Coalition fights to save state pensions

Rep. James Armes (D-Leesville) says Gov. Jindal's retirement system changes threaten the state's middle class.

At a capitol press conference Monday, a coalition of firefighters, teachers, law enforcement personnel, AARP retirees, local leaders, state budget experts, and others exposed and rejected Governor Jindal’s pension-slashing scheme on middle class Louisiana workers.

Governor Jindal is trying to force through the legislature one of the most extreme overhauls of a state-run pension system anywhere in the nation, without the benefit of a transparent and open debate.

Shrouded in secrecy, Jindal’s pension slashing scheme, includes a so-called “cash balance plan” that turns pensions over to Wall Street. According to an actuarial note prepared by the Actuarial Services Department of the Office of the Legislative Auditor, the proposed cash balance plan would likely cost more than the current defined benefit plan. The report goes on to note, “Because there is no Social Security coverage [for state workers], such a member may very well become a ward of the state because he or she has no other available resources.”

Rep. James K. Armes (District 30) said: “The public deserves openness and transparency from their government especially when it comes to their retirement security. Unfortunately, Governor Jindal insists on secrecy. Even worse, his plan punishes Louisiana’s middle class workers by handing over their pensions to greedy Wall Street insiders who crashed our economy in the first place.”

Kerri Everitt, Advocacy Director for AARP said: “The Governor’s ‘cash balance plan,’ is particularly bad for retirees because state employees do not get Social Security. The plan will cost the state money and leave retirees in poverty. Instead of punishing working people and our seniors we should be making big corporations and Wall Street pay their fair share.”

Jan Moller, Director for Louisiana Budget Project said: “The cash balance plan is a lose-lose for Louisiana. It’s bad for taxpayers and bad for state employees. It’s especially risky for state employees, who do not receive Social Security and whose families would be vulnerable if they die or become disabled before they retire.”

Stacy Birdwell, Professional Fire fighters Association of Louisiana: “Firefighters don’t become firefighters to get rich. But we at least expect there to be a decent and guaranteed retirement at the end of a lifetime of hard work. We stand with our fellow state workers and demand politicians stop trying to turn our retirement security over to Wall Street.

Brenda G Matthews, qualified teacher aide, East Baton Rouge Federation of Teachers: “It’s shameful when politicians show such disrespect to the people who work every day to make the next generation of this state better and smarter. This plan is immoral and does not represent Louisiana values it represents Wall Street values. We must stop trying to sell the state and its people off to Wall Street and start making Wall Street and the richest one percent pay their fair share.

According to a new study from the Louisiana State Employees' Retirement System, based on the decisions they make, a worker who has already worked 10 years and plans to retire at age 55 with 28 years of service would have their pension slashed by $18,500 per year. Alternatively, someone currently with 20 years under their belt and plans to retire at age 55 with 25 years of service would see their pension chopped by $6000 per year.

Retirement bills taking center stage

Now that major elements of Gov. Bobby Jindal’s education package have been steamrolled through the legislature, attention is turning to the bills filed on his behalf that change state retirement systems.

Teacher and school employee system merger: Only one of the bills directly affects K-12 teachers and school employees – HB 60 by Rep. Kevin Pearson (R-Slidell), which would merge the Teachers’ Retirement System of Louisiana and the Louisiana School Employees Retirement System. That bill was changed so drastically on the House floor (it ballooned from 10 pages to 86 pages) that it was assigned a new number, HB 1198 by Rep. Pearson.

LFT opposes the bill because both systems work well, provide better retirement security than the private market and have earned the confidence of their members. It will be heard on the House floor on April 25.

The merger would abolish LSERS and transfer all its property, rights, obligations and employees into the Teachers’ system. In the process, 30 employees would lose their jobs within a year. That greatly increases the work load on remaining staff, and could cause a reduction in services for the members of the merged systems.

Why other retirement bills should concern educators

Other retirement bills in the governor’s package pose a threat to K-12 educators, even though they are not directly mentioned. The net effect of the Jindal plan is to dismantle the state‘s defined benefit retirement system. The ultimate objective is to replace pensions with market-based plans, putting employee retirement into 401(k)-type investment plans that do not guarantee an income.

If the governor succeeds in dismantling state employee pension systems, there is little doubt that teacher and school employee pensions will be next.

To read about specific retirement bills, please click here.

It's important: Urge Gov. Jindal to sign Senate Bill 6!

Please click here and ask Gov. Jindal to sign SB 6 into law!

SB 6 by Sen. Butch Gautreaux (D-Morgan City) deserves to be signed into law on its own merits. But its passage became even more urgent when three bills allowing retirees to return to work without losing their whole retirement benefit were tied to SB 6 in the waning days of the legislative session.

Those three were amended by House/Senate conference committees, and cannot go into effect unless the governor signs SB 6, which would require employers which withdraw from the Teachers Retirement System of Louisiana to pay their proportionate share of TRSL’s unfunded accrued liability.

These are the bills that depend on adoption of SB 6 before they can go into effect:

• HB 417 by Rep. Page Cortez (R-Lafayette) is the most comprehensive of the bills. It would allow retired teachers to substitute without penalty as long as they do not earn more than 25% of their retirement benefit. The reason for the 25% limit? Rep. Cortez told reporters “We didn’t want to give an incentive for a teacher to retire so they could go back and double dip.”


• 
  HB 369 by Rep. Gary Smith (D-Norco) says that teachers who were enrolled in the Deferred Retirement Option Plan on June 30, 2010, may work in an adult education or literacy program administered through a K-12 school as long as they do not earn more than 25% of their retirement benefit.


• 
  HB 150 by Rep. Hollis Downs (R-Ruston) says that retired higher education professors may return to work as adjunct professors, as long as they do not earn more than 25% of their retirement benefit.

Please click here and ask Gov. Jindal to sign SB 6 into law!

Panel acts to dismantle teacher salary schedule

The House Education Committee took a step toward dismantling the state's teacher salary schedule today when it approved House Bill 739 by Rep. Frank Hoffman of West Monroe.

The bill represents a true race to the bottom, as it allows school districts to pit retired teachers against current teachers in a contest to see who will work for the lowest salary.

If the bill becomes law, retired teachers who return to the classroom will not be allowed to enter the system at their former place on the salary ladder. Instead, school boards will "negotiate" their salaries. Testimony revealed that the intent is to pay them the same salary as beginning teachers.

Neither will the returning teachers ever be allowed to earn tenure or advance on the salary schedule - they will be year-to-year employees.

LFT President Steve Monaghan was the only person to present arguments against the bill, and he did it passionately.

"This is a direct affront to the salary schedule," Monaghan said. "Teachers should be paid for the service that they bring to a school."

"There will be unintended consequences to this legislation," he said. "It represents a disincentive for school boards to hire younger teachers if they can get veterans for less money."

The committee gave the bill a favorable recommendation, and then referred it to the House Retirement Committee for further action.

Times-Picayune: Let retirees eat cake

It's two months until; Christmas, but the Grinch is already at work at the Times-Picayune. In this editorial, the state's largest newspaper fulminates against public employee retirement pensions as "reckless and unsustainable."

They are not reckless, but come from a carefully devised formula based on an employee's earnings and years of service. And they have been sustainable for generations, surviving even the most recent stock market crash without plunging Louisiana into the bankruptcy predicted by critics.

True, the state is obligated to pony up if there is a shortfall, but that is what any decent employer ought to do in defense of those who spent their working lives on its behalf.

But in siding with Speaker of the House Jim Tucker, the TP is adopting a "let them eat cake" attitude befitting its Brahman heritage.

LFT President Steve Monaghan has responded to the editorial with this letter:

Dear Editor:

The Times-Picayune and Rep. Jim Tucker couldn't have picked a worse time to endorse a scheme that would subject retired state employees, including teachers, to the not-so-tender mercies of the marketplace.

While millions of Americans saw their retirement hopes shrivel along with their 401(k), individuals fortunate enough to have a defined benefit plan – a genuine pension – were spared financial devastation. Rep. Tucker’s plan would eliminate retirement security for future teachers and other public employees and make them targets for the next Ponzi scheme.

The Times-Picayune acknowledges the sad fact that far too many Louisiana workers have little or have no retirement plan. But rather than demanding fair pensions for all workers, the newspaper supports the Tucker proposal.

Here is the flawed logic implicit in the first sentence of your October 20 editorial: If many Louisianans do not have sustainable pensions, then none should. The Times-Picayune and the Speaker of the House are endorsing a great race to the bottom, and seem to be comfortable with a world in which only the privileged few can expect a sustainable post-employment future.

On behalf of the teachers and school employees we represent, the Louisiana Federation of Teachers rejects that vision of the future. We believe that after a lifetime of work, all employees deserve the security of a fair, guaranteed pension. No American's retirement security should be subject to the vagaries of the stock market or the manipulations of a few unscrupulous insiders.

We hope that Speaker Tucker and the Times Picayune rethink their position, and join in a greater struggle for fair, decent retirement security for all workers.

Sincerely yours,
Steve Monaghan, President
Louisiana Federation of Teachers

Experts say retirement changes would cost the state

If Speaker of the House Jim Tucker was expecting overwhelming support for his scheme to put public employee retirement at the mercy of the marketplace, he might have been disappointed by the result of the first hearing on the subject.

The emerging consensus seems to be that changing state retirement systems to a defined contribution plan would cost more than the current defined benefit plan, according to experts cited in this story by Advocate reporter Sarah Chacko.

Opinions vary on why Tucker is so bent on taking away one of the good things about public service in Louisiana - the promise of a retirement plan that is not subject to the whims of the stock market.

Whether his zeal is out of disdain for the people who work in public positions - including teachers and school support staff - or it is out of allegiance to the private fund managers who stand to be the real winners in a defined contribution plan, or even out of a misguided belief that his idea would truly be good for the state, one thing is certain. His plan would not be in the best interest of the people who've made public service their life's work.

Committees study retirement "reform"

If you like the way the stock market tanked in the past couple of years, you'll love Speaker of the House Jim Tucker's ideas about changing the state's public employee retirement systems.

During the last legislative session, Tucker passed a resolution calling for a study of defined contribution retirement systems versus the defined benefit systems now enjoyed by state employees, including teachers and school support staff.

Under the current system, retirees get a pension based on their income and years of service. A defined contribution plan would put retirement income at the mercy of the stock market. Purveyors of 401k and other retirement plans strongly support the defined contribution option.

As this article by Advocate reporter Sarah Chacko notes, Tucker's plan would go into effect next year, and would affect newly hired teachers and other public employees.

Today, a joint meeting of the House and Senate Retirement Committees began the study required by Tucker's resolution.