With about 80 faculty members in attendance, Teachers’ Retirement System of Louisiana (TRSL) representative Katherine Whitney explained Wednesday the reason the percentage of the University’s share of retirement funds reaching faculty members is decreasing. She also described the various bills in the state legislature that will effect the Optional Retirement Plan, if enacted.
The Daily Reveille previously reported there are two retirement plans open to University faculty: a defined benefits plan, referred to as the TRSL plan, and a defined contribution plan, referred to as the Optional Retirement Plan (ORP). As previously reported, the TRSL plan operates more like Social Security, while the ORP operates similar to a 401(k).
Faculty Senate President Kevin Cope said the TRSL plan has been inadequately funded by the state, leading to debt called the Unfunded Accrued Liability (UAL). He said the University must pay an employer’s share of the UAL, with each higher ed institution in the state contributing to pay off the debt. The University’s share is currently about 27 percent, with around 5 percent currently going to retirement benefits.
In determining the normal cost, the cost to maintain the TRSL plan, the TRSL’s actuary conducts a study to determine how economic and demographic factors influence the projected costs of the retirement plans, Whitney said. She said the actuary’s two biggest factors that affect the cost to maintain the TRSL plan are increased withdrawals, where faculty members stop paying into the system before they retire, and delayed retirements.
Whitney said the state decided the employer share of the normal cost, the cost to maintain the TRSL plan, would be the same across both retirement plans.
Associate professor of religious studies and member of LSUnited Stuart Irvine said in a letter to University faculty the University’s payment to ORP accounts will decrease to 3.66 percent in the next fiscal year if legislative action is not taken, while University faculty will continue to pay 8 percent of their salary toward retirement.
Whitney presented a number of retirement bills currently in the legislature, one of which establishes a floor for employer contributions to ORP accounts, which would prevent the University’s projected payment to fall to 3.66 percent. Another bill would use 5 percent of state revenue from taxes resulting from potential marijuana legalization to pay off the UAL.
Irvine said he thinks the best bill currently in the legislature is House Bill 6, which detaches the employer contribution to the normal cost of the TRSL plan from the ORP. He said it also establishes a 6.25 percent floor for the rate faculty members receive.
Irvine said he does not like Senate Bill 23, which allows ORP participants to opt out and “buy years of service” in the TRSL plan. He said the bill is unrealistic, as the TRSL actuary would have to calculate the cost of those years for each individual candidate, of which Irvine suspects there will too many for the state to handle.

Gallery • 3 Photos

Angela Major

Katherine Whitney speaks to an audience Wednesday, Feb. 12, 2014 during the Retirement Forum in the Atchafalaya Room in the Student Union.