The University administration has pledged to set a minimum for the amount of money it contributes to employees’ retirement funds, following the passage of House Bill 6 this summer.
The bill dictates the state’s normal cost — the cost of funding the benefits all active employees will earn per year — drop no lower than 6.2 percent starting in 2018. Gov. Bobby Jindal signed the bill into law on June 12.
The normal cost also refers to the amount of money universities pay to the Teachers’ Retirement System of Louisiana to fund employee benefits.
For the previous fiscal year, which ended on the last day of June 2014, the normal cost was 5.2 percent, said Director of External Affairs Jason Droddy.
Droddy said the normal cost was set to fall to 3.7 percent starting July 1, but the University took action in June to maintain its current employer contribution proportion. The University also guaranteed it would increase the cost each year until it hits 6.2 percent in 2018 as mandated by law.
The amount the University pays to the TRSL to fund employee benefits will never fall below 5.2 percent of payroll, regardless of changes in the normal cost.
“Basically, the University’s making a commitment that it’s going to cover its costs,” Droddy said.
Faculty Senate President Kevin Cope said he was grateful for the commitment by the administration to set a floor for the normal cost but thinks it’s unfortunate that it will take the University so long to reach 6.2 percent in 2018.
“House Bill 6 does not require that this contribution be ratcheted up over the course of four years, it only suggests that that is possible,” Cope said. “In other words, the sum could have been increased to 6.2 percent immediately, but the LSU System chose not to do so.”
Cope also said the University’s pledge will not be a factor in maintaining or recruiting faculty.