Funds Appropriated to Reduce Retirment Systems Debt

During the Second Extraordinary Session of the 2008 Louisiana Legislature, lawmakers appropriated $60 million to make a payment on the debt of the state’s largest public retirement systems. This debt is known as the Unfunded Accrued Liability. It is the difference between the projected benefits owed to retirement system members and the money available to pay those benefits.

The initial UAL of the Louisiana State Employees’ Retirement System existed from the time the system was founded in 1946, when LASERS began paying benefits to retirees who had never made any employee contributions. The initial UAL debt grew to almost $3 billion over the next six decades, as lawmakers added special benefits without the funding to pay for them, and failed to make adequate payments against the principal.

For every dollar paid to reduce the initial UAL, Louisiana will save more than $4 in interest payments. Of the $60 million allocated for this purpose, $40 million will go towards the debt of the teachers retirement system and $20 million will go towards the LASERS debt.

This action benefits not only the retirement systems and their hardworking public employees, but every Louisiana taxpayer as well.

Cindy Rougeou, executive director
Louisiana State Employees’ Retirement System
Baton Rouge