Pension plan relief clears House

Kevin Pearson Show caption
Kevin Pearson

The Louisiana House approved legislation Monday that supporters say would make Louisiana colleges and universities more competitive.

The House voted 95-0 for the measure to improve pension benefits for the Optional Retirement Plan, which is a popular retirement plan among college faculty and other academics.

Members of the plan can take it with them if they move to jobs at most other U.S. colleges and universities. Employee and employer investments are invested in options chosen by the individual member. The performance of the investments determines the retirement benefit due to the retirees.

Today, Optional Retirement Plan members contribute 8 percent, but the amount that the employing colleges and universities pay fluctuates based on normal costs. The employer amount dips to 3.8 percent in the next fiscal year.

House Bill 6 , sponsored by state Rep. Kevin Pearson, R-Slidell, would require colleges and universities to contribute at least 6.2 percent, which is the same amount private employers pay into Social Security, by 2018. School management boards would have the flexibility to increase the contribution above the 3.8 percent before 2018, but the contribution could never go lower.

Pearson said the employer contribution is the lowest of any state. The next-lowest rate in the country is 6.4 percent. Higher education officials have said the low employer contribution makes it hard to retain and recruit faculty.

“These persons don’t have Social Security in most cases,” Pearson said. “That is what is going to comprise their retirement.”

State Rep. John Bel Edwards, D-Amite, said the change is needed to help colleges be competitive. He said Pennington Biomedical Research Center Executive Director Dr. William Cefalu told him in recruiting faculty “he could not get close on benefit.”

State Rep. Jim Fannin, R-Jonesboro, tried unsuccessfully to recommit the legislation to the House Appropriations Committee because of a fiscal note that estimated the cost of the increased benefit at $13 million a year. He said the budget panel should review it just as other measures that have a potential substantial cost.

“We are trying to get this bill where LSU and all other campuses can recruit,” Pearson added. “There’s no requirement for the money to come out of the state general fund.”

Forty-four House members supported Fannin. Forty-five House members opposed recommittal.

The legislation moves to the Senate for debate.