Louisiana House Bill HB26

Louisiana 2014 Regular Session

• Introduced: 3/10/14
• Refer: 3/10/14

Caption

(Constitutional Amendment) Requires that a portion of nonrecurring revenue be applied toward reducing the balance of the unfunded accrued liability of certain state retirement systems

Impact

If enacted, HB 26 would amend Article VII, Section 10 of the Louisiana Constitution, establishing a structured approach for the allocation of nonrecurring revenues specifically to pay down long-standing unfunded liabilities. It stipulates that for fiscal years 2015-2016 and beyond, the allocated percentage would increase over time, starting at a base of 2.5% and ensuring a growing contribution that will significantly help mitigate the state's retirement funding challenges. This structured funding strategy represents a notable shift in how the state addresses its fiscal obligations to public employees.

Summary

House Bill 26 proposes a constitutional amendment requiring that a minimum of 2.5% of any nonrecurring state revenue be allocated towards addressing the unfunded accrued liabilities of the Louisiana School Employees' Retirement System and the State Police Retirement System. The aim of this legislation is to enhance the fiscal stability of these retirement systems by ensuring that these unpaid debts are systematically reduced over time. By mandating this allocation, the bill seeks to provide a more predictable funding mechanism for these critical state retirement systems.

Sentiment

The general sentiment around HB 26 appears to be supportive, primarily from legislators who are focused on stabilizing the state's retirement systems. Proponents argue that the bill reflects a prudent approach to managing the state's financial responsibilities and demonstrates a commitment to honoring obligations to past and current public servants. However, there may exist concerns over whether this amendment places too rigid a restriction on how the state can utilize nonrecurring funds, which opponents might view as limiting budget flexibility in critical areas.

Contention

Notably, a point of contention in discussions surrounding HB 26 relates to the prohibition against using the funds for cost-of-living adjustments (COLAs) for retirees. This stipulation may elicit debate amongst stakeholders in the retirement systems who may feel that while addressing unfunded liabilities is essential, failing to provide COLA can undermine the financial well-being of retirees. This conflict underscores a broader discussion about the balance between fiscal responsibility and providing adequate support to public employees in retirement.