Not a single Louisiana representative and senator has voted against raising the monthly pension checks for most of the state’s retirees.
But the bill that passed the full House on Monday 92-0 is not the same as the version that passed the Senate 35-0 on April 13.
The differences between the House and Senate measures would have to be worked out — both chambers must agree on the exact language — before any cost of living adjustments could be approved and sent to the governor for his signature.
The cost of living adjustment, for about 125,000 retirees beginning on July 1, in Senate Bill 2 is conditioned on the passage of two other bills that tweak how the retirement system funds retirements and pays for administrative costs. House Bill 32 carries no conditions and would simply raise the benefits.
“The key point,” said Rep. Sam Jones, the Franklin Democrat who sponsored HB32, “is we have consensus to pass a COLA.”
HB32 and SB2 would give retired state workers and public school teachers over the age of 60 a 1.5 percent increase. Retirees in the systems that handle the pensions for State Police employees and public school workers over the age of 60 would receive an increase of about 2 percent.
The average monthly increase would be about $30 but could vary based on the circumstances of individual retirees and the retirement systems to which they belong. It would be the first cost of living adjustment in two years for many retirees. For others, it’ll be the first raise in benefits in at least eight years, Jones said.
The state is in a fiscal crisis and is still looking at a budget deficit of about $600 million for the fiscal year that begins July 1, without any real plan to bridge that gap short of draconian cuts to hospitals, higher education institutions and possibly not funding the college tuition-paying Taylor Opportunity Program for Students, or TOPS, for more than 30,000 students already qualified for the scholarships.
But the money would come from an account where excess investment earnings were deposited and the $385 million ultimate cost would not impact the state budget. The money in the funds cannot legally be used for other state expenses.
Part of the reason for the $20 billion debt issue involving retirement accounts is the COLAs granted over the years. Generally, the additional dollars were tacked onto the debt, which state government didn’t adequately fund.
Two years ago, Act 399 set criteria that allowed cost of living adjustments every other year, provided enough money was in the excess investment accounts and the systems hit predetermined levels of funding. Part of the criteria is inflation, which last year was below the amount needed to trigger the increased benefit.
Both Jones and Sen. Barrow Peacock, who sponsored SB2, acknowledge that the federal consumer price index last year wasn’t high enough. However, they argue, the cost of health care and food, on which seniors spend most of their money, rose last year, while the collapse of energy prices drove down the official inflation rate. If looking at the rise in consumer prices over the past two years, the inflation rate is plenty high enough, both Jones and Peacock said.
While Jones’ House bill puts no conditions on the adjustment, Peacock’s Senate Bill 2 would grant a COLA only if two other measures also are approved.
A Shreveport Republican who chairs the Senate retirement panel, Peacock said during an interview moments before the House vote that he still wants to link the cost of living adjustment to his two other bills. Senate Bill 18 would tinker with how the retirement systems are funded, and Senate Bill 5 would require administrative costs to be paid annually rather than rolled into the long-term debt.
“The important thing is to help the long-term soundness of the retirement system,” Peacock said.
Jones said he is OK with the two measures attached to Peacock’s cost of living adjustment bill. But the two of them haven’t yet met to decide how best to proceed.
All three Senate bills are scheduled for a hearing Thursday before the House Retirement Committee.
HB32 now goes to the Senate, where it’ll likely be assigned to Peacock’s committee for a hearing.
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