Taxpayers Cover 56 Percent of State Police Pension
Driver’s license fee also finances police retirement plan
State police have almost 56 percent of their pension plan contributions covered by the Louisiana taxpayer, an actuarial assessment that offers a detailed analysis of costs, benefits and liabilities for 2010, shows. This is up dramatically from 2008, when taxpayers covered about 31 percent. For the upcoming fiscal year, taxpayers will cover almost 76 percent of the pension costs, according to the House Committee on Retirement.
The police benefit is generous considering the 25 percent taxpayer contribution to retirement plans for “rank-and-file” workers included within the Louisiana State Employees’ Retirement System (LASERS) for 2010.
Moreover, as an added benefit, up $7.43 of the $28.50 driver’s license fee for non-commercial licenses, and $10.80 of the $40.00 for commercial licenses, helps finance the police retirement plan.
“Without the revenues from the driver’s license fee and the insurance premium tax fund, the employer [taxpayer] contribution would be closer to 63 percent,” Rep. Kevin Pearson (R-Slidell) explains.
“This is not an us against them issue, it is about the sustainability and security of pension benefits,” he added. “We just keep passing on costs to our grandchildren, similar to the federal government. There is obviously less funding for colleges and health care due to the rising cost of employee pensions.”
Renee Baker, the Louisiana director for the National Federation of Independent Business (NFIB), acknowledges that Louisiana should compensate police for performing dangerous tasks and emergency services. However, she says police should contribute more to their pension plans in light of the state’s financial condition.
“Taxpayers should not be on the hook for covering 50 percent or more of the contributions,” she argued. “From a small business perspective you do not pay out benefits above market rates when you have a huge amount of debt.”
The total unfunded liability for the four pension programs in Louisiana is over $18 billion, according to the most recent actuarial estimates. This figure does not include other post employment benefits (OPEB), which have $11.5 billion in liabilities.
In an effort to close the gap, Gov. Bobby Jindal has called for “rank-and-file” state workers to contribute 11 percent of their salaries to pensions, up from the current eight percent.
While there is no strict legal definition for the term “rank-and-file,” the term typically applies to those government employees not included in the Louisiana State Employees’ Retirement System (LASERS) special sub plan which offers enhanced benefits. Employees in the sub plan include, among others, judges and other legal offices, some state legislators, corrections officials, wildlife officials, and peace officers in the state police department.
The State Police are unique in that they have their own separate retirement plan. State police officers also benefit from early retirement incentives.
Officers hired before Jan 1., 2011 can retire 10 years of service at age 50, or with 25 years of service at any age. State troopers retiring with 25 years of service, regardless of their age will receive about 83 percent of their regular salary, according to government records. The law was modified this year so that new police hires could retire at the age 55 with 12 years of service and , at any age with 25 years of service, at any age with 20 years of service, but subject to an actuarial reduction of benefits.
Early retirement is “becoming extinct” in most areas of the country, Pearson said. While they may be appropriate in certain circumstances, he would like to see a comparison between the benefits for Louisiana State Troopers and those in other states.
Kevin Mooney is an investigative reporter with the Pelican Institute for Public Policy. He can be reached at firstname.lastname@example.org. Follow him on Twitter.