Louisiana Public Sector Retirees Win Public Pension Lawsuit.

The Retired State Employees Association of Louisiana (RSEA) has won its lawsuit contesting Louisiana’s adoption of a “401K-like” cash balance plan for new hires in their state.  (I am confident that if such an organization existed in Colorado the Colorado General Assembly would have failed to enact legislation breaching Colorado PERA pension contracts in 2010 (SB 10-001.)  The Louisiana Legislature overreached, and their unconstitutional attempt to reform public pensions has been struck down (as we know, several state legislatures are making such an attempt.)  However; this Louisiana ruling really doesn’t contribute much to the legal defense of public pension benefits in the U.S., since it simply relates to the level of support that was necessary for its enactment by the Louisiana Legislature.  The nature of contractual public pension benefits was not at issue in the case.
From the Louisiana State Employees Retirement System:
“Cash Balance Plan Ruled Unconstitutional On Thursday, January 24, 19th Judicial District Court Judge William Morvant ruled Act 483, known as the Cash Balance Plan (CBP), unconstitutional. Attorneys representing the Retired State Employees Association (RSEA) filed the lawsuit on August 16, 2012 challenging the constitutionality of House Bill 61, which became Act 483 of the 2012 Louisiana Legislative Session.В  RSEA claimed the law required a two-thirds vote because an actuarial cost was associated with its enactment, based on Article X – Section 29(F) in the Louisiana Constitution.
The House of Representatives passed the CBP with a simple majority, lacking the 70 votes of the elected members. The legislation would have affected future non-hazardous duty state employees of LASERS, post-secondary education members of the Teachers’ Retirement System, and would have been optional for certain Louisiana School Employees’ Retirement System members.В  The plan would have taken effect for these new hires on July 1, 2013.”
From the Seattle PI:
“Neither the House nor Senate gave the bill a two-thirds vote on initial passage.”
“Jindal, who was out of town for a national Republican Party speech, issued a statement pledging to appeal Morvant’s decision, an appeal that will go directly to the Louisiana Supreme Court.”
“‘We are disappointed in the court’s ruling and we look forward to a successful appeal.В  We’re confident that the bill was constitutionally passed,’ the governor said.”
“‘The constitution is clear, and the Legislature didn’t follow the rules,’ said Robert Klausner, a lawyer for the Retired State Employees Association.В  ‘If they want to pass the cash balance plan, they just have to do it the right way.’”
Link to complete article at the Seattle PI:
From The Advocate (Baton Rouge):
“A Baton Rouge judge on Thursday struck down a 401(k)-type pension plan that was scheduled to take effect July 1 for future state employees.”
“State District Judge William Morvant, who did not rule on the merits of the so-called ‘cash balance’ plan, agreed with the Retired State Employees Association of Louisiana that the plan did not get a two-thirds vote in the 2012 legislative session, as required by the state Constitution.”
“Morvant ruled at the conclusion of a daylong bench trial of an RSEA lawsuit against the state and Gov. Bobby Jindal, that Act 483 is ‘invalid’ because it was passed in violation of the Constitution.”
“Klausner argued in court that, even after the Legislature’s own actuary advised that the cash balance plan had a cost attached to it, state lawmakers did not approve the measure by a required two-thirds vote.”
“A 2010 amendment to the state Constitution required a two-thirds vote of the Legislature, rather than a simple majority vote, for proposed changes to any public retirement system that have actuarial costs.”
“‘We felt very confident that Buck was correct,’ Division of Administration Steven Procopio testified, referring to Buck Consultants.”
Link to complete article in The Advocate:
(Recall that Colorado PERA’s own Buck Consultants report [November 20, 2001] clearly identifies the Colorado PERA 3.5 percent COLA as “automatic,” refers to “guaranteed benefits at retirement,” and the “fixed” COLA, that is “compounded annually for each year of retirement.”  It is significant that the 2001 Buck report identifies the 3.5% Colorado PERA COLA as “automatic” and contrasts it with an “ad hoc” COLA “as approved by Legislature.”
The 2001 Buck Colorado report is available here:

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