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A little-noticed retirement obligation is costing public schools $853 million per year, a state audit issued Monday says.

A little-noticed state retirement obligation is costing public school students and teachers $853 million per year, state Auditor Mike Waguespack said Monday.

The debt means that nearly $1 of every $4 in annual state aid allocated to public schools by the Legislature disappears before it reaches classrooms, according to the report. It also means that the $853 million amounts to $1,302 per student and swallows an average of 10% of total revenue for schools.

The 44-page study highlights an issue known to education insiders but not to most taxpayers – Louisiana's retirement debt for former teachers strips millions of dollars both from schools and the salaries of active teachers, which have been below the regional average for years.

The review also said the Legislature might want to consider revamping how the retirement debt is handled in a way "that could be less burdensome for participating schools."

State aid for public schools totaled $3.9 billion for the year targeted in the audit, 2019-20.

The teacher debt obligation grabbed 23.9% of that allocation, the report says.

The issue stems from years of neglect by the Legislature and other state leaders, which allowed the retirement debt for teachers to keep growing without a way to pay for it.

The debt is called the unfunded accrued liability, or UAL, which is the difference between what the state owes teachers and what it has to pay that debt.

In 1987 voters approved a constitutional amendment that required the Legislature to come up with a plan to pay off the teacher and state employee debt that existed in 1988 by 2029.

State laws enacted in 2009 and 2014 require that retirement obligations for teachers built up between 1988 and 2009 had to be paid by 2040 and by 2044 for former state employees.

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Public schools make a dent in that debt annually by paying a percentage of their employees' salaries.

Most of that money goes to the Teachers Retirement System of Louisiana and the Louisiana School Employees Retirement System.

The combined UAL for both groups totals $11.1 billion, according to the audit.

Cynthia Posey, director of legislative and political affairs for the Louisiana Federation of Teachers, noted that state leaders allowed the debt to accumulate for years and now uses part of annual state aid for public schools to pay it off.

"This is how the state chose to do it," Posey said. "Don't blame TRSL."

Tia Mills, president of the Louisiana Association of Educators, said Monday she has heard discussions in the past about possible changes in how the debt is retired. "Our retirees deserve to be rewarded at the end of their tenure by being able to have a living wage based on their years of service," Mills said.

In a written response, state Superintendent of Education Cade Brumley said the annual obligation to former teachers "is a large portion of city and parish school systems' budget and is tied to the biggest expense in education, staff salaries."

Brumley also said other expenses are nearly as costly, including transportation, technology and facilities.

Katherine Whitney, director of TRSL, said retiring the debt has been a goal of her office and others in state government for years. "By 2029 the UAL is projected to decrease 43% from the 2020 total of $10.37 billion and by 2040 the UAL is projected to be less than $1 billion," Whitney said in her written response to the audit.

A total of 1,355 traditional and charter schools take part in the retirement system and 112 charter schools do not. The 112 that opt not to have to contribute to Social Security.

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