Legislature moving to revamp retiree pensions increases
Legislation that would give a 1.5 percent cost-of-living adjustment to roughly 100,000 state retirees is nearing final passage in the Senate. House Bill 1225 by Rep. Joel Robideaux, R-Lafayette, has already passed the House and is supported by the Governor, reports the Advocate. Retirees have not received a COLA in six years, and inflation has eaten away at the value of their pensions over that time. Most state employees are not part of Social Security, making retirees more dependent on their pension. Robideaux’s bill would change how COLAs are paid by tying benefit increases to the financial health of the retirement systems and dedicating “excess investment earnings” to paying down the state’s $19 billion in accrued debt. Public Affairs Research Council President Robert Scott called the bill “one of the biggest cost-saving bills around here,” but critics say it would make it harder for retirees to get raises in future years.

Children and Families secretary defends agency against damaging audit
Last month, a report from the Legislative Auditor detailed a pattern of problems plaguing how Louisiana protects the most vulnerable children from abuse and neglect. Yesterday in the Shreveport Times, Department of Children and Families Services’ Secretary Suzy Sonnier defended the department’s performance and listed a number of initiatives aimed at improving child protection services.

But left unsaid in Sonnier’s defense is that budget cuts have contributed to growing caseloads and high staff turnover. Since 2009, the budget for child protection fell 26 percent while the number of caseworkers fell 19 percent, even as the number of cases went up by 18 percent. Despite rhetoric about “doing more with less,” the recent audit of child protection services shows that budget cuts can, in fact, harm performance. Unfortunately, this time budget cuts meant direct harm to child welfare. Until the state gets serious about raising adequate revenue — and secretaries with the knowledge of how the budget impacts services speak out — the likelihood of more negative audit reports only grows.

State shuffling tax-exempt bonds, hoping to avoid IRS tax penalties
The Lens’ Tyler Bridges reports that Louisiana could be on the hook for millions of dollars in IRS penalties because it failed to spend tax-exempt bond proceeds in a timely fashion. At issue is about $70 million in capital outlay funding for projects that have been delayed, sometimes for years. Legislators moved last week to shift the money to fund newer projects as part of House Bill 2, with the agreement of Gov. Bobby Jindal’s administration. Some of the unspent bonds date back to 1994.

Instead of spending annual tax revenue on construction projects, most states — including Louisiana — issue tax exempt bonds to investors. The IRS does not require the investors to pay tax on the earnings, which allows the state to borrow at a lower rate. But states are required to spend the proceeds within a certain time frame, and are subject to penalties if they hold on to the money too long. Last year such delays meant the state had to pay the IRS $6.7 million.

The Jindal administration says that this type of bond swapping occurs every year, but the Lens found that the amount of changes required this year were out of the ordinary: 23 pages of amendments compared to three pages in prior years. State Treasurer John Kennedy called the issue a “bookkeeping problem,” though the problem caused a delay in the issuance of bonds last year after attorneys raised concerns.