Louisiana governor rebuts K-12 pension funding report
BRADENTON, Fla. – A report critical of Louisiana’s handling of teachers’ pensions is “full of misinformation,” according to Gov. John Bel Edwards’ office.
The report, released last week by the public policy think tank TeacherPensions.org, said the Teachers’ Retirement System of Louisiana is among the most expensive in the country with more than $11.7 billion in debt driven by “years of irresponsible budgeting practices.”
“The fact is, the debt decreased this year by $466 million, and the funding ratio increased from about 62% in 2016 to about 65% this year,” the governor’s office said in a statement to The Bond Buyer. “The state has a sound plan to pay the debt down and is on track to eliminate it, and the governor is committed to maintaining a defined benefit retirement system for our teachers.”
The 24-page report called, “Bayou Blues: How Louisiana’s Retirement Plan Hurts Teachers and Schools,” cited information based on the pension system’s 2016 comprehensive annual financial report. It said teachers are paying the price for past mistakes.
The current net pension liability is $10.3 billion, according to the June 30, 2017 actuarial valuation by Foster & Foster Actuaries and Consultants, which is posted on TRSL’s website.
The Bayou Blues “report is full of misinformation and inaccurately describes the current status of the TRSL, which was recognized earlier this year by the journal Pensions & Investments as having the second-best performing public pension plan in the country for 2017,” Edwards’ office said.
In August, Pensions & Investments ranked the Louisiana Teachers’ retirement system as the second-highest performing pension plan with a 15.93% return for fiscal year 2017, confirmed P&I Editor Amy Resnick, who is former Editor In Chief of The Bond Buyer.
P&I ranked the Arkansas Teacher Retirement System as top performing plan of 2017 with a 16.1% return for the year, while the Louisiana State Employees' Retirement System ranked third with 15.8%.
“The Pensions & Investments ranking is numerical, based on the pension funds’ performance for the most recent year,” Resnick said.
The P&I ranking does not consider the funded status of any public pension plan.
For the Louisiana teachers’ pension system, the unfunded actuarial accrued liability for 2017 is $10.55 billion, compared to $11.02 billion for 2016, according to the Foster & Foster valuation.
“The plans unfunded actuarial accrued liability decreased mainly due to a reduction in principal following receipt of the prior year’s UAL payment and an experience gain from investment and non-investment actuarial assumptions,” the actuaries wrote.
The market value of the system’s assets is $19.5 billion.
TRSL is Louisiana’s largest public retirement system for K-12 school employees (excluding bus drivers, maintenance and janitorial employees) and unclassified personnel in higher education. More than 188,000 members participate in a qualified defined benefit plan.