With great fanfare last year, the Legislature enacted and Gov. Bobby Jindal signed into law new rules for cost-of-living raises for pensioners.
The goal was a slow and steady investment of excess funds to cover the long-term debts that are held by the state’s largest retirement systems. The bill was a compromise but was desperately needed.
That was then.
Now, it’s an election year, and many of the members who paraded their financial responsibility last year are voting to break that compact and advance cost-of-living raises.
It’s a shame. If the 80-20 vote of the House for the bill by Rep. Sam Jones, D-Franklin, is any indication, politics has eroded the will of lawmakers.
We urge the Senate to show more responsibility and stick to the 2014 schedule. If this bill nevertheless gets to the governor’s desk, he should veto it.
Is it hard-hearted to do so? The Jones bill grants a 1.5 percent permanent benefit increase to retirees of the state’s four big pension systems. It would be an average increase of under $30 a month, the systems report, but there are some 100,000 recipients; the money comes from “experience accounts,” investment earnings by the retirement systems.
We do not begrudge anyone a little more money. State retirees are not eligible for Social Security, although many have spousal benefits from the federal government. And for every elderly retiree living on little, there are healthy and active state retirees in second careers while drawing big, tax-free checks — moreso in Baton Rouge, where state government is located, but really all over the state.
That’s one of the complexities of the retirement situation; retirement systems founded on equity for broad blue-collar workforces are now benefiting a white-collar state workforce. Another is that irresponsible lawmakers and governors in the past failed to pay enough into the systems to give them a stronger financial basis for the future.
We were encouraged by last year’s law, even if many of the members voting for it were also the people voting to give big tax breaks instead of generating surpluses to pay off the state’s long-term debts to the retirement systems, among other purposes.
The retirement situation was supposed to have been addressed by last year’s law, which did not forbid increases in COLAs. More of the retirement systems’ excess investment earnings will go toward reduction of long-term debts before dollars are put into the special “experience” accounts from which COLAs are granted. The changes limited both the frequency and amount of future retiree benefit hikes until systems hit targets for unfunded accrued liability levels.
Retired state employees, teachers, school employees and State Police got a cost-of-living increase last year but, under the new law, were not to get one in the coming year. All the good-government and financial responsibility rhetoric of last year has gone out of the window because of the election calendar.
Advancing this won’t break the bank, but it will make the 2014 law a dead letter. “The systems are only about 60 percent funded. We have taken steps to get that on the right trajectory. House Bill 42 will undo that,” said Retirement Committee Chairman Kevin Pearson, R-Slidell.
He was right to oppose Jones’ HB42, and we hope the Senate listens. Or at least remembers its own vote for the reform of 2014.