There’s enough money in a special account for Teachers Retirement System of Louisiana retirees to get a new 1.5 percent cost-of-living increase in their pension checks, the system’s board was told Friday.
But a new law would prevent that from happening, even though many retirees’ pensions are below the federal poverty level and they are facing higher state health insurance bills, said the system’s executive director, Maureen Westgard.
Westgard said the board should consider asking the Legislature to provide the cost-of-living adjustment, called a COLA, despite the law’s prohibition.
“It’s a good discussion to have,” she said, particularly in an election year.
Legislators earlier this year approved a 1.5 percent cost-of-living increase in the pension checks of retired teachers, state employees and others in statewide retirement systems. For teachers system retirees, it meant an average increase of just under $29 a month.
But at the same time, the Legislature passed a law designed to improve state retirement systems’ long-term finances. That law contained a provision that initially would bar the adjustments in consecutive years.
The law changes came because of unfunded accrued liabilities, called UALs, of the four statewide systems. The UAL is the funding required to pay promised benefits to all pension system members — current and retired. The teachers system has the largest UAL — nearly $12 billion.
Teachers system actuary Shelley Johnson said investment earnings were so good in the fiscal year that ended June 30 that they allowed the special COLA account to hit $218 million, sufficient for another 1.5 percent boost.
“My concern is when this gets reported, some retirees will look at this and say, ‘Hey, wait a minute, why can’t I get another COLA?’ ” said teachers system board Vice Chairman Joe Potts Jr., adding that he wanted to make sure retirees know why the COLA cannot be provided.
“This is because the Legislature changed the law,” Potts said. “I don’t want the board or staff to take a hit, to be criticized because we did not do it. … The emotions are going to run high.”
Westgard and Graig Luscomb, executive director of the Retired Teachers Association, said efforts are being made to explain the situation to retirees.
Westgard also said she has begun collecting data to demonstrate the need for another 1.5 percent increase in pensions. She said 28,058 retirees’ pension checks are below the federal poverty level even after the most recent 1.5 percent increase.
The federal poverty level is $11,670 for an individual.
Among teachers retirement system retirees, there are 15,336 people who have an annual pension benefit below $9,999. There are another 19,638 with annual benefits between $10,000 and $19,999, and 14,446 with annual benefits between $20,000 and $29,999.
The retirees’ financial situation also is being negatively impacted by changes in the state Group Benefits health insurance program, increasing their out-of-pocket expenses, Westgard said. She said 44 school systems use Group Benefits for health insurance.
“Probably some of our more elderly retirees also don’t have Medicare, so this is going to be a double hit,” she said.
“You struggle to get people above the poverty level,” she said. “You give with one hand, and it’s taken away by insurance increases.”
The board could at least send a resolution to the Legislature “to bring the issue forward,” she said.