Bills that would have hampered state pension systems’ ability to grant future cost-of-living increases to more than 100,000 retirees got sidelined Thursday by a state House committee.
The House Retirement Committee voted 5-5 for a proposal to steer more money to retirement debt by taking dollars from an account used to pay cost-of-living increases.
After the vote, committee Chairman Kevin Pearson, R-Slidell, set aside similar proposals for the retirement systems for public school teachers and state police. It was unclear if he would seek to later revive them.
The action came as the House Retirement Committee tackled a series of bills dealing with “experience accounts” — special funds into which some of the pension systems’ excess investment earnings are directed for cost-of-living adjustments.
The bills would have drained the accounts of leftover money should a bill granting a 1.5 percent COLA pass.
In each case, the dollars would have been directed to paying off each system’s long-term debt obligations.
Two of the state’s four statewide systems have long-term debts of $17.7 billion: $11.3 billion in the Teachers Retirement System of Louisiana and $6.4 billion in the Louisiana State Employees Retirement System.
“I’m worried about the health of the systems,” Pearson, R-Slidell, said. “I’m always going to come to you with bills that make the systems more stable.”
Pearson said he does not like the way COLAs are funded because investment earnings should instead go to funding systems’ “unfunded accrued liabilities,” which is the money needed to cover promised pension benefits.
Opponents countered that the funds were “swept” in 2009 with an agreement it would not be a continuing practice. They said other changes were made then too which need to be given time to work.
“The ‘experience account’ was put in statute to pay COLAs, not to pay debt,” LASERS executive director Cindy Rougeou said.
Retired State Employees of Louisiana executive director Frank Joubert said retirees bills keep going up for grocery, medicine and the like while their pension checks are static.
After the 1.5 pecent planned increase, Joubert said, “It would be wise to leave that money there for future COLAs.”
Louisiana Federation of Teachers lobbyist Mary-Patricia E. Wray said retirees should not have to pay for debts created because employers did not adequately fund benefits promised. They have already paid their share, she said.
The committee approved Pearson’s House Bill 42 dealing with school employees, largely because the leftover dollars would help school boards cope with rising pension costs.
Pearson said the bill would provide a funding source school boards need now to avoid future “spikes” in pension contributions coming as a result of a previously adopted debt repayment plan.
The system has $905 million in long-term liabilities.
The panel balked when a similar bill affecting the State Employees system came up — deadlocking 5-5 on the proposal, House Bill 40. Pearson then postponed action on Teachers’ Retirement System of Louisiana and State Police Retirement System legislation.
Also Thursday, retirement committee members voted 5-4 against legislation that would have reduced the dollars going into state employees, teachers, school employees and State Police experience accounts.
Under state Rep. Barry Ivey’s HB86, more of the system’s investment earnings in the future would go toward debt retirement before money could be diverted into the experience accounts.
“I’m trying to increase that ceiling a little bit and keep money in the systems which are struggling right now,” Ivey, R-Central, said.