Posted: Apr 17, 2012 9:12 AM by AP
BATON ROUGE, La. (AP) - It was a battle of legal opinions as the Senate Retirement Committee combed through Gov. Bobby Jindal's proposals to push back the retirement age for about 50,000 rank-and-file state workers and public college employees and to charge them more for their pensions.
Without objection Monday, the committee approved the package of bills after hours of legal disagreements and promises that if any of these changes get final legislative passage, they will be challenged in court. As headed to the full Senate for debate, one measure would increase the amount state workers pay toward their retirement from 8 percent of their salary to 11 percent. Another bill would require employees to work longer to get their full retirement benefits, to as much as 67 years old, depending on how many years they've been in the system and their current age.
Other proposals would make it much tougher for retirement systems to pass cost-of-living adjustments for retirees and would calculate the monthly retirement payment on an employee's top five years of salary instead of three years.
Much of the debate centered on provisions in the Louisiana Constitution that protect pension benefits for state employees, calling them a "contractual relationship" and that prohibit laws "impairing the obligation of contracts."
Jindal's deputy chief of staff, Kristy Nichols, described the bills as a way to rein in costs of pension programs that are more than $18 billion short of the funding they'll need to pay for all the benefits promised. She said the current system is unsustainable, threatens to eat into taxpayer dollars needed for other state services and jeopardizes the ability to provide pensions to employees.
"We are here today to protect the system as a whole," Nichols said.
But the governor's proposals only center on certain state employees. They don't include elementary and secondary school system employees or state police, prison guards and anyone else deemed in hazardous duty.
Current and retired state workers said they could have made more money in private sector jobs, but chose to work for public agencies because they would get a better retirement.
"Passing this bill to renege on a promise shows a lack of integrity," said Neil Carpenter, 41, a state worker since 1999. "Do you really want to breach a contract with the employees who have committed a long part of their lives to the state of Louisiana?"
Lawyers for the retirement systems and a legal analysis done for the Legislature said the changes would be an unconstitutional move that breaks existing and protected contracts with workers.
"People entered into state government with a state contract provided for specifically for in the constitution," said Roy Mongrue, general counsel for the Teachers' Retirement System of Louisiana and a former assistant attorney general.
Jindal administration officials said they have structured the bills so existing benefits aren't diminished, only benefits accrued after they are enacted, and they argued that the precise value of the pension can be changed until the final calculations upon retirement. The governor's top lawyer, Elizabeth Murrill, said decades of Louisiana Supreme Court rulings have sided with their view.
"We stand on firm constitutional ground," Murrill told senators.
But Mongrue said Murrill was referring to case law decided before the current state constitution was enacted in the 1970s.
"You hear about 60 years of jurisprudence, but that was the old constitution without the current protections for retirement," he said.
The package of bills was rewritten in the Senate committee, after behind-the-scenes negotiations between the Jindal administration and committee members. In some instances, the changes were so sweeping, opponents and retirement system leaders said they didn't have enough time to digest the rewrite and explain what they could mean for the systems.
Sen. Elbert Guillory, the committee chairman and a Jindal ally, at one point said he'd have to read the retirement age change bill more closely before he takes it up on the Senate floor. But that didn't slow down his push to pass the legislation.
"Our retirement systems are heading toward a cliff ... This is not easy. It's particularly not easy because it's not the most popular thing to do. But pension reform must take place," said Guillory, D-Opelousas.
Jindal also is pushing to create a cheaper investment account similar to a 401(k) plan for state employees hired after July 1, 2013, instead of a monthly retirement payment based on their salaries. That proposal awaits debate in the House.