Posts Tagged ‘Business Report’

Don’t let the fact that Gov. Bobby Jindal appears not to have a clue about his state employee retirement reform package fool you. While the governor appears to be backing down on parts of his controversial retirement bills, one strategy clearly has not changed: divide and conquer.

More about that later.

On the heels of a 38-page analysis of the retirement bills which would require state employees to contribute 3 percent more, work longer and accept fewer benefits, Jindal’s office launched a petulant “official response” via his favorite medium, the Baton Rouge Business Report.

The report, by the Dallas law firm Strasburger & Price, said that virtually all components of the retirement bills would be ruled unconstitutional if subjected to legal challenges.

Not so, sniffed Jindal through his press office, and here’s where things get a bit dicey—for the governor.

First, the response to the Strasburger report, ordered by Legislative Auditor Daryl Purpera, said that the firm “relied on a vague conceptual understanding of the proposals, without an actual analysis of the bill text.”

That allegation could just as easily be directed at the governor’s office, based on Jindal’s response and what followed a scant week later.

“We’re open to compromise,” said Jindal’s deputy chief of staff, Kristy Nichols.


When has Jindal ever compromised on anything?

Perhaps a better question: why would Jindal compromise on anything given his track record?

Even better, after his insistence a week earlier that “The reforms are constitutional,” why would he suddenly change direction?

The answer to all three questions has to be that someone—perhaps someone who actually read the state and U.S. constitutions—whispered in Jindal’s ear that his “reforms,” if passed, would be in for a long, hard—and losing—fight.

But maybe we should examine the nuances of the latest developments—including glaring contradictions between the governor’s “official response” and his latest “compromise” offering.

Remember when that Business Report response trumpeted that there is “nothing in the bill” which directs employee contributions to the general fund? “The employee contributions would go, as always, to the retirement system,” it said.

The official response also said, “The 3 percent employee contribution bill is not a tax and is clearly not revenue-raising. The employee contributions remain the employee’s own money; the employee receives the contributions back either in the form of retirement benefits or as a refund of contributions upon termination of employment.”

Okay, let’s break down the shell game—and make no mistake about it, these bills are nothing more than a not-so-elaborate shell game.

It turns out, thanks to Jindal’s subsequent but inadvertent admission, the 3 percent additional employee contribution indeed would have gone toward employee retirement. But before we grovel at Jindal’s feet in abject contrition, it also turns out that that additional 3 percent would have corresponded to a 3 percent reduction in the state’s contribution and it was that 3 percent that was to go to the general fund.

Tomato, tomahto.

And there’s another awfully charitable compromise offer by the governor, necessitated, no doubt, by pure old-fashioned embarrassment. Jindal has said he will ask lawmakers to include the governor so that he, too, would be subject to the 3 percentage point increase in his retirement cost.

Terribly sporting of you, Guv. But why did you wait until after LouisianaVoice broke the story of your purchasing back 2.2 years of time and the fact that you and other statewide elected officials were exempt from the 3 percent increase? Afraid that doesn’t pass the smell test, much less the open and accountable transparency test.

Well, on second thought, it is pretty transparent.

And then there is that nagging little requirement that employees work until age 67 to qualify for retirement benefits. That, too, has been scrubbed, though not scuttled completely, by the governor in his newborn spirit of compromise.

Under Jindal’s revised plan, employees would be able to retire as early as 55 as they currently are, depending on years of service, with full retirement benefits based on contributions already made into the retirement system. Additional benefits accrued after the bill would take effect, however, could only be collected at a full rate at age 67 or older. If the employee sought to collect the additional befits before age 67, they would be at a reduced rate.

Louisiana State Employees Retirement System (LASERS) deputy director Maris LeBlanc, however said the general feeling is that there would still be the same question of constitutionality because even in its revised form, the retirement plan proposed would break an employment contract. “I would think that would be subject to challenge,” she said.

Of course, the question remains over whether or not the additional 3 percent contribution would constitute an employee tax. If so, it would be in violation of the state constitution because no tax issue can be passed in an even-numbered year.

Now, though, Nichols says that Jindal would support an amendment that would apply the 3 percent to pay down the state’s multibillion-dollar retirement cost-instead of the money going into the general fund. Someone either lied or didn’t know what he/she was talking about in that Business Report official response. It’s that simple.

Is the governor really saying now that after the legislature reneged on its obligations all these years to pay down the retirement funds’ unfunded accrued liability (UAL), that state employees will be asked to chip in an additional 3 percent to make up for what amounts to negligence and fraud on the part of legislators in years past—while not realizing additional retirement benefits?

That’s the way it all shakes out: a shakedown. Think Deduct Box of days of yore.

Not much of a compromise at all for state employees.

But if you think all that is smoke and mirrors, let’s take a look at the divide and conquer strategy.

“We’re drowning in debt, and our pension systems are unsustainable,” Nichols said last week.

Jindal has said repeatedly that the proposed retirement changes would help reduce the costs of pension programs (note the plural use of the word programs as opposed to the singular application in the bills) that have a combined UAL of more than $18 billion.

“The legislature has a constitutional mandate to maintain a sustainable retirement system—an obligation which exists both to protect the retirement system and taxpayers,” the administration said in its response to the Strasburger report.

Good political rhetoric that sounds reassuring on the surface. But let’s peel back a layer or two.

Remember that UAL in excess of $18 billion?

There are four retirement systems: LASERS, the Teachers Retirement System of Louisiana (TRSL), the Louisiana School Employees Retirement System (LSERS), and the Louisiana State Police Retirement System (LSPRS).

The LASERS UAL is $6.3 billion, only about a third of the total, and is 57.7 percent funded, second only to LSERS, which is 61 percent funded and which has a UAL of $863 million. The state police system has a UAL of $313 million and is 55.6 percent funded.

TRSL, by comparison, has a UAL of $10.8 billion and its 54.4 percent funding, the lowest percentage of the four.

Yet, Jindal, who says, “We must act now in order to keep our promise to workers, protect critical services…and protect future generations from more debt and higher taxes,” addresses only LASERS in his proposed pension reform. As in singular.

Could there be a reason for not including the other three systems?

Simple logic would seem to dictate that the burden be shared proportionately between teachers, civil service employees, school employees and state police.

But logic has never held a place of prominence in this administration.

Ulterior motive, however, is quite another matter.

Nichols, speaking in a telephone conference with reporters last Friday, was unable to go into details about the governor’s revised plan because “specifics were not available.”

That certainly has a familiar ring to it. Seems the recently passed education bills also were sorely lacking in specifics—not that it mattered to legislators who fell into line like so many sheep.

But just as you learned here of the governor’s purchase of those 2.2 years of time and of his being exempted from the 3 percent increase in contributions, remember that we were the first to warn you about the divide and conquer tactic.

It’s more important than ever that state employees, teachers and school employees show a united front.

Who knows who would be next on Jindal’s hit list?


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