BATON ROUGE, La. — With the state facing an $11 billion pension funding gap, Louisiana lawmakers are discussing restoring legislative oversight of the state's public retirement systems.
The political heat follows a series of blows against Louisiana's two largest plans — the $11.5 billion Teachers' Retirement System of Louisiana and $6.5 billion Louisiana State Employees' Retirement System, both in Baton Rouge.
Last year, the state's legislative fiscal officer, John R. Rombach, told the Legislature the systems should do away with external managers and shift 80% of their assets to passive management. An analysis of the funds found active management by the two plans cost the state $450 million to $500 million in fees between 1996 and 2003, he said.
Now, state Sen. Jay Dardenne said he will draft a bill to restore legislative power over Louisiana's plans.
Plan officials are skeptical.
"I'm afraid of a knee-jerk reaction to the problem," said Bob Borden, executive director of the employees fund.
The Legislature gave up oversight of the state's 13 public plans in 1993, and gave the independent boards of trustees the final say over plan assets. But funding shortfalls — a combined unfunded accrued liability of $11 billion, which by law must be paid off by 2029 — are drawing legislators' attention.