Parish school boards and state government won’t have to come up with extra contributions to fund pension plans for their employees in the new budget year.
The Public Retirement Systems’ Actuarial Committee on Tuesday sidelined proposals that would have caused school boards to contribute $100 million more than anticipated and the state to pay an extra $40 million in the fiscal year that starts July 1.
The recommendations came from the Legislative Auditor’s Office actuary as he looked at the financial health of the teachers’ and state employees’ pension plans, both of which have substantial long-term debts.
The panel instead opted to adopt evaluations proposed by the actuary for the Teachers’ Retirement System of Louisiana and the Louisiana State Employees Retirement System, numbers that have been used in state government and school board budgeting.
The committee’s action means school board contributions to the teachers’ retirement system will be $1.15 billion in the new fiscal year. T he state will put up $760.45 million. The state contribution amounts to about $20 million less than this fiscal year.
“State agencies and school boards already prepared their budgets for the upcoming year. They prepared them based on the only evaluation that they had” from the retirement systems, said state Sen. Elbert Guillory, R-Opelousas. “The change in the contribution rate now would require … cuts in line items, employee cuts, pay increase proposals would have to be canned, layoffs. The word ‘chaos’ would not be inappropriate.”
The legislative actuary’s valuation took a more conservative approach to investment earnings than the systems’ actuary. The difference would have resulted in higher employer contributions being required under the legislative actuary’s plan — a thought that set off shock waves, particularly among parish school board executives.
The actuarial committee is tasked under state law with adopting the annual actuarial valuations and required contributions to the state employee and teachers retirement systems.
It considers analysis done by both the systems and Legislature’s actuaries.