So, How’s That Retirement Reform Package Going?

One done, one close to the finish line and five to go. That is the status of Gov. Bobby Jindal’s retirement reform package with just over two weeks remaining in the Legislature’s regular session that ends June 4.

Two of the major bills haven’t gotten far. A Senate bill changing retirement ages is awaiting a vote on the Senate floor and has to go to the House. A House bill merging the Louisiana School Employees Retirement System (LSERS) with the Teachers Retirement System of Louisiana (TRSL) needs a full vote by the House before it can make it to the Senate.

It should be noted here that the governor’s reform package, except for the merger, only applies to members of the Louisiana State Employees Retirement System (LASERS) and higher education members of the TRSL. Pre-K through 12 teachers, hazardous duty workers and judges aren’t affected.

You can understand why members of the two systems being changed feel discriminated against. They aren’t responsible for all of the $18.9 billion retirement debt Jindal is trying to cut down to a manageable size.

The bill to raise the retirement age has been rewritten a few times in an effort to make it more acceptable. It currently exempts those who are 55 or who have 20 years of service. Current employees hired before July 1, 2006, could retire at any age with 30 years on the job. Retirement ages for others would depend on years of service.

While it isn’t always the case, legislation usually sits on the calendars of the House and Senate for a time because the authors haven’t been able to round up the necessary votes.

The only bill Gov. Jindal has signed so far (SB 48) is the least controversial of the lot. It adds the commissioner of administration or his designee to the boards of the LASERS, the TRSL and the LSERS. The idea is to get a budget expert involved in retirement issues.

House Bill 61 is the one that is close. It sets up a cash balance retirement system for new state employees. The legislation has passed both houses and is awaiting House approval of the changes made by the Senate.

New employees in the cash balance plan would contribute 8 percent of their salaries and the state would put in at least 4 percent. Those funds would be invested and losses would never be counted against the worker’s earnings. A lump sum would be available at retirement that the retiree could take or convert to an annuity paying an annual pension.

Critics of the new plan say it isn’t going to adequately provide for workers when they reach retirement age. Some are worried retirees could end up spending their accumulated earnings.

Sen. Elbert Guillory, D-Opelousas, said, “We cannot protect people from making bad decisions in their lives.” Guillory is chairman of the Senate Retirement Committee and author of much of the governor’s package.

A reader of The Advocate of Baton Rouge had a great reply for that one. It was an obvious reference to the failure of governors and legislators to properly fund the retirement systems over the years, even when they enjoyed large surpluses.

“… But we can protect the state government from making bad decisions in the past,” the reader said.

Senate Bills 49 and 740 are awaiting debate and final action in the House. The first one would figure pensions based on a five-year rather than three-year average annual salary. The measure was amended earlier to protect the worker’s final average compensation earned to date.

SB 740 would deny cost-of-living raises to retired state employees and workers in higher education until their two systems had assets equal to 80 percent of their liabilities. They are now at 60 percent, and a Jindal policy adviser said reaching 80 percent could take 10 to 15 years.

Employees would pay a higher retirement contribution rate under provisions of SB 52. The bill is in the House Retirement Committee. Like most of the key reform legislation, it has been watered down from 3 to 2 percent. Contribution rates would be phased in over a four-year period and would not apply until a worker got at least a 4 percent merit pay increase.

We will see a concerted effort by the Jindal administration over the last two weeks of the session to get all of this retirement legislation passed in some form or fashion, even if it has to make additional concessions.

Remember the ethics reform enacted during the first year of Jindal’s first term? The changes improved the state’s national rankings, but ethics enforcement hasn’t been too successful. There are bills in the current session to fix some flaws.

Education reform whizzed through the process early in this session, but its effects are still to be determined. Nevertheless, Gov. Jindal has received high praise nationally for taking on the issue. You can be sure he wants to add retirement reform to his list of accomplishments.

What we won’t know for a long time is whether what’s left of the package that becomes law will actually achieve the goal of reining in the state’s nearly $19 billion retirement debt.

Jim Beam, the retired editor of the Lake Charles American Press, has covered people and politics for more than five decades. Contact him at 494-4025 or



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