Louisiana’s state pension systems have $300 million sitting in “reserve” accounts; the money is meant to fund future cost-of-living increases.
But lawmakers have begun eyeing the money, and are now weighing ways to use the money for other purposes.
One lawmaker, Senator Elbert Guillory [R-Opelousas], wants to use the money to give retirees an extra, immediate cost-of-living adjustment (COLA).
Current Louisiana law allows one COLA increase every two years. State retirees received a 1.5 percent increase this fiscal year, so they normally wouldn’t be eligible to receive another until 2016-17.
But retiree groups, along with Sen. Guillory, are pushing to use the reserve money to fund another 1.5 percent increase this year.
More details from the Advocate:
A state senator wants the 90,000-plus retirees to get an immediate boost in their pension checks.
[Retired State Employees Association legislative liaison Frank] Jobert said retirees want the money reserved for its intended purpose — cost-of-living adjustments to retiree pension checks.
The retiree group will publish the required public notice that legislation will be filed aimed at granting a cost-of-living increase, Jobert said.
Retirees will push for a 1.5 percent cost-of-living increase in the fiscal year that begins July 1 with help from Senate Retirement Committee Chairman Elbert Guillory, R-Opelousas. Retirees got a 1.5 percent adjustment during the current fiscal year. Under a 2014 law, retirees would be eligible for cost-of-living adjustments only every other year, meaning there would not be one in the new fiscal year, which begins July 1.
Other lawmakers have other plans. If history is any indication, many lawmakers likely want to use the money to pay down the state’s pension debt, which in turn will lower the state’s future pension payments and give lawmakers more money to work with in the general budget. From the Advocate:
The money cannot legally be taken out of pension systems for use in funding other areas of the budget. But the dollars can be used toward reducing the pension systems’ long-term debts, which stand at $19 billion: $12 billion for teachers’ retirements and $7 billion for state government retirees. The payments toward the UAL would reduce the required state contribution. That would free up state dollars for other purposes.
[…]
Cindy Rougeou, Louisiana State Employees Retirement System executive director, said it would not be the first time dollars were “swept” from the retiree cost-of-living accounts. She said it happened in 2009 with dollars going to payments on the systems’ unfunded accrued liability. Commonly called the UAL, the term refers to the amount of money necessary to pay out all promised future benefits. The state contributes extra dollars to pay down the immense debt.
Sen. Guillory plans to file a bill in the coming months that would give retirees the extra COLA.
Guillory is chairman of the Senate Retirement Committee.
Photo by Dewayne Neeley via Flickr CC License