From John Curry, April 3, 2010
Pension proposals draw fire from employee groups
Photo: Michell
e Becnel works with kindergarten students Pedro Garcia (center), 5, and Giomel Berrios, 5, Monday afternoon at Raceland Lower Elementary School.
By Daniel McBride Staff Writer
Houmatoday.com, April 3, 2010
THIBODAUX — State lawmakers are again looking to streamline Louisiana’s retirement systems, a move opposed by the groups representing current and retired employees.
Though more than 100 bills filed this session seek to alter parts of the state’s retirement system, widespread opposition has emerged against two particular proposals. One would consolidate four state-employee retirement systems into one and create a single oversight board.
Just as controversial is the plan to convert retired employees’ systems from defined-benefit, like a pension, to defined-contribution, like a 401(k).
House Speaker Jim Tucker, R-Algiers, with the backing of the state’s Streamlining Commission, authored a trio of bills that include the two changes. Tucker’s target is $17 billion in “unfunded accrued liability” — also known as the state’s retirement debt.
“It will take the risk off of the state and place it onto the employees,” said Rep. Joel Robideaux, no party, Lafayette, who heads the House’s Retirement Committee.
Employees are coming out against these proposals as they have in the past.
“We are opposed to both of the efforts to change,” said Graig Luscombe, executive director of the Louisiana Retired Teachers Association.
The defined benefit system now in place allows state employees — rank-and-file employees, teachers, State Police and others — to forfeit a percentage of their income for the promise of regular stipends, as well as benefits like medical coverage, once they retire. A defined-contribution plan, like that suggested by Tucker in bills 930 and 931, means those employees would instead contribute money into an investment account.
Though more than 100 bills filed this session seek to alter parts of the state’s retirement system, widespread opposition has emerged against two particular proposals. One would consolidate four state-employee retirement systems into one and create a single oversight board.
Just as controversial is the plan to convert retired employees’ systems from defined-benefit, like a pension, to defined-contribution, like a 401(k).
House Speaker Jim Tucker, R-Algiers, with the backing of the state’s Streamlining Commission, authored a trio of bills that include the two changes. Tucker’s target is $17 billion in “unfunded accrued liability” — also known as the state’s retirement debt.
“It will take the risk off of the state and place it onto the employees,” said Rep. Joel Robideaux, no party, Lafayette, who heads the House’s Retirement Committee.
Employees are coming out against these proposals as they have in the past.
“We are opposed to both of the efforts to change,” said Graig Luscombe, executive director of the Louisiana Retired Teachers Association.
The defined benefit system now in place allows state employees — rank-and-file employees, teachers, State Police and others — to forfeit a percentage of their income for the promise of regular stipends, as well as benefits like medical coverage, once they retire. A defined-contribution plan, like that suggested by Tucker in bills 930 and 931, means those employees would instead contribute money into an investment account.
“A significant portion of that account could be lost due to market fluctuations,” Luscombe said in a news release.
Eliminating the current pension system could actually cost more for state government by adding Social Security or Medicare contributions, Luscombe said. Under the present pension system, neither state workers nor the government contribute to Social Security and the pension plan includes post-retirement medical benefits. The downgrade in retirement perks could also cripple recruitment efforts by public employers, opponents say.
And the employee benefits are written into the state constitution, meaning that even if the Legislature approves the proposal it also requires a ballot measure that would go to Louisiana voters.
Meanwhile, Tucker’s House Bill 1229 would combine the state’s four retirement boards.
Now there is one each for Louisiana’s teachers, one for other school workers, for State Police and for other state employees. Those boards — largely comprising former state employees — would be replaced by a single board, with nearly half of its members appointed by state officials.
“The State Police, based on that proposed legislation, would have one representative on the board out of 25,” said Irwin Felps, executive director of the Louisiana State Police Retirement System. “We don’t think putting all our eggs into one basket is necessarily the best thing.”
Merging the state’s retirement boards could also cost more than it saves, said Les Landon, spokesman for the Louisiana Federation of Teachers.
With similar bills defeated in past legislative sessions, critics of the proposed changes say they have no plans to let up their opposition.
“When you start messing with people’s plans for the future, we’ve got to be very careful,” Landon added. “We owe people who have dedicated their lives to public service a decent retirement.”
(View complete article here.)
Staff Writer Daniel McBride can be reached at 448-7635 or daniel.mcbride@houmatoday.com. Follow him on Twitter @BayouSchools. Capitol Correspondent Jeremy Alford contributed to this report. You can reach him through his Web site at www.jeremyalford.com.
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