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Don't buy into his smoke and mirrors act.

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Again, I stated above I'm not the biggest fan of Jindal, and really don't doubt the above. However, wouldn't those two statements above be violations of the State Constitution?

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Retirement ages for select state workers will move up, no matter what has been promised to these workers previously, some with decades of service on the job. No one is protected from the changes except elementary and secondary schoolteachers, judges and hazardous duty workers.

Why exempt some employees from the new rules? By separating certain employees from others, the governor is able to divide the employees into manageable groups and sink all of the pensions a little at a time. This session is just step one, but I predict the excluded employees will get “Jindalized” during the next three years.

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One of the most grievous proposals is a 38 percent or higher tax increase on many state employees’ retirement contributions. The massive tax increase is bad, but where will this money go? Not to retirement. It’s going into the state general fund, a shell game. I can’t make this stuff up.

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The Louisiana state retirement systems are models nationwide. They are solvent. Though underfunded prior to the 1980s by previous Louisiana governors, steps have been made to fix this long-term, chiefly by paying down the debt over time similar to a mortgage. Much of the current debt occurred through the “Great Recession” stock market downturn, and this is fixing itself right now.

Our governor’s approach is unconstitutional, as the recently released 38-page Louisiana legislative auditor report makes clear. But Jindal is cut out of the same cloth as Huey P. Long, who once said, “I am the constitution around here now.”

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The first thing you have to realize is that Jindal has zero intent to make the state retirement system more solvent, he wants to privatize it so he can take the $500mil surplus LASERS has and put it into the general fund.

Even with that surplus, the DoA hasn't paid its matching funds into LASERS for about 20 years now.

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The Louisiana state retirement systems are models nationwide. They are solvent

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The have 55% of the money they will need to pay retirement benefits. If someone only had 55% of the money they needed to pay me the bills they owed, I would not consider them "solvent."

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Possible alternative solutions to the current pension proposals is to:

A: Immediately stop any diversion of retirement system investment gains, other than to be used to pay of the IUAL and any other subsequent UAL. Diverting these excess gains is basically preventing the natural offset to down years and is generating additional UAL.

B: Stop generating tax cuts for certain people and corporations (the state owes debts that are growing and cannot keep avoiding using its main method for generating money to pay it off). These decisions should not be done wholesale or at same time, but rather through careful and thoughtful consideration. (I personally hate the idea of taxing just for the sake of taxing, but also disagree with selective tax forgiveness that is not really justifiable)

C: Immediately stop throwing money into stupid local pet projects, falsely labeled as economic development.

D. Address tax alternative funding sources for paying of the IUAL (other than only a select group of state employees).

E. Address un-needed costs and employment generated through unnecessary state agency red tape (when they charge one another for services instead of just cooperating, additional people have to be hired to handle that money changing hands. )

F. Finally, go back to the drawing board on state expenditures and fix the constitution to protect the expenditures that are really important and cut out the 30 years of BS spending that has developed through special interest legislation (local, industrial, etc)

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They have 55% of money to cover all retirement benefits promised to existing workers, but many employees are years from being owed any retirement, and assuming they stay employed long enough to earn the expected retirement. The entire amount is not due now or anytime in the near future, so LASERS will make up the difference through employee and employer contributions and investment gains, prior to any issue arriving.

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The Unfunded Accrued Liability is in large part a debt solely of the state through its failure to properly fund the retirement system prior to 1988, also called the Initial Unfunded Accrued Liability (IUAL). The IUAL has also grown in large part by the state charging interest on their payments owed on the IUAL, and back ending payments nearer the 2029 deadline (aka kicking the can down the road) with annual payments to date often being less than the annual interest accrued on the debt.

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Subsequent UALs have arisen due to the market losses last decade, but should be overcome in time by eventual excess market gains (assuming those excess gains aren't diverted for COLAs again.

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The Louisiana constitution also prohibits the State from exceeding the contribution ration (Employee/employer) as it was in 1988 until the IUAL is paid off (Article X, Section 29 (E)(2)(a)) to prevent the State from passing off its debt onto future workers.

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The current administration is pawning off the state's past stupid financial decision making on its workers.

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Possible alternative solutions to the current pension proposals is to:

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The first thing you have to realize is that Jindal has zero intent to make the state retirement system more solvent, he wants to privatize it so he can take the $500mil surplus LASERS has and put it into the general fund.

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They have 55% of money to cover all retirement benefits promised to existing workers, but many employees are years from being owed any retirement, and assuming they stay employed long enough to earn the expected retirement. The entire amount is not due now or anytime in the near future, so LASERS will make up the difference through employee and employer contributions and investment gains, prior to any issue arriving.



That is, LASERS doesn't have enough money so they are passing the cost on to the state. Which means more cuts for health care and higher ed. The shortfall ISN'T getting passed on to employees since they pay a static 8% regardless of how well funded the system is.

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The Unfunded Accrued Liability is in large part a debt solely of the state through its failure to properly fund the retirement system prior to 1988, also called the Initial Unfunded Accrued Liability (IUAL). The IUAL has also grown in large part by the state charging interest on their payments owed on the IUAL, and back ending payments nearer the 2029 deadline (aka kicking the can down the road) with annual payments to date often being less than the annual interest accrued on the debt.



That would have been true in 2007.

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quote: Subsequent UALs have arisen due to the market losses last decade, but should be overcome in time by eventual excess market gains (assuming those excess gains aren't diverted for COLAs again. Again, true prior to market bottoming out. Now the subsequent UAL created in large part by that event (which isn't even fully realized yet due to the actuarial smoothing process) is as large as the IUAL. They will never get that back through normal market growth. Remember they have to get an 8.25% return on their investments just to stay even. And like you point out, (roughly) half of the gains go toward paying future COLAs. So what happens is the state has had to double their payments to LASERS. That is money that isn't getting spent on other areas like education.

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quote: The Louisiana constitution also prohibits the State from exceeding the contribution ration (Employee/employer) as it was in 1988 until the IUAL is paid off (Article X, Section 29 (E)(2)(a)) to prevent the State from passing off its debt onto future workers. And the state is WAY under that ratio and will still be under that ratio even after state workers kick in an extra 3%.

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quote: The current administration is pawning off the state's past stupid financial decision making on its workers. At least state workers get the benefit of the retirement system. The alternative is pawning it off on tax payers.

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B-F. aka "cut generic waste." For someone who writes with great specificity about the UAL, you are real vague on where to cut.

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The 8% can be changed, but that is not what is being proposed currently. Employee contributions remain property of employees and can only go to their individual retirement. Employees would likely be less adverse if the 3% was treated like the 8% and was used to fund their retirement.

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Actually they currently fairly close to that ratio, but agree if the 3% was done properly (see above) it would possibly still come in within that ratio, but I'd rather see what the state's actuaries say before I specifically made any judgement in that regard.

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FACT the state is only just now reaching the point where its annual payments will even touch the principal on the IUAL. Payments by the state (on just IUAL, not employer contributions) are set to grow every year until 2029 and the final 5 years are over a billion per year.

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Subsequent UAL and IUAL are being intertwined, the largest portion of the systems' entire UAL is mostly IUAL debt and the interest on that debt. If the State had paid more on the principal of the IUAL early on, none of use would be having these discussion regardless of the stock market collapse.

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Sorry I'm not intimately familiar with every single area of the inner-workings of the state and its tax code. Anyone claiming to be is lying.

People who are much smarter than me, specifically in regards to individual department budgets and tax credits, know more details about their particular area/niche of state government. I have no problem admitting this, and have no problem deferring to someone else's expertise in making decisions, that if done wrong, could make the state's current financial problems much worse.

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