Pension plan misses majority by 4 votes
The Louisiana House refused Thursday to give final legislative approval to the Jindal administration’s proposed new 401(k)-type pension plan for future state employees.
The House voted 49-43 to concur in state Senate changes to the so-called “cash balance” legislation — four votes shy of the majority needed to send House Bill 61 to the governor’s desk for signing into law.
The legislation now goes to a House-Senate conference committee to try to iron out differences as the June 4 end of session looms. The conference committee has three House and three Senate members.
Both chambers now must agree to a final version or the measure — a key part of Gov. Bobby Jindal’s retirement system revamp — will die.
Jindal’s deputy chief of staff Kristy Nichols attributed the failure to “a light House.” Thirteen representatives were absent for the vote.
“We will have the votes after conference,” Nichols said in an email response to questions.
Opponents said the “cash balance” plan offers little retirement security for employees who could end up living in poverty. “There is no back-stop, no Social Security,” said state Rep. Sam Jones, D-Franklin. Under the plan, Jones said future retirees would get 60 percent less than they do today after 25 years of employment.
House Bill 61 sponsor Rep. Kevin Pearson, R-Slidell, urged his colleagues to approve the measure, contending the new pension plan is needed to get better control over escalating pension system debts for which the state is ultimately responsible.
Pearson said he does not know where opponents are getting information that they use to paint a dire financial picture for retirees under the plan. “There are so many mischaracterizations,” he said.
The legislation has been opposed by the AARP of Louisiana and the Louisiana State Employees Retirement System board of directors.
It is the furthest along of the pension bills Jindal proposed affecting the benefits of current, future and retired state employees. Current employees would be required to contribute more for reduced benefits and some would have to work longer too under various proposals.
Jindal said the changes are needed to protect retirement benefits of employees and reduce state expense. He cited the drain on the state budget of employee contributions and constitutionally required payments on long-term pension system liabilities which is taking money away from health care and education.
Pension systems affected argue the proposals are unconstitutional because they break employee contracts and require employees to pay more than their share, making it a payroll tax.
HB61 would impact those nonhazardous duty employees who become members of Louisiana State Employees Retirement System after July 1, 2013, as well as new higher education employees of the Teachers Retirement System of Louisiana .
The cash balance plan is similar to a private sector 401(k) except state employee accounts would be protected from investment losses. Employees would contribute 8 percent and the state 4 percent with earnings from investments also credited to their accounts. One percent of the earnings would go into a reserve fund that could be tapped in economic downturns.
The House-passed version of the plan would have allowed current state employees to opt into the cash-balance pension system. The Senate stripped that provision at the request of Gov. Bobby Jindal’s pension policy advisors. The Senate version also added to those who would be covered employees of post-secondary management boards.
The House came close to tabling the legislation on two occasions on identical 44-47 votes. A majority of those present and voting would have resulted in a sidelining of the measure. Proponents would have had to get a two-thirds vote to bring it up again.
Before the votes, House Speaker Chuck Kleckley, R-Lake Charles, said voting to table would kill the legislation.
State Rep. Joe Harrison, R-Napoleonville, said Louisiana would be only the second state to have a cash balance plan.
Voting FOR concurring in the Senate amendments to the “cash balance” plan (49): Speaker Kleckley and state Reps. Barras, Berthelot, Billiot, S. Bishop, Broadwater, Burford, T. Burns, Carmody, Carter, Champagne, Chaney, Cromer, Danahay, Fannin, Foil, Garofalo, Geymann, Harris, Henry, Hensgens, Hoffmann, Hollis, Howard, Huval, N. Landry, Ligi, Lopinto, Lorusso, Miller, Moreno, Jay Morris, Jim Morris, Pearson, Ponti, Pugh, Pylant, Richardson, Robideaux, Schexnayder, Seabaugh, Shadoin, Simon, St. Germain, Talbot, Thibaut, Thompson, Whitney and Willmott.
Voting AGAINST concurring on HB61 amendments (43): State Reps. Armes, Badon, Barrow, W. Bishop, Brossett, Brown, H. Burns, Burrell, Cox, Dixon, Edwards, Franklin, Gaines, Gisclair, Greene, Guinn, Harrison, Havard, Hazel, Hill, Hodges, Honoré, Hunter, K. Jackson, James, Jefferson, Johnson, Jones, Lambert, T. Landry, LeBas, Mack, Norton, Ortego, Pierre, Pope, Price, Reynolds, Richard, Ritchie, Smith, Thierry and A. Williams.
Not Voting (13): State Reps. Abramson, Adams, Anders, Arnold, Connick, Dove, Guillory, G. Jackson, Leger, Leopold, Montoucet, Schroder and P. Williams.