Pension reform report has not legal but political impact

Flying under the radar, until the results were made public last week, was a report requested by the Louisiana Legislative Auditor to assess costs associated with the implementation of retirement system reforms promoted by Gov. Bobby Jindal. While it did not shed much light on the final determination of legal issues involved, it made clear the political issue.

It’s important to understand what the report, rendered by an out-of-state law firm, was intended to do and what it does not say. As, constitutionally, notes must be produced for legislation the fiscal impact of which may be more than a (relatively) small amount, part of the potential cost could be legal challenges. Already, opponents and special interests have indicated this would be a consideration in their reaction to the legislation, potentially adding millions of dollars to the cost (although, in the larger scheme of things, the changes would save taxpayers hundreds, perhaps thousands, of times that cost).

As the report itself indicates, its job was to assess the likelihood of legal challenges to these bills if becoming law, not the constitutionality or legality of them. And nowhere in it does it say it builds, according to the Louisiana Constitution in the context of existing Louisiana jurisprudence, any kind of compelling case that these laws would not be constitutional. Indeed, there is not a single remark in it that suggests the bills would be contrary to established Louisiana case law.

Instead, full of conditional language, it explores avenues for challenges to these laws, based upon two rationales. One is what has occurred along these lines in other states, the examples of which (keeping in mind it was to show what could be challenged in, not what confirmed, the content of these bills) showed where others states’ jurisprudence could justify a challenge. State courts are perfectly free to bring cases from other states with justification in molding rulings – or not. Again, current Louisiana jurisprudence does not incorporate the points made in these other foreign cases.

The other was to imply that Louisiana’s jurisprudence has not to date gone in this direction because it has not followed a “modern” jurisprudence of pension law claimed by the authors. Whether the Louisiana Supreme Court would adopt this line of reasoning in any cases based upon challenges to the law is another matter, with the most the authors were willing to address on this was noting that two current members of the Court had decided a related case in a way they thought might be sympathetic to this jurisprudence. Again, there is no requirement that the Louisiana judiciary or Supreme Court follow the interpretation forwarded.

Thereby, according to it, only in buying into these two assumptions – that the state’s judiciary would cherry-pick exemplary cases from other states damaging to the bills’ contents and it would jettison what the document terms the “outdated” view of pension law – can any kind of reasonable case (but not with any certainty) be made against the legislation. The report also notes that relief could be applied for in the federal courts, which could avoid the unfriendly environment for such suits under current Louisiana jurisprudence, but essentially concludes this is a long shot. Finally, challenges could occur under sections of the U.S Constitution and law, but, again, depends upon how the state’s jurisprudence defines the matter.

Thus, the report concludes (keeping in mind the legislation as presently constituted was analyzed; changes to allow for the same objectives to be achieved could moot at least some of these concerns) “a reasonable likelihood exists that these bills as currently drafted will not survive constitutional scrutiny.” To put it another, expanded way: if Louisiana courts change their past jurisprudence on the matter and if they follow select examples from other states, plaintiffs can win their cases.

The Jindal Administration has expressed confidence that based upon its assessment of the jurisprudence of this issue it does not see this happening in regards to these laws. If it’s correct, the legal reasoning contained in the report isn’t worth the paper it’s written on. But regardless, the real value and impact of this study is political, because it emboldens reform’s opponents and opposing special interests to conduct a scorched earth tactic to try to stop it. It will be used as a device to try to discourage legislative enactment of reforms amid threats of legal action and their associated costs – even if the bills pass and contrary claims are declared bogus by the state’s courts, which the report does not address and in no way tries to diminish the possibility of that happening. Simply, the report makes the threat more real.

Given political ammunition handed to reform’s enemies, the Jindal Administration must decide its response. It could determine too many of its own resources needed to contest other battles now would have to be expended to continue the fight over the major changes, and defer. It could try to have the bills amended to minimize potential challenges identified. Or, with confidence it could go to the wall and defend what’s there, even with the costs involved. No matter what transpires, it would be unfortunate if the outcome fails to address the looming insolvency of pension systems in the state and the continued overindulgence that many state employees enjoy at taxpayer expense.