Bill to raise teacher retirement age met with silence
BATON ROUGE — In a packed Statehouse conference room, Rep. Barry Ivey, R-Baton Rouge, encountered an unexpected silence from the Teacher’s Retirement System of Louisiana’s Board of Trustees after he presented a plan to reform the state’s pension system.
Ivey, who sits on the House Retirement Committee, presented legislation to curb the increase of debt used to pay for the state employee pension system and to transform the current defined benefit plan, which places all financial risk on the state, into a hybrid system that would split the burden 50/50 with the employer.
The proposed legislation, House Bill 65, would raise the minimum retirement age from 62 to 65 for state employees hired from July 1, 2018, onward.
Ivey explained the goals of his legislation to a hesitant board, arguing the state should fully fund its pension system now in order to free up money to provide teacher salary increases and better technology in schools.
Ivey claimed that paying off the unfunded accrued liabilities, also known as UAL, would provide the Legislature with nearly $1.5 billion dollars of additional funds. A lobbyist for state pensioners intimated the proposal was “too good to be true.”
That didn’t deter Ivey, but the board’s non-reaction was a bit unsettling for him.
“The Board was uncannily mute. I find it odd because that was not my experience on it in the previous meeting,” Ivey said after his presentation. “I was asking for engagement at least on what are [its] thoughts. I’m one perspective so I invite other perspectives to the extent that they’re willing to participate and offer recommendations.”
Mary-Patricia Wray, a lobbyist for the Louisiana Public Pension Coalition, said in terms of fiscal responsibility the Legislature has passed a lot of difficult reforms to deal with unfunded liabilities already, stopping the accrual of new liabilities and paying off previous UALs faster than expected.
“Constant examination of whether those strategies are working as well as they could is always appropriate and a good thing,” Wray said. “I’m glad we’re going to have a lively discussion about retirement (this) session. It’s always positive.”
Wray said she is hesitant to criticize Ivey’s legislation because the actuarial cost associated with the legislation as yet has not been released and won’t be until the Legislature meets in regular session beginning in mid-March.
HB65 provides an automatic cost of living adjustment, known as a COLA, to the pension program every other year. Currently the legislature must approve any COLA changes added to benefits.
While somewhat different than previous legislative proposals to reform the state retirement program, Ivey’s hybrid bill is one of many attempts, occurring every two to three years, to make major changes to the pension system, Wray said.
“Rep. Ivey has a long way to go, and I wonder when the actuarial notes come out whether that’s going to impact the trajectory of the legislation positively or negatively. He’s got some good sales pitches going on about higher benefits and lower costs. But if it sounds too good to be true, it usually is.”
The bill will require a two-thirds majority in order to be enacted, and despite the Board’s quiet response, Ivey remains optimistic of his bill’s legislative chances
“I’ve already discussed some of the legislation with a few legislators and I’ve had a lot of encouragement with particularly the House members in the Republican delegation who seem to believe it’s essential we have pension reform as well,” Ivey said.