A legislative package that would effectively reduce retirement pensions for future retired state employees and increase pension contributions for many municipal employees was approved Monday in the House.
The legislation was amended to delete a hotly debated measure that also would have increased state employees’ contributions for retirement.
House Bill 530 by Rep. Kevin Pearson, R-Slidell, would reduce pension benefits for state employees by changing how retirement benefits are calculated.
The benefit would be based on the average compensation over the past five years — instead of three years — and limit pay raises that could be counted during that period.
By counting five years, it would effectively reduce the pension benefit.
The legislation applies to the Louisiana State Employees’ Retirement System and to higher education workers in the Teachers’ Retirement System of Louisiana.
The estimated $55 million in annual savings would go to pay off past, state-obligated retirement debt, Pearson said.
“It’s to try in some way to deal with the unfunded liabilities,” he said.
HB530, approved on a 76-20 House vote, excludes the State Police.
Pearson’s House Bill 332 dealing mostly with municipal police officers and firefighters was approved on a 68-24 vote.
The proposal is about relieving the “financial burdens on cash-strapped cities and departments,” Pearson said.
The two bills go to the Senate for debate.
Employer contributions for the Municipal Police Employees Retirement System have increased from 11 percent to 28 percent in two years, Pearson said.
Under HB332, some of the police and firefighter pension costs would shift from employer to employees as local government costs increase.
Likewise, as employer costs decline, so would employee contributions.
The legislation also would put limits on pay raises in the years prior to retirement that would be used in computing pension benefits for members of the Municipal Employees, Firefighters and Municipal Police Retirement systems.
The “anti-spiking” provision would apply to rank-and-file municipal employees. It would reduce costs of the pension systems, because retirement benefits are based on the final years’ average compensation.
The strongest opposition is from the Professional Firefighters Association of Louisiana.
State Rep. Jack Montoucet, D-Crowley, unsuccessfully pushed an amendment to create more favorable scales for firefighters.
It failed on a 45-49 vote.
“I’m here today to force a compromise on both sides,” Montoucet said.
HB332 also would add the governor’s top budget architect and the state treasurer to the Municipal Public Employees Retirement System’s board of trustees.
State Rep. Sam Jones, D-Franklin, complained about the increased influence that could give the governor.
“Do you not have a problem with the separation of powers?” Jones questioned.