A shift in retirement plans, billed as a way to save millions on personnel costs, has ensnared Lafayette Consolidated Government in a lawsuit that may instead cost it tens of millions.
In 2020, then-Mayor-President Josh Guillory’s administration sought to shift some 800 LCG jobs out of the state’s retirement system for municipal employees and into a system for parish employees, touting savings of as much as $4 million to $5 million each year as new public workers enrolled in the parish system. Instead, the plan has mired LCG in a $21 million lawsuit and threatens the local government with far greater financial disaster.
As a consolidated government, LCG can essentially choose between retirement systems for public employees: the Municipal Employee Retirement System (MERS) or the Parochial Employee Retirement System (PERS). The dispute comes down to how much LCG should pay MERS to leave.
The plan, devised by Robert Benoit, Guillory’s chief of staff, was to move those jobs into PERS one at a time as new employees were hired, significantly cutting LCG’s employer contributions. MERS requires a 29.5% employer contribution. PERS’ employer contribution rate is 11.5%.
The critical issue arose in May 2020 as Guillory and Benoit sought legislative approval. MERS was $417 million behind in retirement collections, and it wasn’t going to let LCG leave without paying its share: $73 million.
“We agreed that we owe [them]; we’re just at total odds over what we owe [them] for,” says Benoit, who wasn’t kept on when Mayor-President Monique Blanco Boulet took office in January.
It’s unclear how the Guillory administration calculated its purported savings or obligations, and whether those calculations were thoroughly vetted by an actuary — a specialized financial analyst with expertise in risk and retirement computations.
“We have been unable to locate any actuarial or other financial analysis prepared in connection with the 2020 legislation,” City-Parish Attorney Pat Ottinger says in an email responding to questions from The Current.
So far, MERS has billed LCG $21 million for 250 jobs that have been moved to PERS, an average of $82,400 per position. That presents a financial crisis for LCG. At that rate, LCG would owe $65 million for all 800 jobs required to move to PERS by state law, though neither LCG nor MERS could confirm the move’s total estimated cost.
Appearing before legislators in 2020, Benoit said LCG was leaving existing employees in MERS, so it wasn’t required to pay the full amount, but the Legislature ultimately amended LCG’s bill to require MERS to determine how much LCG owed for each position moved to PERS, effectively handing the system significant leverage in the suit that followed.
The result has been years of back and forth over how much MERS has billed Lafayette, which culminated in a lawsuit filed by the Guillory administration last spring, seeking a summary judgment on what LCG owes.
This spring marks a critical juncture in the suit. The first hearing is set for April 16, and both parties say they will continue to pursue the case until some resolution is found.
“We have endeavored to create a conciliatory approach with representatives of MERS but have not yet formulated any possible terms of settlement,” Ottinger notes in his response.
In the meantime, the regular session of the state Legislature starts Monday, and LCG is aiming to again change state law in a new bid to resolve its dispute with MERS. That could take many forms, including a potential reversal of the move pushed by Guillory, but Ottinger says “no firm decisions have been made yet” on what that fix will look like.