According to the Public Affairs Research Council (www.la-par.org), Louisiana has four “state” retirement systems: the Louisiana State Employees’ Retirement System (LASERS), the Teachers’ Retirement System of Louisiana (TRSL), the Louisiana School Employees’ Retirement System (LSERS) and the Louisiana State Police Retirement System (STPOL). Those systems offer defined benefit plans for their members that promise a certain retirement compensation based on salary and years of service. This amendment affects LASERS and TRSL.
A vote for the amendment would require the Legislature to designate certain percentages of the state’s nonrecurring revenue to reduce the long-term financial shortfall of the state employee (LASERS) and teacher (TRSL) retirement systems.
A vote against the amendment would still allow the Legislature to appropriate nonrecurring revenue to retiring the unfunded accrued liability of public retirement systems but would not require such.
This amendment would require that a certain percentage of state revenue designated as nonrecurring be used to pay down the pre-1988 batch of unfunded accrued liability (UAL) for two state retirement systems: the Louisiana State Employees’ Retirement System and the Teachers’ Retirement. Proponents of the amendment assert that using nonrecurring funds for the purpose of reducing the retirement systems’ unfunded accrued liability makes good fiscal sense. These “extra payments” will help the state retire the UAL more quickly and lessen the long-term cost of keeping the retirement systems solvent. When nonrecurring revenue is collected, the Legislature must exercise some discipline in addressing the financial needs of the state’s retirement liability. In most years, this amendment would force lawmakers to make a contribution to pay down the UAL. The amendment would not prevent the state from directing additional dollars to the UAL.
Opponents argue against dedicating funds because it ties the hands of the Legislature in the future for budgeting purposes. Constitutionally mandating a certain percentage of nonrecurring funds to pay the UAL means the Legislature cannot direct those funds toward other allowable expenses. The Constitution already allows the use of nonrecurring revenue toward the UAL and an amendment that creates budget restrictions is not needed. A different argument against the amendment is that it calls for mandated proportions – 5 percent and 10 percent of nonrecurring revenue – that are too small. The amendment could have the unintended consequence of convincing lawmakers to stop at that level when they should be contributing more to the UAL. In other words, the minimum could become the maximum.