The state House Retirement Committee chairman sidelined legislation Thursday that would have all but eliminated cost-of-living raises for retired state employees, teachers and others.
State Rep. Kevin Pearson, R-Slidell, “voluntarily deferred” further action on House Bill 1018. The move ended debate before a vote by the House committee. Pearson said he would instead study how cost-of-living adjustments, called COLAs, should be handled in the future.
HB1018 would have delayed any COLA increases on pension checks until the financial condition of the retirement systems improve substantially.
Officials of retired state employee and teacher organizations said the legislation would prevent the pension systems from helping the most elderly of retirees who are living at or near the federal poverty level.
Pearson said that was not his intention. He said he was trying to strengthen the retirement systems, so they would not collapse in the future, leaving retirees in the lurch. Louisiana’s four statewide retirement systems are sorely underfunded, Pearson said.
The COLA increases contributed to underfunding, Pearson said. The COLAs are funded with excess investment earnings that could be going to improving the financial health of the systems, he said.
Pearson wanted to require each retirement system to be at least 80 percent funded before investment earnings could be transferred to fund COLAs. None of the statewide systems is funded above 60 percent, in assets versus long-term pension liabilities, he said.
Pearson said the legislation would have helped the systems become funded at a “more adequate level, more meaningful level.”
Opponents said the legislation could eliminate the prospects of some of the neediest retirees getting the help contemplated in two Senate bills because the money would no longer be there to fund the aid.
The state Senate measures would provide one-time checks to state employee and teachers system retirees who are at least age 75, who had worked 30 years and whose checks were at the poverty level or below. Under that legislation, the retirees would get a payment of $300 or 2 percent of the net benefit whichever is greater. The legislation is pending Senate approval.
Under Pearson’s bill, the money would come from the investment earnings that could no longer be accessed.
“It’s not a permanent benefit. It’s a one-time shot in the arm,” said Frank Jobert, director of the Retired State Employees Association. Pearson’s bill would have precluded giving COLAs for the neediest retirees, Jobert said.
Retired Teachers Association Executive Director Graig Luscombe said the state’s retired teachers include 29 people who are more than 100 years old and about 1,300 who are ages of 90 to 99. The salaries at the time they retired decades ago, on which the pension is based, is not enough to sustain a quality of life, Luscomb said.
“We are talking about trying to help the people who cannot help themselves,” said Jobert.
Jobert suggested reducing the amount of investment earnings going into the COLA account and possibly getting active retirement system members to start paying a little more to “prepay” COLAs to take of the issue in the future.
Copyright © 2011, Capital City Press LLC • 7290 Bluebonnet Blvd., Baton Rouge, LA 70810 • All Rights Reserved