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Desperately bad arguments against reform betray fear

Maybe now we know why the Louisiana State Employees Retirement System’s investment return barely beat that of a risk-free 30-year U.S. Treasury bond over the past five years – because its top officers aren’t very good critical thinkers, as evidenced by the sloppy, if not illogical, arguments they try to make against reforms proposed for the state’s retirement system for most of its non-education employees. Or maybe this display of intellectual piffle shows they're just desperate to stop an erosion of their power and privilege.

Gov. Bobby Jindal has proposed altering regulations regarding LASERS, one of the four state (major) retirement funds and which is responsible for about a third of the unfunded accrued liability taxpayers must face (inflated in no small part by its failure in recent years to achieve its stated target of an 8.25 percent rate of return on its roughly $10 billion investment portfolio). These would have current employees pay 11 percent rather than 8 percent of their pay into retirement (the private sector average is 18 percent), and calculate the value of their defined benefit pensions (which few in the private sector offer any more) on the average of their (usually last) five years instead of three, and in addition for future employees raise the retirement age for most jobs from 55 to 67 (matching the regular retirement age for Social Security), and enroll them in a defined contribution systems that acts like an individual retirement account (which most private sector employees now offer).

Dim bulb #1 is LASERS Executive Director Cindy Rougeou, who complained that these kinds of changes ultimately would constitute a change of provisions that “would violate the constitutional restriction against impairing existing benefits.” She further declares that, because LASERS is the only state system about which these kinds of changes have been contemplated, that these changes are not comprehensive enough to merit adoption, and she promises “protracted litigation” over the matter.

As of this posting, LASERS had not deigned to issue on its website a copy of the letter to Jindal in which Rougeou’s sentiments had appeared, but perhaps the document would explain exactly which part of the Constitution is allegedly violated. The only sentence that even comes close to what she claims appears in it is found in Art. X Sec. 29, which reads, “the state shall guarantee benefits payable to a member or retiree or to his lawful beneficiary upon his death.” That’s a stretch to say that there is some blanket right of employees make a specific dollar amount claim for a generality, but let’s take at her word that this means for current employees when they retire the periodic monetary payout calculated under the present formula cannot be reduced.

But there’s nothing about Jindal’s proposal that does that. The three percent increase comes from current salary – it doesn’t cut benefits down the road at all. Nor does the calculation of the benefit level on five rather than three years – it shifts the baseline in an indeterminate way. The only proposal that could fit that interpretation would be to force employees to work as many as 12 extra years to draw full retirement, as that would imply the amount you would get at 55 is zero, which is lower than what currently would be drawn – except that this proposed change makes this voluntary for current employees. It’s a mystery to clear thinkers from where Rougoeu, who does not dispute that these alterations would pay down the UAL, draws this conclusion.

Perhaps it’s because she has a problem making logical concatenations, as shown by her argument about a “comprehensive” solution. By stating this as an objection to the changes, she implies that there is no benefit, and perhaps even harm done to paying down the UAL by their implementation without applying it to all systems. But isn’t something that addresses 35 percent of a problem better than not addressing the problem at all? So just because something beneficial is done to rectify a part of the problem and not all of it means it shouldn’t be done at all? How can Rougeou state this an as objection in any logical sense? If she didn’t mean that, then why even bring it up?

While lack of adequate argumentation from a top administrator living off taxpayers should evoke pity from observers, she merits scorn for the scorched earth tactic she threatens – using potentially millions of dollars of state employees’ and taxpayers’ money to litigate against the changes, which rest on that inadequate argumentation in the first place. Like a thug with a weapon protruding from under a coat, she chose those words to try to coerce policy-makers into abandoning these reforms.

Joining her in her lack of constitutional literacy is her subaltern LASERS associate director Trey Boudreaux. He amplified a statement of hers that insinuated Jindal personally was on a vendetta against LASERS employees, “picking on them because they have no voice.” The argument here appears to be that classified state employees, who comprise members of LASERS, constitutionally cannot run for office (except for the employee spot on the State Civil Service Commission), hold a party office, take part in party affairs including fundraising, work on behalf of a candidate including making donations, or make public expressions about policy. That is, relevant to this issue, these employees cannot formally organize to express an opinion publicly.

However, there’s a wonderful concept both in the state’s and U.S. Constitution that perhaps Rougeou and Boudreaux ought to inform themselves about that serves as the ultimate political voice of all eligible citizens, state employees included. It’s called voting, and if state employees wish to support or oppose these changes, they have a chance to evaluate candidates on the basis of actions and statements dealing with this issue, and vote accordingly. Better, nothing prevents them from privately telling officeholders and candidates this, and in a private setting telling any other eligible voters their feelings on the issue in the hopes of persuading them. Since it’s a pretty safe bet Rougeou and Boudreaux learned at some point that the state (despite the efforts of some) is a representative democracy, it’s just sheer stupidity on their part to claim LASERS members have no “voice” in all of this and thereby are targeted, if not unfairly treated.

You might think the brass would want to see their agency’s assets steered to solvency on behalf of taxpayers, but their loyalty seems to lie more with present and future retirees in trying to see that special interest has the maximum benefits for the least amount of contribution. It may be the current criticisms are a political strategy to create a firewall against the change that really scares them – the replacement of the defined benefit plan (which has been defended time and again by Rougeau, most recently here) with a defined contribution plan for new employees. As this would remove future assets from being under their control, to bureaucrats such as these this represents a loss of power and prestige. They figure if they can defeat these measures, or perhaps use them as a bargaining chip, they can forestall implementation of the change in philosophy in benefits administration – even as other states and local governments continue to make that change in accelerating numbers.

It would be one thing to try to argue against the changes because they wouldn’t lower the UAL and thereby relieve the burden on taxpayers – but they can’t – or that such changes create an unfair burden to state employees – next to impossible given the gravy train of compensation and benefits Louisiana state employees generally enjoy relative to their private sector counterparts in jobs requiring similar responsibilities and skills. But it’s another to argue so weakly, by forwarding irrelevancies, illogic, and straw men, as to raise legitimate doubts about the capabilities of these people to give taxpayers their money’s worth, or perhaps serving as a sign of desperation in their opposition indicating just how completely they have thrown in their lot against taxpayers.


Anonymous said...

I would submit to your readers that you have AGAIN resorted to personally attacking those who have the audacity to publicly differ with the Governor and say why.

I would suggest to your readers this diminishes your value as purported serious political commentator.

And as one who oftens calls for strong evidence of facts stated by those who disagree with you, please advise your readers where and by what evidence they can really be persuaded that people in the private sector pay 18% of their salary for their retirement benefits.

I would also like to point out to you (and to the Governor and his aides, if they are among your readers) that the current retirement age for Social Security is 66, NOT 67 as proposed and presented (and stated to be "the regular retirement age" for Social Security by you, too).

Just a simple oversight? (Or, perhaps, misleading the public again?)

As for your statement about "the only sentence that even comes close" (in the Constitution), you failed to provide your readers the first clause of the sentence quoted, that pertinently states: "Membership in any retirement system of the state or a political subdivision thereof shall be A CONTRACTUAL RELATIONSHIP BETWEEN EMPLOYEE AND EMPLOYER ..." (Emphasis supplied)

I would suggest to your readers that you did not, intentionally or negligently, provide them ALL of the pertinent language of the Constitutional provision in question.

Why would you do that?

Anonymous said...

LSU-Shreveport has really lowered their standards for faculty since I graduated there. You really ought to to a minimum of research before you post as an expert online. You need to re-check the LA Constitution which has multiple sections on public retirement. Sect. 29(B) clearly states that retirement membership is a contractual relationship between employee and employer and the state has to guarantee benefits until death, and of course, 29(E)(5) which you referenced which says the accrued benefits of employees cannot be diminished or impaired.

Combine these with the "impairment clause" in the US Constitution and Governor Jindal and the Legislature have a bit of a constitutional problem. You may also want to review numerous papers online that review clear caselaw on public retirements, contractual relationships, and the impairment clause to further educate yourself. Are you really a professor? That should mean you're familiar with research, I take it.

The 3% increase in contributions is not going to help the UAL at all because the governor is just going to use it to offset the contribution the state makes. Ms. Rougeou is correct, it's not state employees fault that the state did not make its necessary payment in the past and it's not state employees job to fix it. In the real world, contracts are contracts and people expect them to be honored. Right?

You apparently haven't at some point grasped the concept of the time value of money, if you think delaying someone's benefit from 55 or 60 to 67 does not diminish the value of their benefit. I wish you were my mortgage company. I could convince you to delay my payments another 10 years at no cost to me. As for the 5-year average to calculate a retirement base (psst, the governor's office and Rep. Pearson say this will lower the retiree's benefit), you may want to revisit that just in case they might be fibbing?

I agree with you on one thing, state employees just might not be as easy a target as some might think.

Anonymous said...

While there may be a need to reform the state's retirement systems, it should not be at the cost for just one sector. All public employees receive salaries from "taxpayers". Therefore, contributions made by these employees are "taxpayer" dollars. So why is just one group targeted by the governor's proposed reform plans? Is it because it is the one group who has the most restrictions placed on them?

Classified state employees, the group who would face this reform, are not allowed to unionize or politic. This is something the author of this article is able to do. However, in order to know the truth, all sides must be viewed. Unclassified employees, such as those appointed by the governor, receive higher pay. Their contribution rate will not be changed. Why should they not be subject to the same increase? State employees had increases to their health insurance premiums twice last year and have not received merit increases in the last two to three years to help absorb those costs. An increase in the contribution rate for this group will cause their incomes to be stretched even tighter.

One final point: increasing the number of years used to calculate the final average compensation will reduce that average. When you divide a number by 36, you get a higher result than if you divide it by 60. That is simple math.

If reform must come, it should be directed at all public employees, not just the select few that are being "targeted".

Anonymous said...

Little Jeffie, You are spending too much time in te bathroom. Do you want to go blind? Self gratification has become Habit poor chid. Get help.

Anonymous said...

No, replies, huh?

Anonymous said...

I wasn't aware that you were a lawyer.

I won't resort to the rather childish ad hominem attacks that you favor in this blog, but I would point out that someone defending the constituationality or legality of proposal typically researches the answer prior to drawing such broad conclusions as you have in paragraphs 3 and 4. As an acaedemic, I would hope you would have higher standards. A very simple search of cases involving Article X, SEction 29 would reveal that Ms. Rougeau's assertions are not without some merit. See 851 So. 2d 1100.

This blog could be a useful conservative voice in Louisiana politics as you are a very good writer. But your constant attacks (almost exclusviely reserved for democrats or anyone who even questions Jindal) and lack of research just your worthy of the same insults you've hurled at everyone else for years.

Anonymous said...

Observatio: Your credibility is being attacked (with real bases).

Another: It is a lot harder to defend these things, and have to resort ineffective and obvious tactics, when you are on the wrong side.

Anonymous said...

Prof. - you have disappeared on this issue.

I bet you, as a state employee, are in the ORP Retirement Plan instead of the Defined Benefits Plan.

Makes it a lot easier to be critical of the reform proposals, doesn't it?

Anonymous said...

The Professor says our Governor is getting it right.

He is going to devastate that part of state employees who are the weakest in defending themselves. For what: to get more money to spend!!!!!!!!!

Then, we read that welfare money cards are being used at bars, race traces, strip joints, etc., with impunity, every month, month after month.

Did you read that, Professor? Still, no comment?

I believe this program is run by the Governor's appointees. Yes, and the former Secretary of the overseeing Department was: Kristy Nichols, who left it in such good shape that they got a scalding Auditors's report, and now they apparently cannot control welfare fraud and misspending.

Guess who got promoted from that job to Deputy Chief of Staff for the Governor? Right, the same Ms. Nichols.

Then, guess again who is the outfront leader of Team Jindal's astonishingly, overreaching retirement reform. Yot got it: the same Ms. Nichols.

You can believe everything she says, right? That right, Professor?

Anonymous said...

Thanks Anonymous. Ms. Rougeou is not exactly a "dim bulb" by any means. How lame to personally attack her via name calling. Now Ms. Nichols, on the other hand....well, let's just say she once publically described herself as the "Homework Nazi" when chortling about her taskmaster role as parent. She was really proud of the Nazi emphasis. Now, that's a self described "dim bulb". And who better to lead this assault on state employees but a pit bull in lipstick making 6 figures to inflict maulings? Oops - I stooped to name calling.