Barry Erwin, president and CEO of the Council for a Better Louisiana, is urging the Louisiana Legislature to act on its own and advance legislation that drastically reforms the state’s retirement system despite opposition from Gov. John Bel Edwards.
“Legislation to reform one of Louisiana’s major retirement plans is being shelved by the state retirement system that proposed it because of opposition from the governor,” Erwin writes in a guest column. “What it means is that unless something changes, this significant reform legislation, which has already passed favorably out of two committees, will die without even a minute of debate on the Senate floor.”
That’s unfortunate, says Erwin, for citizens and thousands of future state employees.
The problems with Louisiana’s retirement debt are well known, he continues, adding that poor decisions from the past have built up an unfunded accrued liability approaching $20 billion
“In today’s world that’s placed growing stress on our current budgets as the state struggles to make the necessary payments to reduce that debt,” Erwin says.
But Senate Bill 14, by Shreveport Sen. Barrow Peacock, would reduce the state’s risk for future liabilities and set the retirement plan for workers in the Louisiana State Employees Retirement System, or LASERS, on a more sustainable path going forward. Unlike Louisiana’s current retirement plan, which is basically a traditional pension, Barrow’s proposal creates a hybrid plan—part guaranteed benefit, part 401 (k) contribution plan. The plan would only go into effect for state employees hired beginning in 2020.
The vast majority of new state hires eventually move on to private-sector careers accruing little or no retirement benefit from the state, he says. The initial contribution to the plan would be slightly higher than it is now, but actuarial estimate shows the hybrid plan would reduce unfunded liabilities by $100 million over the next 10-12 years.
“This proposal represents a structural change in retirement that protects current workers, makes things better for future workers, and reduces liabilities for the state,” Erwin writes. “CABL wishes the governor had not stepped forward to scuttle the proposal, but we hope the Legislature acting on its own will choose to move it forward through the legislative process.”
