodates COLA deposits for anyone participating in the state employees’ retirement system.

Present law prohibits such an automatic increase in benefits in any year that the trust fund’s rate of return fails to exceed the board-approved actuarial valuation rate, currently 8.25 percent, and in which the system is less than 80 percent funded. SB 10 “deletes these prohibitions and allows a benefit increase in years in which the system is below 80% funded and fails to exceed the valuation rate of return.”

Pending legislation would also boost benefits for the assessors, those who determine fair market value of all taxable property within a particular parish. Their determination is then subject to review by local governing authorities, the state tax commission and the courts

As was previously reported, Louisiana taxpayers are covering all or part of the tab for over 70 percent of the pension plans for state assessors in 64 parishes, according to a 2010 state audit.

Sen. Neil Riser (R-Columbia) has introduced the Assessors bill (SB 34), which “provides for the payment of certain [health] insurance premium costs for certain retired assessors and assessors’ employees in Catahoula Parish.” Previous legislation had omitted benefit increases for Catahoula Parish. Over on the House side, Rep. Noble Ellington (R-Winnsboro) has introduced HB 281, which “…retains present law and adds the assessor in a parish with a population of between 10,000 and 11,000 according to the 2010 census.”

The movement to cover 100 percent of medical premiums for employees of the Assessor’s office began almost 40 years ago. In 1970, the state legislature passed a law that allowed the assessor in each parish to cover 50 percent of premiums for their employees. The attorney general subsequently clarified this change in response to an inquiry from the the chief deputy assessor in St. John the Baptist Parish. The attorney general opined in response to the inquiry that the assessor could cover 100 percent of the insurance premiums for employees.

In the just the past few years, the state legislature further extended insurance coverage for the assessors. The key bills here include Rep. Karen St. Germain’s (D-Plaquemine) HB 211 in 2007, Rep. Joe Harrison’s (R-Gray) HB 38 and then Rep. Jonathan Perry’s (R-Kaplan)  HB 354, both filed in 2008. Perry is now a state senator representing District 26. These bills made it possible to have taxpayers pick up 100 percent of the insurance costs for assessor retirees in certain parishes.

The unfunded liability of the state’s four public pension programs – over $18 billion, according to the Louisiana Comprehensive Annual Financial Report for 2010 – has earned prominence in the run up to the legislative session. Additionally, the state’s other post-employment benefits (OPED), for retiree health care and life insurance, are unfunded to the tune of $11.5 billion.

Gov. Bobby Jindal has proposed that “rank-and-file” state workers contribute 11 percent of their salaries to pensions, up from the current eight percent, and Rep. Kirk Talbot’s (R-River Ridge) Retirement Contributions Bill HR 479 includes this three percent increase. Rep. Kevin Pearson (R-Slidell) has suggested more severe action (HB 530): an increase in pension contributions for all state employees by one and half percent on their first $50,000 and then any salary over $50,000 might include a 3 percent contribution.

The governor’s proposal, however, does not sit well with Sen. DA “Butch” Gautreaux (D-Morgan City).

“It’s typical Jindal predatory politics that he goes after the weakest of the herd and goes after the folks who don’t have a voice and who are afraid for their jobs,” Gautreaux said. “So he [Jindal] goes to take three percent out of their paychecks when they have not had a raise for the past two years and then proposes something like this.” A broader reform package that is not limited to LASERS and helps to alleviate costs for existing retirement programs is needed, he added.

Sen. Gautreaux is sponsoring the Sheriffs Pension Relief Fund Bill (SB 3), which restructures the benefit package for new hires. Currently, workers can retire after 12 years of service at 55 years of age or 30 years of service at any age. But new hires would have to be 62 years old to retire after 12 years of service. To retire after 20 years of service they would have be age 60 and they would have to be 55 years old to retire after 30 years. These changes were made in the interest of cost savings at the behest of the sheriffs own pension board, Gautreaux said.

Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at kmooney@pelicaninstitute.org and he can be followed on Twitter.

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