New faculty members could miss out on more money than their more experienced counterparts following the legislature’s passage of a bill that changes retirement plans for state employees. The bill, passed this summer, further erodes the retirement program Faculty Senate President Kevin Cope already considers poor. “The retirement program had already deteriorated to such a point that it is difficult to imagine it getting much worse,” Cope said. “But, the legislature managed to make it a little bit worse. They have actually written the impoverishment of the faculty into law.” LA House Bill 61 creates a plan called cash balance, which officially takes effect for all new hires July 1, 2013. All current employees will remain on the defined benefits plan – a retirement package in which employee benefits are decided based on a formula using factors like salary history and duration of employment. Cope said the delay will be good for current faculty members, but may not be beneficial for new hires. “The good thing is that the cash balance plan will not affect many faculty members right now,” he said. “However, the incoming employees will be faced with this hybrid plan. Some may say it isn’t any worse than the plans before, but at the same time, it really isn’t any better.” Employees will pay 8 percent of their monthly salaries to the plan. The state will contribute 4 percent – totalling 12 percent of the employee’s monthly salary. After the state invests the money, employees will then receive interest on their plan equal to the state’s return on the investment. Once an employee “separates from service,” or no longer works for the University, his or her plan will no longer be credited with interest, according to the bill. Staff Senate President Chad Gothreaux said the plan may weaken the University’s appeal to prospective employees. “I am concerned that the strength of the benefits program will not be attractive to recruitment,” Gothreaux said. “I am also worried about the portability of the plan. I don’t know how easy it will be for staff members to transfer the cash balance plan to other states.” But this isn’t the first time the cash balance plan has come under fire. In 2005, the plan received some criticism on a national scale when the Government Accountability Office, an arm of the United States Congress, released a report stating the cash balance plan would provide lower benefits for most workers than the defined benefit plan. Governor Bobby Jindal argued during the legislative session that the new bill is less expensive for the state. However, state employees say they aren’t going down without a fight. The Retired State Employees Association of Louisiana filed a lawsuit Thursday in Baton Rouge District Court, claiming the bill is unconstitutional because it didn’t receive a two-thirds vote in the state House of Representatives. In the House, the bill passed with a 68-36 vote. But, during debate, Republican Speaker of the House Chuck Kleckley said the bill only needed a simple majority. ____ Contact Joshua Bergeron at [email protected]