Blueprint Louisiana recently read with interest the comments of the executive director of the Louisiana State Employees Retirement System.
We acknowledge Louisiana’s very large unfunded accrued liability didn’t happen overnight. It’s a cumulative result of generous commitments made decades ago as well as a number of other factors, some of which are out of any one person’s or one organization’s control.
Nonetheless, this is one difficult reality we can’t escape: Employer contributions for public pensions cost Louisiana taxpayers $1.78 billion this year — a number that will continue to grow for years to come.
As that number grows, so does the percentage of state funds needed to meet this obligation. More money dedicated to retirement benefits means less money for higher education and health-care services.
Blueprint Louisiana stands by its recommendations to address the unfunded accrued liability and put the state’s retirement systems on better financial footing.
Our recommendations seek to modify features that got us into debt in the first place. That includes transforming the current defined benefits system to provide new employees with options and decision-making power over their own retirement, rather than a one-size-fits-all, state-run program.
We also believe that promised benefits need to be reviewed so that they are fair, but also affordable to taxpayers.
Finally, good fiscal policy dictates we have a complete picture of Louisiana’s debt. The investment gains often trumpeted by retirement systems ignore current market returns and the fact that those gains took place during a period of tremendous national economic growth. Those return levels will not likely be duplicated going forward, and the state will be required to pay the debt associated with the unfunded accrued liability sooner or later. We prefer sooner.
Louisiana is not alone in dealing with its public retirement challenges. According to the National Conference of State Legislatures, 27 state legislatures in 2011 have enacted significant retirement-system changes after 21 states did so in 2010.
California Gov. Jerry Brown just unveiled his own far-reaching pension reforms in an attempt to save that state billions over the next 30 to 60 years while maintaining “a fair but sustainable income-security plan.”
Blueprint urges state leaders to make sound but bold decisions for new state workers that will provide a guarantee of retirement benefits as well as fiscal benefits to the state in the decades to come.
member, Blueprint Louisiana Board of Trustees