As Louisiana lawmakers gear up for another legislative session that will deal with the state’s ongoing budget crisis, pension reform should be a key agenda item.
According to a recent report from the American Legislative Exchange Council (ALEC), “Unaffordable and Unaccountable,” the unfunded liabilities of state and local pension plans nationwide now exceed $6 trillion (up from $433 billion in just the last year).
“Absent significant reforms, unfunded liabilities of state-administered pension plans will continue to grow and threaten the financial security of state retirees and taxpayers alike,” the report noted. “The fiscal calamity could be far deeper and prolonged than the Great Recession. … Current state workers and retirees are not the only people affected by this unfunded pension crisis. Taxpayers ultimately provide the wages for public sector employees and the financial resources to cover the promised benefits of traditional pension plans. And all residents are impacted when pension costs absorb limited government resources, rather than core government services such as education, public safety, and roads.”
For Louisiana specifically, the state’s pension fund is 30.9 percent funded, creating an unfunded liability is $100,246,142,253, or $21,412 per person. Also problematic: Louisiana is one of the least transparent states when it comes to pension reporting.
“Across all states, Louisiana is quite possibly the most opaque in its reporting of pension finances,” the report says. “The large number of plans (16) is difficult to track. In addition, standards of timeliness, format, content or public availability appear nonexistent. Although some pension financial reports may be found on the website for the State’s Division of Administration, most are years out-of-date. Worse, the lack of a centrally located page forces those seeking information to either use an archaic search function on the site or rely on Google to find direct links to PDFs of the reports. Such an expedition requires intimate knowledge of the proper search terms. The format of the discoverable reports often fails to provide actuarial valuations of assets or liabilities, obscuring the assumed rates of return.”
