This story was first reported by Louisiana Illuminator and republished with permission.
The Louisiana House of Representatives approved a budget plan Thursday that eliminates a proposed $2,000 annual raise for public school teachers in order to pay off an enormous amount of public employee retirement debt. House Republicans say the strategy will save the state government and school districts money over the next few years.
“How do you take a one-time dollar and make it a long-term recurring benefit?” House Appropriations Committee Chairman Jerome “Zee” Zeringue, R-Houma, who leads the House’s budget-writing efforts, asked colleagues on the floor. “By making extra payments that we’re proposing in the budget this year and next, the state and our school systems save hundreds of millions of dollars.”
House GOP lawmakers believe paying off more retirement debt for teachers early would free up money for local school districts to give out raises to teachers in lieu of a state pay hike. But legislators can’t force local school officials to give teachers salary increases with the saved money — and most charter school teachers would likely miss out on a raise altogether if the House plan went into effect.
“You’re not funding a teacher pay raise by voting this bill,” said Commissioner of Administration Jay Dardenne, who leads Gov. John Bel Edwards’ budget efforts. “You’re saying we hope local school districts will vote for this pay raise.”
The House also reduced early childhood education programs in the governor’s proposed budget by approximately 8,000 slots and $51 million, and representatives forced a reduction of $22 million from the health department, which state officials said might result in a pay cut for workers who care for elderly people who live at home.
House Republicans said state departments should be able to absorb this loss because retirement payments they typically have to make with that money would be covered in another portion of the spending proposal. The Edwards administration said those extra debt payments won’t necessarily make up for a $95 million loss, and more cuts to services may be necessary.
House Democrats attempted to put much of the cut funding — including the teacher pay raise — back into the budget through a series of amendments on the House floor but weren’t successful. They couldn’t get enough Republicans to go along with their efforts.
The House Republican leadership had to make larger program cuts than the governor proposed because they were trying to spend hundreds of millions of dollars less than Edwards wanted.
Louisiana has approximately $1.9 billion in unexpected revenue available to spend before June 30, 2024, but legislators would have to vote to break through a constitutionally-mandated spending cap to access all that money.
Edwards and Louisiana Senate leaders are in favor of exceeding that limit to make use of the extra money, but conservative House Republicans — who generally oppose government growth — don’t want to take that vote and crafted a budget that doesn’t break through the spending ceiling.
The extra retirement debt payments the House GOP leadership back largely help avoid the spending cap conundrum because they don’t count toward the limit.
Paying off retirement debt early also puts the state in a better financial position ahead of a 2025 revenue dropoff. Louisiana’s sales tax is scheduled to automatically go down 0.45% in three years, costing the state approximately $440 million annually.
Several lawmakers in the House think it’s prudent to pay off the retirement debt early because it might help the state avoid large budget cuts in the future.
But the large retirement debt payments made it impossible to afford some other popular initiatives, including the governor’s proposed teacher and school support staff pay raises, which would have cost the state at least $197 million next year.
Legislators have suggested that school boards give out these raises with savings realized once the state pays down more of their teacher retirement debt, but several questions remain about how that arrangement would work.
Many public charter schools don’t pay into the state teacher retirement system and therefore wouldn’t benefit from early retirement debt payments. Unlike traditional school districts, most charter schools wouldn’t see any extra money to cover teacher pay hikes.
Even in the traditional school systems, it’s not clear there would be enough savings to award the $2,000 raise next year like the governor proposed. Democrats also worried local school districts wouldn’t see equal benefits from the early debt payments. Some could receive proportionally more money than others.
Though their budget plan may have removed the teacher pay hike, House members retained salary and wage increases for other groups. A university faculty pay raise of approximately 2.5% remains in the budget, and lawmakers also went along with the governor’s decision to increase the minimum wage for all state workers to at least $10 per hour. Republicans also added salary increases for staff in the attorney general’s office that will cost $476,000.
First responders and law enforcement officials around the state will also see $1,200 more in supplemental pay for the second year in a row under the House plan, though the payment wouldn’t become permanent as the governor and Senate leadership have proposed.
Legislators are also considering a $24,000 hike to their own salary that would take effect next year. On top of that, they included over $35 million of their own pet projects — money for local parks, law enforcement agencies and nonprofits — in their spending proposal.
The Senate will now take up the budget plan. The final spending plan is expected to be in place by the end of June before the new budget cycle begins in July.
Negotiations should wrap up before the legislature adjourns June 8.