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Caddo must rectify unconstitutional scheme now
The Caddo Parish Commission would end its term on a high note by dismantling what has become increasingly obviously an unconstitutional scheme that enriches its members at the expense of the public and making taxpayers whole.
Last week, the Louisiana Legislative Auditor issued a blistering report castigating the parish for violating the state Constitution with its inclusion of its elected legislators in the Caddo Parish Employees Retirement System. The parish established CPERS in the wake of federal law mandating that local government employees must join Social Security unless they had a specific retirement system run by local or state governments in which to participate.
While Louisiana has the Parochial Employees’ Retirement System that permits unclassified parish employees, a designation that includes elected officials, to join in lieu of Social Security, in 1997 Art. X Sec. 29.1 of the Constitution went into effect that barred part-time public servant membership in any pension plan, which includes Caddo Parish commissioners (even if, because of subsequent legislation, they now pay themselves at a rate as if they had a legally-defined full-time job). Caddo had participated in PERS, forcibly because of a court decision since 1993, until a 1999 change to state law. Yet when in 2000 Caddo set up its own pension system, it included commissioners in that despite the Constitution’s unambiguous language.
Only recently has the discrepancy entered the public consciousness, fueled by a lawsuit by area citizens. Parish officials have defended the arrangement by arguing the amendment affected only defined benefit systems, or those where fixed pension payouts in perpetuity over which the employee has no control come from a calculation of average salary amount over a certain period and longevity. CPERS works under a voluntary defined contribution system, or where employee and employer contributions go to an investment account controlled by the employee who can gain arrange for payouts of varying sizes and durations after leaving office. Parish full-time employees may refuse CPERS participation and go with PERS if they prefer a defined benefit plan.
The report notes the absurdity of Caddo’s contention, as the Constitution makes no distinctions as far as kinds of pension systems; all regardless of type must adhere to the prohibition of part-timers, as backed by an attorney general’s opinion. To make matters worse, had the parish followed federal law, the amount of money taxpayers would have paid out would have been less than half of the roughly $286,000 paid into the unconstitutional racket.
And, worst of all, the computation chosen for the contribution rates jacked up that theft of taxpayer money higher than necessary. CPERS pegged its employer contribution rate the same as the PERS defined benefit plan contribution rate, which, because past state policy-makers allowed generous government salaries and benefits relative to jobs with similar tasks in the private sector that created a $20 billion gap in unfunded obligations, has forced escalation of the employer portions to meet another section of the Constitution’s requirement that this shortfall go to zero by 2029.
Currently, the parish has hoped against hope that somehow in the suit’s resolution that a court will legitimize its eccentric interpretation of the Constitution. But anybody who can read should know the clear language of the relevant passage should remove any hope for this Hail Mary. So an ethical response would require immediate extrication from this unconstitutional situation.
Specifically, the parish should begin next year to pay its portion of Social Security tax (it already pays the Medicare portion) for commissioners and the identical deduction from their paychecks and abandon removing the amounts for CPERS. It also must enter into an agreement with the Social Security Administration to pay into that system the amount owed that has accumulated for past living commissioners, former and present, to bring the parish into legal compliance with federal law.
It then should give living commissioners the option whether to return the monies in their illegal accounts in a lump sum or on a payment plan, with the option to garnish salaries of present commissioners, and arrange with the Internal Revenue Service to make these withdrawals non-taxable events. If necessary, it must bring legal proceedings against those who refuse to set up some kind of reimbursement plan (although in the case of deceased commissioners taxpayers may have to eat those funds).
Given the straightforward wording of the Constitution and that this has gone on for 15 years, the parish should being restitution to taxpayers and the SSA at once. It has no excuse to act otherwise.
Posted by Jeff Sadow at 10:30