BATON ROUGE, La. (AP) — Gov. Bobby Jindal’s plan to shift future rank-and-file state workers to a 401(k)-style retirement plan is unconstitutional because it didn’t receive enough support from lawmakers, a judge ruled Thursday.
“Because the Legislature did not pass this by a two-thirds majority, I think it’s invalid,” said state District Judge William Morvant in Baton Rouge.
Morvant sided with the Retired State Employees Association of Louisiana, which argued the pension plan change required the supermajority vote because the legislative actuary who analyzes retirement bills deemed it carried a price tag.
Neither the House nor Senate gave the bill a two-thirds vote on initial passage.
Jindal, who was out of town for a national Republican Party speech, issued a statement pledging to appeal Morvant’s decision.
“We are disappointed in the court’s ruling and we look forward to a successful appeal. We’re confident that the bill was constitutionally passed,” the governor said.
The bill, approved in the 2012 legislative session, created an investment account similar to a 401(k) plan for state employees hired after July 1, 2013. That would stand in place of a monthly retirement payment based on salary and years of employment.
Louisiana was set to become the first state in the nation to provide only the “cash balance” retirement plan for certain employees, without also offering federal Social Security benefits.
Passage of the cash balance plan was Jindal’s lone significant victory on the retirement front in the last legislative session, after lawmakers refused most of his package of proposals to change benefits for existing workers.
The issue of the two-thirds vote was raised during House debate on the cash balance retirement plan, but House Speaker Chuck Kleckley, R-Lake Charles and a Jindal supporter, disagreed. The House voted to support Kleckley’s ruling.
The switch to a cash balance plan would apply to rank-and-file state employees and university staff, not to law enforcement or other workers deemed to be in hazardous duty. It also wouldn’t change the retirement benefits offered to public school employees.
Supporters of the cash balance plan described the change as a way to rein in the growth of the pension programs that are billions of dollars short of the money they’ll need to pay for all benefits promised.
Opponents said the new investment account won’t give state workers enough of a safety net and could leave retirees dependent on state social service programs if their retirement checks don’t meet their needs. Louisiana state employees aren’t in the federal Social Security system.
