Wednesday, May 22, 2024

Louisiana faculty sound the alarm on retirement crisis 

by BIZ Magazine

By Piper Hutchinson, Louisiana Illuminator

Louisiana’s higher education faculty feel trapped. 

In the early days of their teaching careers, professors are asked to make an irrevocable choice about their retirement: choose the more portable optional retirement plan, or the more lucrative Teachers’ Retirement System of Louisiana

Faculty do not pay into Social Security and therefore do not have the option to draw on Social Security in retirement. 

Because of the natural uncertainty about a career in academia, many select the optional retirement plan, which gives individuals the ability to take the money they’ve paid in to another employer. Approximately 26% of college faculty have tenure, which offers an indefinite academic appointment. To be granted tenure, a faculty member typically works at an institution for about six years. 

That combination of factors has led to thousands of faculty statewide choosing the optional retirement plan, a decision they regret as they join the lucky few that obtain tenure or the unlucky crew that are unable to leave for a more prestigious post. Many of these individuals now struggle to afford retirement. 

The LSU Faculty Senate, the most vocal faculty body in the state, passed a resolution last week calling on LSU leadership to endorse legislation in the 2023 regular session that would allow faculty to switch from the optional retirement plan to the Teachers’ Retirement System on an actuarial basis. 

The ability to switch on an actuarial basis, meaning that faculty would have to buy their way into Teachers’ Retirement System, would mean that those individuals would have a higher monthly pension based on their years of service and highest average annual salary as well as a lifetime benefit guaranteed by the state. 

Under the optional retirement plan, monthly payout and length of benefits depend entirely on how much professors in Louisiana, who are consistently compensated below the regional average, are able to put aside. The Southern Regional Education Board reports that the average faculty pay for 2019-2020, the most recent period data is available, is $56,305, whereas the average faculty pay in Louisiana for the same period is $46,542. 

But legislative relief is not likely to happen anytime soon. 

Legislation regarding public retirement systems is subject to public notice, which must be given no later than 60 days before the regular session. That deadline passed on Feb. 9. 

The topic could be approached in next year’s regular session, but future legislation is likely to hit the same obstacles as past attempts. 

In the 2022 regular session, Sens. Jay Morris, R-West Monroe, and Jay Luneau, D-Alexandria, introduced Senate Bill 10, which would’ve allowed individuals in the optional retirement plan to switch to Teachers’ on an actuarial basis. 

The bill ran into problems when it was realized that although it was designed to be cost neutral for the state, it would actually result in millions of dollars in cost for the state. 

“From a fairness point of view, it was the right thing to do,” Luneau said of the bill, which he hopes to bring back in the future. 

Because the bill would result in an actuarial cost, the constitution would require it to receive a two-thirds majority vote to pass, rather than the usual simple majority most legislation must receive, a high bar to pass in a politically divided legislature. 

Other educators are looking to the judiciary for relief. 

LSU Professors Kevin Cope and Roger Laine are suing the LSU Board of Supervisors and the Teachers’ Retirement System of Louisiana. 

“The retirement plan provided by Louisiana State University and indeed by most of the Louisiana universities, regardless of system or location, is atrociously bad and is indeed one of the worst of the nation by every measurable index,” Cope said in an interview. 

According to the lawsuit, if Cope were to retire, his optional retirement plan account would provide him $1,750 per month. Cope has been a professor at LSU for 40 years. 

The plaintiffs contend that funds paid into the optional retirement plan that should benefit retirees are instead unlawfully diverted to pay off the unfunded accrued liability, which is the difference between what officials expect future retirement benefits to cost and the assets that they have to pay for those benefits. 

The lawsuit also alleges that the university does not meet the criteria to be exempted from Social Security and that LSU misrepresented the facts about the optional retirement plan. 

The lawsuit asks for a judgment that forces LSU to meet the minimum contributions to claim exemption from Social Security. It also seeks a declaratory judgment that Teachers’ has no right to impose unfunded accrued liability expenses on optional retirement plan members. 

Faculty across the state have been eagerly watching the progress of the lawsuit, which has slowly inched its way through the judicial system for several years, in the hope that a ruling in the plaintiffs’ favor creates a precedent that will lead to relief for all.

You may also like

-
00:00
00:00
Update Required Flash plugin
-
00:00
00:00