Columns » The State of the State by Jeremy Alford

Retirement Planning for State Employees



Legislative retirement committees usually rank among the sleepiest, but this year they'll wake things up a bit.

If your idea of a good time involves being cooped up for several hours in a room filled with actuaries who prattle on about cost-of-living adjustments, unfunded accrued liability, annuities and investments, then the House and Senate retirement committees are where you want to be during the current legislative session.

  Public-sector employees and retirees take the proceedings quite seriously and are traditionally among the most energetic stakeholders to mobilize on any given issue. They include former teachers, state employees, law enforcement types and fire officials. This year, as the state grapples with unprecedented budget woes, they'll have many reasons to descend upon the Capitol.

  So far, lawmakers have filed at least 137 retirement-related bills, and some are generating real buzz.

  House Speaker Jim Tucker, an Algiers Republican, wants to attack the state's unfunded accrued liability — also known as the UAL or retirement debt — which has topped $17 billion. One way to do that, he says, is to transition the state employee retirement systems from a "defined-benefits" plan to a "defined-contributions" plan.

  Under the state's existing defined-benefits plan, employees can look forward to certain levels of retirement payouts. Under a defined-contributions plan, which is akin to private-sector 401K plans, payout levels can change.

  Speaker Pro Tem Joel Robideaux of Lafayette, who has no party affiliation, says the speaker's proposal, which grew out of recent streamlining meetings, has momentum. "I think it will take the risk off the state and place it onto the employees, just like in the private sector," says Robideaux, who formerly chaired the House Retirement Committee. "One of the benefits is that, at any point, should you become disenchanted with government work, you can take it with you to the private sector. It's portable."

  Senate Retirement Chairman Butch Gautreaux, D-Morgan City, opposes the swap. "I don't see this happening. It'll be too expensive," he says. "We don't pay what the private sector does, and we shouldn't offer the same thing. And the law is prospective, so we'll be operating two plans simultaneously."

  Procedures matter, too. A bill by Rep. Kevin Pearson, a Slidell Republican, proposes a constitutional amendment that would require lawmakers to have a two-thirds vote to pass any retirement-related changes that have an actuarial cost.

  Practically every year someone from the state's retirement systems pitches a cost-of-living adjustment, or COLA. The state's various retirement systems have different needs, which spreads policy agendas thin, Robideaux says. "We need to get away from doing a little bit each and every year and pitting all of them against each other," he adds. "We need to get rid of this headache."

  Instead, Gautreaux wants to guarantee a 2 percent increase every other year. "We're looking for a more sustainable way to increase benefits over the long run," Gautreaux says. "It won't be a cost-of-living increase, though, and it won't be tied to an index. But in the end, there won't be any more COLAs. In theory, that would be the end of it."

  Meanwhile, Gautreaux says his emailbox is already filling up with messages from teachers warning him that he'll never be elected to another office if he goes through with his planned legislation to eliminate or possibly reform the state's DROP program. DROP is an optional program that allows participating state employees to get much larger retirement benefits.

  "I don't get any joy in trying to make tough decisions, but I know there are a lot of people who regret going into the program, and they want to get out," says Gautreaux, who is term-limited. "The program is not functioning well."

  With so much on the line, it's no wonder that some Capitol insiders, mostly those who hang out in the retirement committees, are expecting an above-average year when it comes to squeezing moments of interest out of one of the more sober legislative issues. "There's really a lot in store for retirement issues in this session," Robideaux says.

Jeremy Alford can be reached at

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