(AP) — Gov. Bobby Jindal’s proposed changes to benefits for state workers are unconstitutional, unnecessarily harsh and unfair to employees vested in the system, state employee retirement system leaders said Tuesday.
Cindy Rougeou, executive director of the Louisiana State Employees Retirement System, said Jindal is targeting workers who are barred from lobbying on their own behalf to speak up in opposition.
“It’s interesting that they’re picking on the ones who have no voice,” said Trey Boudreaux, LASERS assistant director, in a phone interview.
In a three-page written response to the governor’s proposals, Rougeou said the changes would break a promise made to employees when they were hired about the benefits they would receive.
“Many of those employees already have ‘vested’ rights in their retirement benefits. To change provisions such as those targeted would violate the constitutional restriction against impairing existing benefits,” Rougeou wrote.
Jindal is proposing a package of pension changes that would shrink retirement benefits for thousands of current state workers, boost their costs and push back the age for collecting benefits. Lawmakers will consider the ideas in the regular session that begins March 12.
The Republican governor said the changes would help Louisiana rein in the costs of its retirement programs, which are $18.5 billion short of the money needed to cover benefits. He said they would help ensure the state has the money to keep its promises to retirees that they will receive benefits.
He said the state can’t continue on its current path without retirement costs further eroding critical state services and infrastructure needs.
“Obviously, LASERS’ interest in this argument is to protect the status quo. What LASERS wants from the system is unsustainable. The argument about constitutionality and legality is a red herring,” said Jindal deputy chief of staff, Kristy Nichols.
Nichols said the proposals, in bills sponsored by Rep. Kevin Pearson, R-Slidell, are constitutional.
Rougeou said the governor’s recommendations would only result in “protracted litigation,” rather than getting the retirement systems better-funded.
Jindal’s proposals would increase the contribution rate charged to rank-and-file state workers for their retirement from 8 percent to 11 percent; calculate the monthly retirement payment on an employee’s last five years of salary, instead of three years; and increase the retirement age to 67 before a person can receive full benefits.
For most current state employees, if they have worked 30 years in state government, they can retire at any time. Anyone 55 or older wouldn’t be forced to switch to the later retirement age.
The changes wouldn’t apply to teachers and employees at public schools or to law enforcement workers. LASERS’ part of the retirement debt is 35 percent. Rougeou said targeting only LASERS members can’t effectively deal with the larger gap.
“The administration’s proposal is not a comprehensive approach to tackling state debt,” she wrote.
Nichols said the savings would be used to shrink the costs of retirements in state agencies so they can provide services to taxpayers, not to pay down the long-term retirement shortfall. She argued the change would ensure that the costs of retirement don’t grow so unwieldy as to jeopardize pensions promised to state employees.
“We’re protecting LASERS employees and their benefits. They’re not being targeted. They’re being protected by ensuring they have a benefit long-term,” Nichols said.
New rank-and-file state employees hired after the changes wouldn’t receive the promise of a set monthly retirement payment, and instead would get a cheaper, 401(k)-type of investment account.
Some of the governor’s proposals have been defeated in the past, including ideas recommended by Jindal last year, because of opposition from state employees and the retirement systems’ leaders. But the Legislature has many new members after the last election cycle, and increased numbers of Republicans.
 
Copyright 2012 The Associated Press.
 
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