The Louisiana House on Tuesday evening approved revamped procedures for determining future cost-of-living increases for about 100,000 retired state employees, teachers, school employees and State Police.
The House voted 96-0 for the measure which its sponsor state Rep. Joel Robideaux, R-Lafayette, is designed to reduce sooner retirement system liabilities of some $19 billion. But it also makes it more difficult to provide costs of living adjustments, or COLAs, for the forseeable future.
“It’s an important step in the right direction for retirement reform,” said Robideaux.
Passage of Robideaux’s legislation is required in order for retirees to get a proposed 1.5 percent COLA in the fiscal year that begins July 1.
House Bill 1225 would increase the amount of Louisiana’s four statewide retirement systems’ excess investment earnings that go to debt reduction.
The dollars would be steered away from special accounts that fund COLAs.
Robideaux revised the legislation to offset a potential increase in employer contributions associated with the plan. The state’s school boards had projected a $174 million increase in employer retirement contributions over five years because of the plan’s structure.
The House also changed the legislation so retirees could get a 3 percent maximum COLA when the system of which they are a member is 80 percent funded. That means the retirement system has sufficient funds to cover 80 percent of its long-term pension obligations to current members and retirees. None of the systems are anywhere close to hitting that goal.