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Session Information

2007 Regular Session Highlights

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Retirement

  by: Laura G. Sullivan
  (225) 342-1196

 

The major legislative instruments of the 2007 Regular Legislative Session in the public retirement arena generally focused on granting cost-of-living adjustments, allowing retirees to return to work, shoring up the funding of the systems, and providing equitable benefits to employees whose service involves public safety.

COST-OF-LIVING ADJUSTMENTS (COLAs)

Employee experience accounts

For the first time since 2002, the balance in the experience account of the Teachers' Retirement System of Louisiana (Teachers') was sufficient to fund a COLA for the retired teachers.  For the second year in a row, the balance in the Louisiana State Employees' Retirement System (LASERS') employee experience account was sufficient to fund a cost-of-living adjustment (COLA). 

The amount of a COLA paid from an experience account is statutorily limited to the lesser of 3% or the consumer price index (CPI).  For the 2006 calendar year, the CPI was 2.5%.  Although each system had an experience account balance in excess of the amount necessary to fund the full 3%, without special measures, the COLA for the retired state employees and teachers would be limited to 2.5%.  The experience account laws further require legislative approval through concurrent resolution before a COLA can be granted from the funds in the account.

Senate Bill 116 by Senator Theunissen (Act 67) allows a 3% COLA to be paid from the experience account of each system on July 1, 2007, pursuant to the provisions of the experience account laws.  Senate Concurrent Resolution 3 by Senator Butch Gautreaux (enrolled) grants approval to the Teachers' board of trustees to pay the 3% COLA.  House Concurrent Resolution 7 by Representative Schneider (enrolled)  grants similar approval to the LASERS board.

House Bill 658 by Representative Kennard (enrolled) creates employee experience accounts similar to those of the systems for Teachers' and LASERS for the State Police Pension and Retirement System (State Police) and the Louisiana School Employees' Retirement System (School Employees').  Having an experience account will allow these systems to grant COLAs without regard to present statutory restrictions discussed, as these restrictions have become skewed due to the market volatility of the past five years.

"Regular" recurring COLAs

Nearly all of the state and statewide systems have had difficulty granting COLAs in the past five years.  To grant a COLA in a particular year, the eleven such systems that have no experience accounts are statutorily required to achieve investment earnings above a specified level and meet a funding percentage for that year, which increases annually.

The State Police system this year met the statutory requirements to grant a regular, recurring COLA.  However, the structure of any COLA granted by the board of trustees is limited by statute.  Senate Bill 83 by Senator Butch Gautreaux (Pending conference committee) allows a different structure for this year's COLA, to raise the benefit of certain long-time retirees to a minimum level. 

Senator Gautreaux's Senate Bill 83, (pending conference committee) provides that every disability retiree whose benefit is below $1200 and each "regular" retiree with at least 20 years of service credit, who has been retired at least 15 years, and  whose benefit is less than $1200 will receive an increase that will raise the monthly benefit to $1200 or he will receive an increase of $300 a month, whichever is less.  If a retiree who would be eligible has died, the spouse to whom he was married at the time of his death will also receive the increase.  This bill also allows the board to grant a 2% increase to all retirees age 65 or older and an increase of $1 for each year of service and $1 for each year since retirement to all retirees.

House Bill 440 by Representative Schneider (enrolled) allows the Sheriffs' Pension and Relief Fund to grant a regular, recurring COLA despite the system's failure to meet the funding target, using the excess interest the system earned this year.  The amount of the COLA is 3% of the current benefit, plus an additional 2% of the current benefit for those age 65 or older, payable only to those who would be eligible for a COLA if the board were granting it directly.

"Thirteenth check" COLAs

House Bill 415 by Representative Morris (enrolled) allows the boards of the Municipal Police Employees' Retirement System, the Municipal Employees' Retirement System, and School Employees' to grant a "thirteenth check" to retirees if a "regular" recurring COLA cannot be paid based on the June 30, 2007 valuation.  The amount of the check is 3% of the "normal" annual benefit but not less than $300

BENEFITS FOR PUBLIC SAFETY EMPLOYEES

Senate Bill 58 by Senator Ellington (Pending conference committee) allows a state trooper hired on or before June 30, 2008, with at least 10 years of service credit in the State Police system to purchase credit for out-of-state law enforcement time at the actuarial cost.  This treats such out-of-state service on a par with any instate law enforcement time.

House Bill 878 by Representative Kleckley (enrolled) provides enhanced benefits for P.O.S.T.-certified alcohol and tobacco control (ATC) agents in the Dept. of Revenue.  The bill provides an accrual rate of 3⅓% for all past P.O.S.T.-certified LASERS service and for all future service as an ATC agent.  The increased liability is funded through additional employee contributions, which increase from 7.5% to 9% of pay, and through dedicated tobacco taxes.  Any additional costs shall be paid  directly by the office of alcohol and tobacco control.

House Bill 845 by Rep. Durand (enrolled) provides enhanced benefits for certain adult probation and parole officers employed by the Dept. of Public Safety and Corrections (DPS) on or before Dec. 31, 2001.  The bill increases from 2% to 3⅓% the accrual rate for future service credit and increases from 2% to 3% the accrual rate for past service credit.  The additional liability to the system is paid through a fee assessed on each probation and parole officer's case files, deposited into a special fund.  If the fund balance is insufficient to cover a particular year's payment, the unpaid portion shall be paid directly by DPS, subject to appropriation.

RETURNING TO EMPLOYMENT

Senate Bill 60 by Senator Cain (enrolled)  allows a school board to opt to reemploy a bus driver who retired on or before June 1, 2007, and who has been retired for 12 months without the bus driver being subject to having his retirement benefits suspended.  If the bus driver is reemployed within the 12 months following retirement, he receives his full salary but his retirement benefits are suspended for the remainder of the 12 months.  Actuarial costs of reemploying a bus driver under the provisions of this bill are borne by the particular school board employing him, with payment for such costs to be made before the bus driver retires again.  The provisions of the bill cease to be effective on June 1, 2010.

Anyone who elects to retire early under the "regular" LASERS early retirement provision or under the Early Retirement and Payroll Reduction Act is subject to certain prohibitions, among them two which relate to reemployment.  The Payroll Reduction Act prohibits any early retiree from being reemployed in a LASERS-covered position for two years from the date of retirement.  Additionally, reemployment "Option 2", which generally allows a reemployed retiree to repay all benefits received with interest to regain LASERS membership, is not available to anyone who retires under an early-retirement provision.

Senate Bill 96 by Senator Amedee (enrolled) excludes state employees who were displaced from work due to hurricane Katrina or Rita and who elected to retire early under the usual LASERS law or the Payroll Reduction Act from these prohibitions regarding reemployment of early retirees.  The bill allows an early retiree covered by its provisions to be reemployed in a LASERS-covered position within the two-year period following retirement, and upon reemployment allows him to elect to repay the benefits and interest and regain membership in LASERS.

RETIREMENT SYSTEM FUNDING

Several bills were filed again this year in an attempt to provide additional funding for the unfunded accrued liability (UAL) of Teachers' and LASERS and to ensure that any new benefits have adequate funding from inception. 

Senate Bill 127 by Senator Boasso (enrolled) is a constitutional amendment that would require that creation of future benefits for state systems with a cost would have to include a new funding source that pays the cost of that benefit within ten years.

Senate Bills 48 and 130 by Senator Boasso (assigned to Senate Finance) would have set up two funds in the treasury for payments to Teachers' and LASERS, one for UAL payments and one for supplemental COLA funding.  Senate Bill 48 would have captured new monies recognized by the Revenue Estimating Conference and deposited them into the funds.  Twenty-five percent of "surplus" from the previous year would have gone into the UAL fund.  Three percent of newly recognized money for the current would have gone into the COLA fund. Senate Bill 130 would have provided and extra payment by the state from general fund monies every year of 2% of payroll of each system; roughly $100M total annually.



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