Bills to privilege state laid off employees unjustifiable
Mondays are slow news days, so today the Baton Rouge Advocate took out of the can a piece about a bill introduced the week before last that makes one wonder just how much the legislation’s author knows about state retirement regulations and/or the free market.
State Rep. Regina Barrow has introduced bills that would create exceptional treatment for long-time employees of the state hospital system. According to the budget to be considered this year, about 95 percent of them will lose state jobs as eight of 10 charity hospitals will be administered by nongovernment entities by Jul. 1. (Number seem to differ – the budget reports about 8,200 positions will evaporate, while retirement system official indicate at least 8,400 employees are covered. Neither have layoff plans yet been presented to the Department of State Civil Service.) However, it is anticipated that the contractors will rehire around 90 percent of those laid off.
Essentially, HB 34 would allow those laid off to transfer their retirement contributions and those put in by the state to another retirement plan, and HB 35 would allow the early drawing of retirement benefits by those eligible in years served. This preferential treatment that almost certainly would increase costs to the state (final calculations have yet to be completed) Barrow justifies by saying “I don’t want employees to have to suffer because of decisions of the state. They did not choose to retire.”
Describing Barrow’s offering HB 34 as “ironic” understates. Last year she opposed (twice) what became Act 483, setting up a cash balance plan for new hires into much of the state’s bureaucracy beginning this Jul. 1. And one of the features of this plan is … wait for it … a portability of benefits provision just like she now for a select few suddenly champions that then she opposed for all.
As for her rationale for both bills, perhaps “uninformed” does the job as a descriptor. For one thing, she confuses the terms “retire” with “laid off.” With the disappearance of these jobs, nobody is forced into retirement, they are just laid off. Those subject to it as a response may choose to retire from working if they wish, but no such choice is being forced upon them; again, the vast majority of them probably will be rehired if they want to work in their same job. And for those who aren’t, there are other jobs out there for them if they are capable of performing them at least as well as anybody else in them.
She also seems unaware of seeing beyond government employment as a lifetime promise. Perhaps she doesn’t know that millions in the private sector, many previously laid off, who want to work but cannot because of the Pres. Barack Obama economy, whose strategy of economic management is to stifle job growth in order to transform American society into one of dependency on government and creation of an entitlement culture. Yet using her logic, with fewer people working today than when Obama took office despite population growth, all of those private sector entities that laid people off made them “suffer because of [their] decisions,” and that these laid off “did not choose to retire.” So why do state government employees, according to her logic, then get special treatment? This she does not address nor answer.
The fact is, typically Louisiana state employees can draw retirement pay beginning at age 55 (some earlier or later depending on age of hiring, occupation, and years of service). Further, it’s probably going to be pretty generous, as the typical state employee will retire at a rate computed at 3 1/3 percent times years of service times last years of salary averaged. In other words, let’s say someone hired right after college has stayed 30 years with no raises in the past three years but now is being laid off at 52. In three years, he can begin drawing his final salary in a pension for the rest of his life (and his spouse if she outlives him) – and work another non-Louisiana-government job on the side as well. Sweet; if private sector employees, who in jobs with similar tasks generally have to work much longer at higher salaries to draw as much out of their IRAs or 401(k)s and equivalents, don’t rush the Capitol in protest when learning of this kind of deal, nothing will ever move them to do so.
As for this hypothetical example, instead of going out and finding another job to tide over until hitting 55 – maybe not as good or plush of one – or using up savings or making other members of the family work or work more, Barrow wants to allow this person (or one with as few as 25 years in) to be able to retire immediately and draw three extra years. Or, to withdraw the extremely generous assets out of the retirement system in a manner she previously opposed and pour them into another retirement plan elsewhere, thereby (except under unusual circumstances) increasing the unfunded accrued liability that taxpayers will have to pick up.
Posted by Jeff Sadow at 11:25