An effort to provide retired state employees and teachers a cost-of-living increase in their pension checks came up short Thursday.
The Louisiana House Retirement Committee deadlocked in a 6-6 vote — effectively killing legislation impacting more than 100,000 retirees.
An effort to allow the full House to consider the measure’s merit also died.
Rep. Sam Jones, D-Franklin, proposed the 1.5 percent cost-of-living adjustment, citing escalating expenses retirees — many on limited fixed and sometimes poverty incomes — are facing.
Jones particularly noted double-digit increases in the state health insurance program costs because of “mismanagement” by the Jindal administration’s Office of Group Benefits.
The $350 million long-term expense would come out of special accounts set up for the expressed purpose of granting retiree cost-of-living increases. The accounts are funded with a portion of excess investment earnings in each of the four statewide pension plans — state employees, teachers, school employees and State Police.
“We have got to do the right thing,” Jones said. “The money is there.”
All four statewide systems testified that sufficient funds were available to cover the COLAs proposed by Jones. State employees, teachers and State Police system boards supported the legislation. School employees was neutral. The COLA would average $26 a month for state employee retirees and $28.72 for teacher retirees.
The Jindal administration opposed Jones’ House Bill 42.
The Division of Administration’s Executive Counsel Ben Huxen said the legislation would violate a law enacted last year designed to strengthen the finances of the retirement plans. In addition, Huxen said it could “potentially weaken our standing with credit agencies,” who rate the state in advance of bond sales.
Huxen referred to a new law, under which more of the retirement systems’ excess investment earnings will go toward reduction of long-term debts before dollars are put into the special COLA accounts. The changes limited both the frequency and amount of future retiree benefit hikes until systems hit certain unfunded accrued liability levels. Retirees got a cost-of-living increase last year but under the law were not to get one in the coming year.
Huxen said the plan to paydown on the systems’ debts was attractive to the credit agencies. “Here we are talking about violating it,” he said.
“Where were you when our bond capacity for higher education was in jeopardy,” said state Rep. Jack Montoucet, D-Crowley. Montoucet referred to the market’s reaction to LSU’s fiscal plight caused by a $1.6 billion budget shortfall.
“This administration supports funding higher education. We have a plan,” Huxen replied to audible snickering in the room.
“Were you advising this administration on this $1.6 billion budget problem?” Jones said.
Teachers Retirement System of Louisiana Executive Director Maureen Westgard said the cost-of-living increase of last year was granted last year. “Unfortunately, OGB increases took it away. I think that’s why you are hearing such an intense lobbying effort on this COLA,” said Westgard.
Frank Jobert, legislative director of the Retired State Employees Association, said the 12 percent Group Benefits family plan increase translates to $58 a month more in insurance costs. “Even if we get a $30 COLA, we’re still $28 in the hole,” he said.
Here’s how the committee voted when it effectively killed HB42:
FOR a 1.5 percent COLA: State Reps. Jones, Frank Hoffmann, R-West Monroe; Montoucet; Ed Price, D-Gonzales; Gene Reynolds, D-Minden; and Kirk Talbot, R-River Ridge.
AGAINST a 1.5 percent COLA: Committee chairman Kevin Pearson, R-Slidell; and Reps. Nick Lorusso, R-New Orleans; Paul Hollis, R-Covington; Barry Ivey, R-Central; Greg Miller, R-Norco; and Darrell Ourso, R-Baton Rouge.
Follow Marsha Shuler on Twitter @MarshaShulerCNB. For more coverage of the state capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/.