A state House panel Thursday gave a little relief to Pointe Coupee, Lafayette and St. James school systems facing added pension system expenses because they have privatized some jobs.
The House Retirement Committee approved legislation that would give school systems up to 15 years to pay off the money owed to the Louisiana School Employees Retirement System.
System superintendents said state education leadership pushes them to privatize and when they do they get bills for pension system liabilities created with the loss of public school employees.
Pointe Coupee Parish School Superintendent Linda D’Amico said her financially struggling system got one bill for $450,000 from the school employees system and another for $482,000.
D’Amico said the cost should be a state responsibility.
House Bill 43, sponsored by state Rep. Major Thibaut, D-New Roads, sought to eliminate city, parish or other local public school boards from the requirement. Current law allows the payment monthly over 10 years.
But Charles Bujol, executive director for the Louisiana School Employees Retirement System, said that would unfairly spread the liability to all public school systems around the state. The committee opted to extend the payments over 15 years.
“We know as a state we have been encouraging privatization but doing that we have created a problem. We don’t have an answer for it,” said state Rep. Jack Montoucet, D-Crowley. “All I’m trying to do is buy them a little time.”
Under current law, the cost of a pension benefit for an employee is calculated each year based on actuarial assumptions for a given system.
If the assumptions are not achieved, enough money has not been contributed to fund the employee benefit.
That unfunded accrued liability is amortized and paid off over a given number of years.
The school employees pension system assess the charges when school jobs are privatized.
Erin Bendily, the assistant state superintendent of education, testified in favor of the legislation.
“We are sensitive to what these school systems are going through,” she said.
Bendily said under questioning that there’s no money budgeted to help defray the cost.
Today, three or four school systems are encountering the problem, but more will be facing it in the future, Thibaut said.
“This is a huge issue that’s going to come down the road. We have got to bring some light to it,” he said.