Legislation making it harder for retired state employees and college campus personnel to get cost of living raises won Senate approval Thursday.
The Senate voted 20-15 for the legislation backed by the Jindal administration. Senate Bill 740 would suspend the increases until the pension systems’ assets are sufficient to cover at least 80 percent of their long-term liabilities.
State Sen. Elbert Guillory, who is handling Gov. Bobby Jindal’s state employee pension revamp in the Senate, delayed action for a second day on key pieces of the legislative package that would raise employee contributions and retirement ages.
Guillory, D-Opelousas, put off votes on Wednesday, after another changing pension benefit calculations initially ran into trouble in the Senate. Guillory said he opted not to bring the measures up Thursday too because of “timing” issues with an abbreviated Senate session.
“We expect them to be on and off the floor expeditiously, probably on Tuesday,” Guillory said.
Jindal claims the changes are needed to reduce pension system liabilities, which are putting a strain on the state budget. Opponents said the changes are unconstitutional because they break contracts with employees who are not to blame for the liabilities.
The legislative package impacts the Louisiana State Employees’ Retirement System, or LASERS, and the Teachers’ Retirement System of Louisiana, or TRSL, which have assets that would cover under 60 percent of their long-term liabilities.
SB740 approved by the state Senate on Thursday deals with “cost of living adjustments,” or COLAs.
The COLAs are funded through what are called “experience accounts” into which flow some of the pension systems’ investment earnings.
The measure would set up sub-accounts for “rank and file” and “post-secondary education” that would be subject to different COLA granting rules. In addition, money could be deducted from those accounts during times of investment losses on a proportionate basis.
Under current law, if the system is less than 80 percent funded, a COLA could still be granted if the pension system earns an actuarial rate of return that exceeds its board-approved rate.
SB740 keeps that option for hazardous duty employees and schoolteachers, but shuts the door on it for rank and file state employees and those who work in higher education.
As Jindal’s aides pushed the legislation, they said the granting of COLAs has added to the liabilities of the systems in recent years. Taxpayers are ultimately responsible for the liabilities. Some senators opposed the legislation because it exempted certain groups of people from the restrictions, including hazardous duty employees and schoolteachers.
“Why don’t we want to treat everyone the same way?” asked state Sen. Jody Amedee, R-Gonzales.
Guillory said hazardous duty workers put their lives on the line every day. “They should get some additional consideration,” he said.
Unlike higher education members of TRSL, Guillory said schoolteachers’ retirement plans are funded through local school districts.
State Sen. Dan Claitor, R-Baton Rouge, offered an amendment to make the restrictions apply to all groups. “This eliminates the subclasses,” Claitor said. “Everybody’s in the same boat.”
The Senate killed the proposal with 16 voting for it and 17 voting against.
Amedee, a lawyer, sought to take judges who are LASERS members out of the measure. He said they would be off-limits like schoolteachers and hazardous duty employees.
State Sen. Karen Peterson, D-New Orleans, said Amedee’s proposal amounted to “select treatment and does not provide any respect to the rank and file employee ... who work every day and don’t quite earn six-figures, may not have even had a raise in several years.”
The senators overwhelmingly rejected Amedee’s amendment with 2 votes for it and 33 against. State Sen. Francis Thompson, D-Delhi, questioned when the systems would hit the 80 percent mark under which a COLA could occur.
“Would that be in the next five years ... next two years or the next 30 years?” asked Thompson.
Guillory said it is hard to accurately calculate the timing.
Voting FOR limiting COLAs for retired state employees and those who worked on college campuses (20): President Alario and Sens. Adley, Allain, Appel, Chabert, Claitor, Cortez, Crowe, Donahue, Guillory, Johns, Kostelka, Martiny, Morrell, Morrish, Nevers, Peacock, J. Smith, Walsworth and Ward.
Voting AGAINST SB740 (15): State Sens. Amedee, Broome, Brown, Buffington, Dorsey-Columb, Erdey, Gallot, LaFleur, Long, Mills, Murray, Peterson, Riser, Tarver and Thompson.
NOT VOTING (4): Sens. Heitmeier, Perry, G. Smith and White.
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