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If you have concerns about the bills listed below, you should consider packing the committee rooms this coming Monday. Unfortunately, the mayors outnumbered the police, and HB 42 passed with flying colors and even gained some-coauthors, despite the serious harm that it will cause to your retirement system, benefits, and police departments, as indicated by MPERS' fiduciary and tax counsel. You can watch Rep. Bacala's testimony against HB 42 here.
If the mayors outnumber the police again on Monday when HB 52 and SB 412 (and SB 412 is basically HB 42 now), expect the same result. As you read below, keep in mind that these bills are very interrelated, which not a coincidence. If you have concerns, you should at the very least, send an email to the committee members. You can find a sample here.
By the way, the Louisiana Municipal Association had House Retirement Committee members kill (via a 5-5 tie) the MPERS-backed HB 36 in the House Retirement Committee, which would have provided for a 5-year DROP, Back-DROP, and also included other provisions that would greatly help police officers and their employers. Meanwhile, the other MPERS-backed bill, HB 43, which would greatly help employer compliance issues, remains stalled on the House floor. But let's turn to the bills that will be heard Monday, which you hopefully will be in attendance for.
HB 52 would change the required venue for all legal actions involving MPERS from East Baton Rouge Parish to the district court of the judicial district in which the employer is located (in other words, employers are looking for "hometown cooking"). Actions involving all other retirement systems would be left unchanged, thus remaining in East Baton Rouge Parish.
This bill would increase legal costs and is likely a response to MPERS filing lawsuits to protect its status as a tax qualified governmental plan (which, among other things, ensures that employer contributions are not taxable to members and earnings/income of the system are not taxed to the system or members) and force municipalities to enroll their police officers and pay their delinquent contributions (this is required by state law and their failure increases law-abiding employers' costs and decreases retirees' COLAs). Several employers thought that the lawsuits should be heard in their home parish rather than East Baton Rouge. So far, the Louisiana Supreme Court thinks otherwise.
If you have concerns about this bill (and anyone who is receiving, or who wants to receive, retirement benefits should), please contact members of the House Civil Law and Procedure Committee, which will initially hear it at 9:00 am on Monday in House Room 4. The committee members' contact info can be found here. They would all appreciate your input. If you share the same concerns as MPERS' board, you can find a sample script here.
Pursuant to House Rule 14.33, any interested person or any committee member may file with the committee a prepared statement concerning a specific instrument or matter under consideration by the committee or concerning any matter within the committee's scope of authority, and the committee records shall reflect receipt of such statement and the date and time thereof. Statements may be filed with the House Committee on Civil Law and Procedure via e-mail at h-clp@legis.la.gov.
More concerningly, SB 412 would make police officers the minority on their own retirement system board by adding 4 more mayors (for a total of 6 mayors and 19 trustees, compared to a total staff size of 7). At an MPERS' Legislative Committee meeting, the committee heard a presentation by representatives of Global Governance Advisors, who explained that larger boards have historically resulted in poorer performance (1-2% less, as well as an increase in operation costs). To state the obvious, this will increase the employer contribution rate.
Second, the bill increases the employer contribution rate by making it harder for MPERS to collect delinquent contributions. Currently, state law allows the treasurer, if a debt is certified by the retirement system, to withhold certain funds otherwise owed to a municipality in order to satisfy the municipality's delinquent payments. The bill seeks to eliminate this for MPERS (and no other retirement system). MPERS would be required to file suit against a delinquent municipality in order to collect. And it makes MPERS' claims subject to the Louisiana Governmental Claims Act. That means that, even if MPERS obtained a judgment against a municipality, the municipality's governing authority would have to appropriate the funds to pay the judgment.
Let's follow that logic. Municipality doesn't pay MPERS (like when MPERS' largest employer stopped paying MPERS at the beginning of COVID). Under SB 412, MPERS wouldn't be able to get money from the state treasury (which it needs to pay your retirement benefits) without a judgment. The only way MPERS can now collect is by filing suit and obtaining a judgment against the municipality. If MPERS obtains a judgment (after years of appeals), the only way MPERS could collect is to convince the municipality's governing authority (yes, the same municipality that wouldn't pay its own bills and appropriate funds to pay MPERS employer contributions in the first place) to appropriate funds to pay the judgment. Fortunately, given police officers' protected status in Louisiana's Constitution, it would also be unconstitutional.
The bill itself would also cause MPERS to file several lawsuits before it becomes law.
MPERS' tax attorneys tell us that SB 412, like HB 42, would jeopardize MPERS’ funded status and significantly increase employers' costs, as makes employer compliance essentially voluntary, limits MPERS’ ability to collect delinquent employer contributions to a liberative prescription of three years, and makes collections subject to the provisions of the Louisiana Governmental Claims Act.
Therefore, if SB 412 becomes law, not only would it risk MPERS’ funded status, but it would encourage employers to continue to play games with enrolling eligible police officers into MPERS and making employer contributions. As a result, in order to continue to pay promised benefits to existing and future retirees and beneficiaries, MPERS likely will face the need to sell investments in order to have the necessary liquid assets to pay earned (and promised) benefits. Certainly, this need to convert investments to liquid assets further jeopardizes MPERS’ funded status as MPERS may be faced with selling assets without regard to market conditions or without regard for any potential loss or penalty associated with the sale.
Importantly, aside from risking MPERS qualified plan status, ultimately, SB 412 jeopardizes MPERS’ funding and funded status – not just for the municipalities who refuse to comply with Louisiana state law, but for all participating employers and police officers in MPERS.
Moreover, if there are employers that withhold MPERS contributions from police officers' paychecks without forwarding them to MPERS, like what's happening with some employers, not only is this an MPERS plan qualification concern, but presumably also is a matter of theft or misappropriation under state law.
We also note that, because MPERS can only pay COLAs from the 0.875% that's added to the employer contribution rate, any contributions that go uncollected will result in decreased COLAs for retired police officers, their beneficiaries, and survivors.
If you have concerns about this bill, please contact members of the Senate Retirement Committee, which will initially hear it at 2:00 pm on Monday in Senate Room E. The committee members' contact info can be found here. They would appreciate your input. If you share the same concerns as MPERS' board, you can find a sample script here.
Persons who do not feel comfortable giving testimony in person may submit a prepared statement in accordance with Senate Rule 13.79, in lieu of appearing before the committee. Statements may be emailed to broussam@legis.la.gov and must be received by the committee secretary at least four hours prior to the meeting to be included in the record for this committee meeting.
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