Budget / Featured / Pelican Site Featured

Republican Disputes Over Retirement Legislation Scuttle Reform

PrintFriendly and PDF

Senate members unwilling to “make tough vote”

BATON ROUGE, La. – Policy differences within Louisiana’s Republican Party complicated efforts to curtail the unfunded accrued liabilities (UALs) within the state’s retirement funds, key lawmakers acknowledged this week as the legislative session drew to a close.

In a 4-2 vote, the Senate Retirement Committee moved to defer legislation sponsored by Rep. Kevin Pearson’s (R-Slidell) on Sunday, which adjusted the way benefits were calculated. Republican Senators Fred Mills of St. Martinville and Jonathan Perry of Abbeville joined with their Democratic colleagues to defeat the bill.

However, the need for pension reform will be back “front and center” again next year, Rep. Brett Geymann (R-Lake Charles) said. If Gov. Bobby Jindal wins re-election this fall, Geymann continued, he will have more flexibility to push reforms aimed at bolstering the pension system and lowering taxpayer costs.

Rep. Pearson’s Retirement State Systems (HB 530) bill passed the House in a 77-20 vote earlier this month. The legislation called for changing the final average compensation (FAC) from three years to five years. This would translate into immediate savings up front that would lower pension generosity and UALs. (Under current formula, if the five highest paid years are $50,000, $55,000, $60,000, $65,000 and $70,000, the three-year FAC would be $65,000. The proposed five year FAC that Pearson proposed would reduce the average to $60,000.)

Pearson’s plan was in direct competition Gov. Jindal’s proposal to increase pension contributions from 8 to 11 percent for state workers not included in the Louisiana State Employee Retirement System’s (LASERS) more generous sub plans. Rep. Kirk Talbot’s HB 479 included Jindal’s proposal.

Although it cleared the House Retirement Committee in a narrow six to four vote, Talbot’s bill did not move on the Senate floor.

House committee members who questioned Talbot and Kristy Nichols, Jindal’s deputy chief of staff during a hearing on HB 479, expressed concern that the governor’s preferred plan did not do enough to address UALs.

“Gov Jindal has a strong Republican team in the House and I would just encourage him to use these resources,” Rep. Jim Morris (R-Oil City), said. “We need to start these discussions now, because we cannot afford to delay reform.”

Sen. Elbert Guillory, (D-Opelousas) said that he felt compelled to “lead the charge” against Pearson’s bill on the Senate side because he was convinced it was unconstitutional.

“Once a deal is made with employees, we cannot change in mid-stream,” Guillory said. “We already have a situation where there have not been any raises or merit increases. I do agree with Rep. Pearson that we need to address the unfunded liabilities. But we need to do it in a legal and responsible way.”

Pearson’s original bill provided for a one percent across-the-board increase in employee contributions for state workers beginning July 1, 2012, and an additional one percent increase beginning July 1, 2013.
Looking ahead to the next legislative session, Pearson anticipates that he will re-enter the fray to help lock in reforms that strengthen the retirement system for all workers.

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

Tags: , , , , , , ,