DuBos: A solution to state's growing debt of retirement systems

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wwltv.com

Posted on March 27, 2012 at 6:39 PM

Updated Tuesday, Mar 27 at 6:41 PM

In addition to his education reforms, Gov. Bobby Jindal is asking lawmakers to make big changes in the state’s retirement systems. That’s the subject of this week’s Commentary by Eyewitness News political analyst and Gambit columnist Clancy DuBos.

Clancy DuBos / Eyewitness News Political Analyst

Gov. Bobby Jindal has correctly identified a serious problem: the growing debt of the state’s retirement systems. Unfortunately, the governor’s solution to that problem is not a solution at all.

Here’s how.

Jindal proposes to change the formula for state employee retirement benefits, to make it more like private sector 401 (k) plans. He also wants state workers to contribute more toward their retirement. So far, so good.

The problem with Jindal’s plan is that he wants to use the higher employee contributions to balance this year’s operating budget.

Look at it this way: Suppose you had a hole in your roof, and you went to the bank to borrow $20,000. But instead of fixing the roof, you use the money to pay your utility bills, your kids’ tuition and maybe even take a vacation. After you’ve spent the $20,000, you still have a hole in your roof.

In effect, that’s what Jindal’s plan does. It raises money from state workers, in the name of retirement reform, but it doesn’t use the money to reduce the retirement debt.

By the way, when Bobby Jindal took office four years ago, the state retirement debt was $10.5 billion. Today, it’s $18.5 billion — and growing.

Asking state workers to pay more to balance their retirement system is a good idea … but only if the money actually goes toward that purpose. Anything else is just “tax and spend.”

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