Origin of retirement funds challenged
An appeals court in Baton Rouge is set to hear arguments Feb. 12 in a dispute over whether the state or individual school boards are obligated to pay the employer’s share of contributions to a retirement system for school employees.
State District Judge Kay Bates dismissed a suit in April that 47 school boards from across the state filed against the Louisiana School Employees Retirement System.
The school boards contend they shouldn’t have to pay the employer contributions to the retirement system from the funds they receive through the state’s Minimum Foundation Program. The MFP is the annual source of basic aid for public schools and helps fund school operations, teacher salaries and other expenses.
The school boards claim the Legislature should make a separate appropriation directly to the retirement system.
“MFP dollars should be dedicated to true costs associated with educating students,” said Scott Richard, executive director of the Louisiana School Boards Association, on Thursday.
Richard said the school boards hope to prevail at the appellate court level but will pursue the matter to the Louisiana Supreme Court if it proves necessary.
He added the school boards “hope to work with legislators to ensure that our retirement systems remain solvent.”
Charles Bujol, executive director of the Louisiana School Employees Retirement System, said LSERS “was very pleased with Judge Bates’ decision and we believe that it will be affirmed” by the state 1st Circuit Court of Appeal.
Circuit Judges James Kuhn, Toni Higginbotham and Mitch Theriot will hear the case Feb. 12 at the LSU Law Center.
Bates stated in a 2011 ruling in the case that “the amount of MFP funding received by each of the plaintiff school boards has increased every year and the MFP funding has exceeded the full amount of each school board’s obligation for the employer’s contributions to the LSERS retirement system.”
In a final ruling last April, the judge said “it is an undisputed fact that the entire employer’s contribution is fully funded by the Legislature through the MFP.”
“Contrary to the plaintiffs’ contentions that the Legislature has failed to appropriate sufficient funds to pay the employer’s contribution and that these costs must be collected by LSERS directly from the state, LSERS has shown that the Legislature has funded not only the normal costs but also the full employer’s contribution,” Bates wrote.
Richard noted previously the importance of Bates acknowledging it is the state’s constitutional responsibility to provide for the employer’s portion of retirement contributions, but he has said school boards take issue with the judge concluding the MFP actually captures that specific dollar amount for each school board.
“This only adds to the growing list of unfunded mandates that school boards are grappling with in today’s tough economic climate,” he said after Bates’ ruling in April.