Retired state workers can plan on seeing a little bit more in their monthly pension checks as the state Senate, as expected, approved minor changes in two of the three bills that allow for a cost of living adjustment.
Senate Bills 2, 5 and 18 were approved with little discussion Wednesday and now head to Gov. John Bel Edwards, who is expected to sign the measures.
Nearly 125,000 retirees, who are over the age of 60 and have been retired for a year, will receive a modest boost on the first $60,000 of benefits. Most of the state’s retirees live in Baton Rouge and New Orleans areas.
The percentages are based on how well-funded each of the state systems are.
Retired state workers and retired public school teachers would receive a 1.5 percent increase; retired school workers would get 2 percent; and retired State Police troopers and staff would receive at least 2 percent.
The average monthly increase would be about $30, but the exact amounts could vary widely depending the circumstances of individual retirees.
It’s been two years since some of the state pensioners received a cost of living adjustment, called a COLA. That bump came with passage of a law aimed at tackling a $20 billion debt the four state retirement systems have incurred over the years of granting COLAs and of legislators not putting enough money into the systems to cover the promises made to state employees.
Act 399 set triggers for when cost of living allowances could be given. The check-offs include waiting every other year, ensuring enough money was in an account that collects excess earning on investments, and the systems hit a predetermined level of funding. Another criterion is whether there was inflation in the previous year. There wasn’t. But proponents argued that was because the price of energy fell so dramatically and threw calculation off. But the prices consumers paid for health care and groceries rose.
And the funds where excess earnings are parked — and from which COLAs will be paid — are full and cannot be used for other state government expenses. The COLAs granted in the legislation will cost $385 million.
The cost would not come from the state budget, which is $600 million in the red.
Senate Retirement Committee Chairman Barrow Peacock, R-Shreveport, sponsored the three bills. Senate Bill 2 awards the COLAs. Senate Bill 5 would require the retirement systems to timely pay administrative costs rather than roll those charges into the 30-year debt. Senate Bill 18 would reduce the amortization period — paying off debt on a fixed schedule — from 30 years to 20 years.
Follow Mark Ballard on Twitter, @MarkBallardCNB.
For more coverage of government and politics, follow our Politics Blog at http://blogs.theadvocate.com/politicsblog/.