Retirement Debt Eating Up State Funding To Louisiana Schools

BATON ROUGE, La. (AP) — Nearly $1 of every $4 in state aid sent annually to Louisiana's public schools disappears before it reaches classrooms, siphoned away to pay retirement obligations that cost $853 million a year, according to a new report from the legislative auditor.

The retirement debt payment amounts to $1,302 per student and swallows an average of 10% in the total funding available for schools from state, local and other sources, according to the 44-page review from Legislative Auditor Mike Waguespack's office.

The Advocate reports the audit said the Louisiana Legislature might want to consider revamping how the retirement debt for former teachers is handled in a way “that could be less burdensome for participating schools.”

State aid for public schools totaled $3.9 billion for the 2019-20 budget year reviewed by auditors. The teacher debt obligation grabbed 24% of that allocation, the report says. A total of 1,355 traditional and charter schools take part in the retirement system.

In a written response to the auditor, state Superintendent of Education Cade Brumley said the annual obligation to former teachers “is a large portion of city and parish school systems’ budget and is tied to the biggest expense in education, staff salaries.”

The retirement debt built up after lawmakers and other state leaders allowed the obligation to teachers to keep growing without identifying a way to pay for it. The annual payments required of school systems aims to lower the debt long-term and account for the pension benefits owed to teachers when they retire.

The debt is supposed to decline over time, lessening the burden on school systems.

Voters in 1987 approved a constitutional amendment that required the Legislature to pay off the debt for teacher and state employee retirement plans by 2029. After that, later state laws require retirement obligations for teachers built up between 1988 and 2009 to be paid by 2040.

Public schools make a dent in that debt annually by paying a percentage of their employees’ salaries, The Advocate reported. Most of that money goes to the Teachers’ Retirement System of Louisiana and the Louisiana School Employees’ Retirement System.

The combined gap between what is owed for pension benefits and what is available for both groups tops $11 billion, according to the audit.

Katherine Whitney, director of the Teachers’ Retirement System of Louisiana, said paying off the debt has been a goal of her office and others in state government for years.

“By 2029 the (debt) is projected to decrease 43% from the 2020 total of $10.37 billion and by 2040 the (debt) is projected to be less than $1 billion,” Whitney said in her written response to the audit.