BATON ROUGE, LA (WAFB) -
Governor Jindal unveiled a dramatic redesign of the state employee retirement plan. The Governor, in three parts, tries to help the state dig itself out of an $18 billion hole. No all state workers are on board.
"Louisiana taxpayers are spending nearly $2 billion just this year in state retirement," said Jindal.
He called the state's current retirement system irresponsible, pointing to out of control costs that are impacting what he calls critical investments in priority areas; like classrooms and healthcare.
Jindal wants to put all new state workers on a cast-balance plan, where employees still contribute eight percent of their payroll to their retirement.
One percent will be held by the state as pad during market slumps. Leftover money will roll over when the worker leave the state or retires.
"It's very simple. It is a payroll contribution that sustains investment returns on that contribution by not promising more than we can get in the marketplace," said Jindal.
Salaries of existing employees will be averaged over five years rather than three. Jindal is also proposing to align the retirement age with the social security standards of 67, exempting anyone 55 and older. Cost of living adjustments will be made only when they are enough assets on hand to pay the retirement benefits already promised.
State worker Daryl Moore says the plan puts his future on hold.
"You are trying to figure out when you're going to retire. Should I take a Drop? Should I do this? Do that? You're wondering, when am I going to be able to retire?" said Moore.
Jindal is also looking at cutting overhead by improving retirement system operations itself. Right now, benefits are administered by four different systems. It would merge two of them.
"We are gonna have to keep up with the new era or bankrupt the current system and break promises to current workers," said Jindal.
Jindal says if all goes as planned, the state will see at least half a billion dollars almost immediately.
The Governor's new plan will not affect teachers and first responders. Jindal will present his proposal to state lawmakers when legislative session begins in March.
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