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A state panel Monday discussed an audit that said about 25% of state aid for public schools is used for teacher retirement.(Photo by Sophia Germer, NOLA.com, The Times-Picayune | The New Orleans Advocate)

An audit that shows nearly 25% of annual state aid for public schools is siphoned off for retirement debt may require legislation in the name of fairness, members of a state oversight panel said Monday.

Permitting charter schools not to take part in the retirement system, which allows them to avoid helping pay off the retirement obligation, is especially troublesome, according to the vice-chairman of the Legislative Audit Advisory Council. 

"Maybe we need to revisit the statutes to make the system fairer," said Sen. Jay Luneau, D-Alexandria.

The issues surfaced during a hearing on an audit released last month that showed retirement obligations are costing public schools $853 million per year, or $1,302 per public school student.

The debt is called the Unfunded Accrued Liability, which is the difference between what the state owes teachers and others versus what is has on hand to pay.

State Rep. Barry Ivey, R-Central, chairman of the council, said the debt places a "tremendous burden" on schools and stems from "grotesque neglect" by lawmakers and other state leaders before 1988 who allowed the debt to grow.

The year before votes approved a constitutional amendment that required the state to pay off the teacher and state employee debt that existed in 1988 by 2029.

Edward Seyler, an economist in the office of Legislative Auditor Mike Waguespack, told council members the balance will drop dramatically in 2029. "It is just costing us a lot of money while we get there," Seyler said.

State laws passed in 2009 and 2014 require that debts accumulated between 1988 and 2009 had to be paid off by 2040 for teachers and 2044 for former state employees.

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Teachers and others in traditional public schools take part in the Teachers Retirement System of Louisiana.

But only 31% of the state's public charter schools do so.

Schools that are part of TRSL pay an average of 26% of their teacher salaries for retirement compared to 9% in schools that do not, according to the auditor's office.

Charter schools that are not part of the state retirement system generally pay into Social Security for their teachers, who also rely on a 401k-style setup for retirement. 

Luneau repeatedly asked why charter schools are allowed to avoid helping to pay off retirement costs by staying out of the state system.

"It just seems there is a disparity," he said.

Caroline Roemer, executive director of the Louisiana Association of Public Charter Schools, was not at the meeting but said later charter schools were given the option on retirement systems because they were created to be innovative models in finances, not just academics.

Roemer said that, for the past 26 years, some have opted for a "much better, sustainable retirement program with their teachers" rather than the traditional one begun 90 years ago.

Rep. Stephanie Hilferty, R-Metairie, a member of the council, noted that Louisiana typically ends up in the middle nationally in state spending per student.

However, that average includes retirement costs, which never reach the classroom and cannot be used to boost teacher pay or to finance technology or school supplies.

Hilferty said the officials may need to devise a way of offering a more realistic snapshot of school spending.


Email Will Sentell at wsentell@theadvocate.com.