HB 21: Crucial for a COLA

HB 21 would create a funding deposit account for MPERS to accomplish two purposes:

1. avoid about an 8% increase to the annual employer contribution rate by requiring that future COLAs (after FY 22) be both prefunded and less expensive, while providing retirees more clarity regarding their timing; and
2. provide a source of funding to pay down the oldest unfunded accrued liability sooner, but only when the contribution rate would be lower than in the previous fiscal year.

The bill would move MPERS from the COLA charge card to the prepaid debit card and provide an option for paying down debt sooner. It would authorize the MPERS board of trustees to require an employer contribution rate up to the following limits:

1. when the contribution rate would be equal or greater than the previous year's rate, the board can optionally set the rate up to 0.85% greater than the fiscal year's rate. The proceeds could go towards paying future COLAs (sole source of COLA funding); and
2. in a fiscal year when the contribution rate would be lower than the previous year, the board can optionally set the rate at the otherwise required rate plus up to 0.85% plus half the difference between the rates for the two years. Up to half the difference between the rates for the two years goes to pay down the oldest UAL (the rest, for future COLAs, if designated for such by the board).

Under HB 21, COLAs may not exceed 3% of benefit or be payable to the retiree or survivor until one year since benefit commencement. The board of trustees can designate the COLA as recurring or nonrecurring, whether it will be based on the retiree or survivor's current or original benefit, set minimum age requirements, and/or require that there be a minimum period since benefit commencement. No legislative approval would be required to grant a COLA.

HB 18: Sensible Changes

Prior to July 1, 2021, MPERS had no post-employment restrictions. On that date, Act No. 249 of the 2020 Regular Session became effective. R.S. 11:2220(J) requires the benefits of any MPERS retiree who retires and becomes employed by an employer but does not meet the definition of an employee within the twenty-four-month period immediately following the effective date of his retirement shall be suspended for the duration of such employment or the lapse of twenty-four months from the effective date of retirement, whichever occurs first, even if such service is part-time, based on employment by contract, or in a non-qualifying position.

As amended this morning, HB 18 would decrease the suspension period from twenty-four to twelve months and create exceptions to the twelve-month suspension period for employment as either:

• a police officer for not more than fifty hours per month; and
• as an elected official other than a chief of police.

Retirees meeting either of these exceptions (unless covered by another retirement system) and their employers will have to make contributions to MPERS, but the retirees will receive no additional service credit and will not accrue any additional retirement benefit. Upon termination of reemployment, employee contributions paid since reemployment shall, upon application, be refunded to the retiree without interest. MPERS will retain the employer contributions and interest on contributions.

If a retiree meets either of these two exceptions but is covered by another retirement system, he won’t receive a retirement benefit during the sixty-day period following the effective date of his retirement.