Bills to pay down state retirement debt stall
BATON ROUGE, La. (AP) — Lawmakers on a House committee deadlocked Thursday on a proposal that would steer more money to retirement debt by taking dollars from an account used to pay cost-of-living increases for retired state workers.
The Retirement Committee voted 5-5 for the proposal, stalling it.
After the vote, Rep. Kevin Pearson, chairman of the committee, shelved similar proposals for the retirement systems for public school teachers and state police. It was unclear if he would seek to later revive them.
At issue is how to shrink the multibillion-dollar debt of the statewide retirement systems, while also addressing inflationary costs for retirees.
Pearson, R-Slidell, said the state needs to cut the systems’ debt to ensure their financial viability for retirees. The four statewide retirement systems are more than $19 billion short of the money they need to cover all promised pension benefits over time.
“We’ve got to get the systems more stable,” Pearson said.
Opponents said the bills would unfairly harm retirees who weren’t responsible for building the debt. They argued taking dollars out of the COLA savings accounts would break a pledge to retirees told if system investment earnings were good, they would get boosts in their pension payments.
“We’re going to rob an account, and I’m not sure for the right reason,” said Rep. Sam Jones.
Frank Jobert, executive director of the Retired State Employees Association of Louisiana, said retired state employees haven’t had a cost of living adjustment since 2008, even while the cost of groceries, gasoline, insurance and other living expenses continued to rise.
The retirees don’t get social security.
“I don’t think we’re being greedy,” Jobert said.
Over the last year, the statewide retirement systems registered better-than-expected investment gains. That triggers the movement of some investment earnings into the COLA savings accounts from which retiree raises are paid.
Lawmakers are weighing this session whether to give retirees in the state systems a 1.5 percent cost of living adjustment, proposals that are expected to pass. Pearson wants to use any money left in the COLA accounts after that adjustment to pay down retirement debt.
If all four of Pearson’s bills passed, they would shift about $160 million to pay down debt.
But the retirement committee voted 5-5 on the bill that would move the largest amount of money, the one affecting the Louisiana State Employees Retirement System.
Voting for the bill were Pearson and Reps. Nick Lorusso, R-New Orleans; Paul Hollis, R-Covington; Barry Ivey, R-Baton Rouge; and Kirk Talbot, R-River Ridge.
Voting against the proposal were Jones and Reps. Frank Hoffmann, R-West Monroe; Jack Montoucet, D-Crowley; Ed Price, D-Gonzales; and Gene Reynolds, D-Minden.
The committee also rejected an Ivey bill that would raise the benchmark for how high the retirement systems’ investment returns must be before dollars are siphoned into the COLA savings accounts. Lawmakers voted 5-4 against that proposal.