The fight between higher education and public schools over pension funding ended in a draw Monday.
State Sen. Robert Adley wanted to reduce the money colleges have traditionally paid into the Teachers Retirement System of Louisiana, claiming higher education has been overcharged for years. He had plenty of support from the higher education community wrestling with deep financial problems
But the result would have been an increase in K-12 payments into the pension system, which brought loud protests from public school officials, who said the additional expense would take money out of the classroom.
“The problem with this bill is that it creates another problem,” said Sen. Gerald Long, R-Winnfield. “We are caught in a crossfire for lack of a better term.”
So, the Senate Retirement Committee approved a compromise bill that has a big caveat, particularly as legislators struggle to close a $1.6 billion state budget hole.
Higher education would not get what amounts to an $83 million annual cut in pension payments until the Legislature provides $83 million for K-12 to cover the added expense.
Under the change, sponsored by Sen. Page Cortez, R-Lafayette, the extra K-12 funding would have to be specifically appropriated and not go into the state fund for day-to-day public school operations.
The committee voted 4-2 for the revamp, then shipped it to the Senate floor for debate.
Adley’s original SB18 proposed giving colleges and universities permission to pay off the unfunded accrued liabilities, or UAL, associated with their employees and retirees and exit the TRSL system. The UAL is the long-term liabilities of the pension system.
When the measure hit committee, Adley submitted a substitute bill, which would change the allocation of required contributions toward those long-term debts.
Under Adley’s proposal, higher education’s contribution would have dropped from $262.5 million to $179.6 million. At the same time, K-12’s would have increased from $900 million to $983 million.
Adley said higher education has been contributing too much. The debt of the universities is 16 percent but they have been paying 25 percent because of the formula used, the Benton Republican said.
State funding to higher education has been cut to the point that “tuition is now being used to pay the UAL of K-12,” he said.
Board of Regents chairman Roy O. Martin III said the legislation is only aimed at “people paying their own liability.” He said universities need financial relief.
The Teachers Retirement System of Louisiana opposed the legislation.
TRSL Executive Director Maureen Westgard said the system board considers the legislation unconstitutional because it did not comply with laws for introducing pension bills. In addition, she said higher education is coming back 25 years after the fact trying to alter an agreement to pay costs associated with the UAL that is stipulated in state law.
TRSL’s national retirement lawyer, Robert Klausner, said Adley’s original bill included a constitutional requirement that it be prefiled prior to a legislative session.
But the bill Adley is now pushing is nothing like the prefiled bill, which Klausner said creates a legal problem. He suggested that proponents wait until next year and do it right.
Scott Richard, executive director of the Louisiana School Boards Association, said public schools are struggling too. The state program providing funding for public schools has only been increased once during the last seven years, he said.
“This bill would put some real serious strains on my budget,” said Michael Faulk, superintendent of the Central School System.
Follow Marsha Shuler on Twitter, @MarshaShulerCNB. For more coverage of the state capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/.