April 19, 2012
A message to ULM faculty and staff from ULM President Nick J. Bruno
Following is the text from an email which was prepared by the University of Louisiana staff regarding retirement legislation currently being considered. This continues to be a complicated bill and there will certainly be more changes. You should review this carefully and attempt to ascertain how you may be impacted if the bill is passed.
I will continue to provide information as I receive it. I cannot predict when this may be finalized; however, it appears a final resolution may be reached before the session ends on June 4.
Subject: FW: retirement
I know you all have questions regarding the retirement bill. At this juncture I can only tell you that all three bills- age 67 eligibility, 3% contribution increase and 5 year FAC all passed out of Senate Retirement Committee last night.
SB51- The Governor's office offered a substitute bill with a completely revised plan- Unfortunately, no one received a copy of the bill prior to committee, so their testimony was based only on a cursory review of the document. I don't have a copy so I can't tell you precisely what it includes. I can tell you only that it provides a phased in approach to the age 67 requirement based on years of service as follows:
- 25 to 30 years can retire at 55
- 20-25 years- age 58
- 15-20 years-age 61
- 10-15 years-age 64
- less than 10 years- age 67
The bill removes the exemption for individuals born prior to July 1, 1957 as well as retirees prior to October 12, 2012. I believe the effective date of the bill would be June 30, 2012. There was some discussion about the lack of time for employees to analyze the impact of the legislation prior to making retirement decisions between now and June 30.
Further, the Governor's Office testified that the benefits which an individual has accrued to date would be "frozen" and that supplemental benefits would be accrued under the new plan, so for example: a 52 year old employee with 20 years, benefits would be frozen according to the current plan (2.5% x 19 years x 5 year FAC). I believe that would be an actuarially reduced amount. The supplemental benefit would require 9 more years employment in order to draw down full benefits (2.5% x 9 years x new 5 year FAC). Anything less than 9 years would result in an actuarially reduced amount(based on age 61). There were quite a few questions from the members who requested a written analysis to demonstrate that the "existing" benefits would, in fact, not be subject to a reduction under this plan.
Attorneys from both LASERS and TRSL and the Legislative Auditor continued to raise issues of the constitutionality of the plan. Both retirement systems' attorneys cited debate from the 1974 constitutional convention to substantiate their position. There was some debate about how long litigation might take to work through the courts and the impact that would have on employees retirement plans in the interim.
SB52 increasing the contribution rate by 3% was amended to clarify the increased revenues will be directed to the UAL instead of the operating budget.
SB47- 5 year FAC no amendments, little discussion.
SB740- the bill as filed allowed COLAs for retired members only in the event the systems were funded at 100%. The bill was amended in committee to reduce that amount to 80%.
Nick J. Bruno, Ph.D.