Letter to the Editor

Dear Editor:

On behalf of the Teachers’ Retirement System of Louisiana (TRSL) Board of Trustees and its executive management, we would like to express our appreciation to Sen. D.A. “Butch” Gautreaux for his commitment to the educators of this state, as well as his service on the TRSL Board and the Senate Committee on Retirement.

Through his leadership on the Senate Committee on Retirement, Sen. Gautreaux has positively impacted the educational community in a number of areas.

He has consistently supported legislation requesting that Congress repeal federal laws that reduce the Social Security benefits of retired public employees, such as teachers, police officers, and fire fighters, who have participated in public pension plans. The Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) routinely deny critical Social Security income to these former public employees who dedicated their careers to community service.

In the regular session ending on June 23, 2008, Sen. Gautreaux sponsored legislation that would give TRSL’s retired members and their beneficiaries a 3.0 percent cost-of-living adjustment (COLA). This is the second consecutive year our members have received a 3.0 percent increase in their retirement benefits to offset inflation. In fact, last year Sen. Gautreaux and Sen. Gerald J. Theunissen took steps to ensure that retirees received a full 3.0 percent increase when they supported legislation granting an additional 0.5 percent increase to the 2007 COLA. TRSL received a tremendous response from our retirees who thanked Sen. Gautreaux for enabling them to receive a full 3.0 percent COLA in 2007.

In response to attempts in this recent legislative session to seize retirement benefits of school employees for criminal offenses, without regard to constitutional rights or the impact to their innocent families, Sen. Gautreaux offered a sound plan in Senate Bill 27. While the bill did not reach passage, his ability to craft legislation on this controversial topic that addressed both due process issues and victims’ rights concerns illustrated his skill as a decisive legislator and a compassionate public servant.

Also during this session, he and his committee wisely requested that TRSL seek court guidance on House Bill 89 which allows TRSL members who are eligible to participate in the Deferred Retirement Option Plan (DROP) to choose how their DROP accounts earn interest. TRSL will now seek a declaratory judgment with regard to the constitutional rights of DROP members who may elect to have their DROP accounts decreased should the System experience a negative rate of return. Essentially, the Senate Committee on Retirement foresaw the need to have a definitive legal answer in the event of a court challenge to a signed document from a DROP member that waives his or her right to protection from a negative rate of return.

To provide you with more information on DROP, it was established in 1992 and allowed TRSL members to participate for up to two years at any time once eligible. DROP enabled members to continue to work and build a tax-deferred savings by depositing into a special account the regular monthly retirement benefit to which they will be entitled upon ending employment. In 1994, the legislature extended the DROP participation period to three years with a set window of opportunity for participation.

Currently, DROP accounts earn interest in one of two ways:

• For members who were eligible to participate in DROP before January 1, 2004, DROP accounts earn interest at TRSL’s actuarially realized rate of return, less a 0.5 percent administrative fee.

• For members who were eligible to participate in DROP on or after January 1, 2004, DROP accounts earn interest at the liquid asset money market rate of return, less a 0.25 percent administrative fee.

Under a state attorney general opinion in 2002, DROP accounts are protected benefits under the state Constitution, and cannot be decreased by negative rates of return.

This opinion prompted Act 962 of the 2003 Regular Session, establishing the mechanism by which members, who were eligible to participate in DROP on or after January 1, 2004, earn interest on their DROP accounts.

Tying DROP interest rates to the liquid asset money market rate was meant to prevent TRSL from incurring an unfunded accrued liability (UAL) in years when the System experienced a negative rate of return.

The passage of House Bill 89 marks yet another change in the history of DROP. Sen. Gautreaux’s leadership and advice regarding this popular optional TRSL program is welcome and highly respected.

Under the guidance of Sen. Gautreaux, the Senate Committee on Retirement has worked hard to enhance and protect the benefits of TRSL’s retired members and their beneficiaries.

Sen. Gautreaux has consistently demonstrated his keen understanding of the nuances of retirement issues and has been a true advocate for pension legislation that not only provides a dependable source of income to retired educators, but also creates a meaningful difference in the lives of all TRSL members.It has been and continues to be a privilege to work with him and his staff on issues that impact the educators of this state.

Sincerely,

Sheryl R. Abshire, Ph.D.Chair, TRSL Board

Maureen H. Westgard, TRSL Director