This week, the National Public Pension Coalition released a new report titled Why Pensions Matter, a comprehensive examination of the origins and importance of public pensions.
In 2015, no state moved away from defined benefit pensions, meaning that workers across the country will be able to retire securely.
At the mid-point of 2016, states and cities expand access to pensions!
NPPC has created summaries of state fights to protect public pensions and retirement security in 2016. Click this link to see what various states accomplished this year.
A lot of retired teachers, troopers, school workers and state government employees will start seeing slightly bigger monthly pension checks starting July 1.
Gov. John Bel Edwards on Thursday signed into law a cost-of-living adjustment for nearly 125,000 pensioners who are over the age of 60 and have been retired at least a year. Most live in the Baton Rouge and New Orleans areas. It’s the first increase in two years.
Senate Bill 2, now called Act 93, distributes the cost-of-living adjustments, called COLAs, based on calculations that rely on the funding levels of the individual retirement systems.
Members of the Louisiana State Employees’ Retirement System are in line for a 1.5 percent increase on the first $60,000 of their benefits. Teachers Retirement System of Louisiana members will receive a 1.5 percent hike.
Louisiana School Employees’ Retirement System members get a 2 percent raise as do those with the Louisiana State Police Retirement System. A number of State Police retirees over the age of 65 also are eligible for another 2 percent increase.
Read more of this article by Mark Ballard at The Advocate.
Sweeping reforms to the way the state government pays its retired employees were withdrawn Thursday when the sponsor for the four-bill package said he saw the writing on the wall.
Central state Rep. Barry Ivey, who sponsored the four bills that would have worked in concert, said the central point is to change state government retirement from a traditional system that pays retirees a monthly benefit for the rest of their lives to a hybrid model that would include both a pension and a 401(k)-type program, in which the retiree gets only the money invested over time plus any earnings.
Ivey, a Republican, said his plan would put the retirements of state employees more in line with what is offered in the private sector. At the same time, Ivey argued that the hybrid plan would cost taxpayers less and chip away at the near $20 billion difference between the promises made to retirees by the state and the amount of money available to pay those debts, which is called unfunded accrued liability.
Critics, and there were many attending the hearing, disagreed, saying the revamp would cost new state employees more while lowering their benefits in retirement.
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.
Minutes before asking Louisiana senators to endorse a proposal that he said would put most of the state’s firefighters on equal footing with the other retirement plans paid for by local governments, Sen. Barrow Peacock last week took a quick sounding of his colleagues and decided to pull the bill, at least for awhile.
The support he thought was there for Senate Bill 3 had quickly evaporated after Gov. John Bel Edwards’ aides let it be known that the governor opposed the idea, saying it would decrease the benefits for newly hired firefighters.
“It made it politically uncomfortable for some senators,” Peacock said. “I understand the governor wants to support people who have helped him in the past. But this is something that I feel like if we don’t make these small steps, we make it so bad that the door slams on our retirement systems, and then we have drastic change.”
Read more at The Advocate.
Early next week, legislation ensuring unwanted changes to Louisiana's Firefighters Retirement System will be up for vote in the Senate. Neither the Firefighters nor their leadership have asked for these changes. Here are some quick facts to be aware of regarding SB3:
- Future Firefighters will not receive the same benefits as current members. Are they not worthy of the same benefits for risking their lives?
- It's unfair to charge one employee the same contribution rate for a lesser benefit than his or her co-workers receive.
- Firefighters accepted a 25% increase in pension contributions 5 years ago to help do their part. This saved cities over $20 million in the past 5 years. SB3 is projected to save merely $4 million over the next 5 years.
- Firefighters agreed to pay 1% more in pension contributions to fund 25 and out. SB3 removes 25 and out, but doesn't reduce the contribution rate to compensate for it.
- Employer contribution rates are dropping by 2% July 1, 2016. This is the second reduction in 2 years. This will save cities over $30 million over the next 4 years.
- Under SB3, a member could suffer a line of duty debilitating injury in his or her 29th year and be one day shy of reaching their 30 year mark. This member would be forced to retire at 90% where if they'd worked an additional day, they would receive 100%. Sen. Peacock testified in Committee that his bill did not change the law pertaining to disabilities, but the law on disabilities uses the accrual rate that SB3 reduces for new hires. This decreases it from 3.3% to 3% if they retire for any reason prior to attaining 30 full years of service.
- This bill will make recruiting and retention even more difficult than it already is.
Contact your legislator today to let them know you stand with your community's firefighters.
Following the special session, the previously estimated $30 million shortfall for the current fiscal year doubled to $66 million due to the proposed tax hikes falling short. The $750 million shortfall for the next fiscal year remains.
The legislature has given Gov. Edwards the final say over where the additional cuts will be made. Gov. Edwards' chief budget advisor, Jay Dardenne, hopes to release a detailed list of reductions on Monday.
Higher education is expected to absorb half of the nearly $70 million shortfall, leaving at least $30 million to be taken on by healthcare.
The Governor's administration may alleviate the reductions over the next few weeks through various methods including "funds sweeping." This involves taking the remaining cash in dedicated state funds and putting it to towards higher education and healthcare. This could potentially reduce the current year's shortfall by $20 million. However, Gov. Edwards' administration has resisted using this tactic due to it being a quick fix often used by Jindal.
The Senate Retirement Committee heard updates from various state and statewide systems including:
- State Police Retirement System
- Sheriffs' Pension and Relief Fund
- Municipal Police Employees' Retirement System
- Firefighters' Retirement System
- District Attorneys' Retirement System
- Municipal Employees' Retirement System of Louisiana.
For the House Retirement Committee, Chairman Pearson advised other members of the committee that he was "not in a hurry" to schedule Rep. Ivey's bills, citing his belief that they cannot pass the House.
For a constantly updated list of bills we are tracking related to pensions, please click here.
Once again, TRSL and LASERS have taken positions on bills and their boards' positions can be viewed by clicking here for TRSL and here for LASERS.
We will keep everyone updated on any news related to the budget. We will also provide updates on legislation as any progress is made in either committee.
- Business Report: Opportunity for structural change in Louisiana
- The Advocate: For Louisiana higher education, health care; bigger-than-expected budget deficit means deeper cuts