The original deadline for the Task Force on Structural Changes in Budget and Tax Policy was Sept. 1, as detailed in a resolution adopted by lawmakers earlier this year. But members sought more time from the Legislature after the recent flooding in south Louisiana and requested a new deadline of Sept. 30.
One issue that has taken a backseat to the splashier topics of taxes and the budget is unfunded accrued liability, referred to as the UAL. In simple terms, it’s the debt associated with the state’s retirement systems. More to the point, it’s the difference in the amount of assets the systems have and the amount of money the government has promised to pay out to its employees in the future.
Paul T. Richmond, the actuary for the legislative auditor, recently told the task force that Louisiana’s UAL is $18 billion.
That has some task force members wondering whether the UAL should be treated as a separate budget item during legislative sessions.
Richmond told the task force that the problem with the retirement systems is not the overall design of their plans, but rather that UALs have been allowed to accumulate in the past due to inaction by state officials.
Retirement systems are able to gain revenue through investments, but that’s an unlikely avenue to help address the UAL.
The task force was advised that it would be better to have larger contributions directed to the systems with a gradual decline thereafter, as opposed to smaller contributions followed by a pattern of increases.
Who ends up paying for the higher contributions, and how the Legislature would react to such a proposal, are just a few of the unknowns that will likely be addressed in the task force’s report and in next year’s fiscal reform session.