Surplus LA employees retained but will contribute more

So it comes to this: more taxpayer dollars get wasted just to keep a few people off unemployment rolls. But at least they’ll be paying more of their fair share for their pensions.

HB 545 by state Rep. Henry Burns would have privatized both operations and assets of three state prisons and operations at two more. But it lost narrowly in House committee amid concerns that it might cost the state more in the long run but perhaps more influenced by the possibility of state employees losing their jobs as some might not be rehired by private operators because of the increased efficiency such operators would bring.

That’s what the research shows at least, although it is more definitive on the issue that privatizing operations only is most likely to produce savings with no reduction in quality.

Given the odds – while the executive branch can contract out as it pleases with only legislative oversight, present law defines as the only prisons that can be contracted out as the two that currently are – backer Gov. Bobby Jindal probably should have gone just for expansion of operations contracting instead of outright sales. Considerable savings would have been realized, but the Jindal Administration never put much emphasis on the operations aspect and the benefits of its privatization as it did the entire sales idea.

With his reelection almost certain, perhaps next year with likely stronger majorities Republican majorities in the Legislature – among Democrats only Administration ally state Rep. Jim Fannin voted for it while Republicans state Reps. Brett Geymann, Eddie Lambert, and Tom McVea seemed more interested in government providing state employment than in saving taxpayers money – Jindal can come back with a bill focusing on operations privatization. By then perhaps those “saved” jobholders will be pulling more of their own weight for retirement benefits, courtesy of state Rep. Kevin Pearson’s HB 530.

This bill lengthens the amount of time that employees under the defined benefit plan of the state must use to calculate their final payments. At present, an employee chooses three consecutive years of employee as the salary base – typically the last three where the chances of having the highest salary are – on which to calculate that. Pearson’s bill increases that to five which often would have the effect of lowering the payment amounts slightly. But with so many employees and the relatively young ages at which they may retire, it would add up to $55 million a year in savings which would be retained to offset the $18 billion in unfunded accrued liabilities for retirement the state must pay off by 2029, already costing taxpayers $690 million a year.

It’s just one of several working to make retirement benefits for state employees more realistic. With vacation day accrual (which if one works 40 years may constitute up to four years worth of pay at retirement), 75 percent of health benefits at retirement paid for by the state for many (typically it is zero in the private sector), and with pensions at 100 percent of that three-year average with retirement in most classifications as early as 55 to meet that full match, it’s hard to argue these are not overly-generous and that state employees should expect a little less considering the gravy train (compared to the private sector) on which they currently ride in this regard.

(Unfortunately, amended out of the bill was a provision to minimally increase employee contributions. That remains in a bill still hung up as a result of odd political gambits.)

Pearson’s HB 332 like this bill also made it through the House, which would scale back certain salary bases on which to calculate benefits for some public safety personnel at the local level and put more of the contribution responsibility on the beneficiaries instead of taxpayers. It also added state government representatives to the board that oversees the scandal-ridden Municipal Police Employees Retirement System whose professionalism might have saved the system money lost through embezzlement and bad investing practices. That went over the heads of opponents who criticize anything that seems connected to Jindal (one new board member would be from a governor’s administration), but the citizenry and retirees of that system certainly would benefit.