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The Louisiana statehouse, an elderly couple, a piggy bank and a clock

Louisiana lawmakers hope giving higher education employees more time to pick a retirement plan will boost faculty and staff retention rates.

Photo illustration by Justin Morrison/Inside Higher Ed | Bluepoint951/Wikimedia Commons | Fabio Camandona/iStock/Getty Images | rawpixel | iStock/Getty Images

Thousands of faculty and staff at Louisiana’s 28 public higher education institutions now have access to more flexible and lucrative retirement benefits, under a new law signed into effect by Republican governor Jeff Landry on May 21.

Sponsored by Representative Barbara Freiberg—a Republican whose district includes the flagship Louisiana State University—the legislation was designed to minimize brain drain and retain quality faculty and staff members in a state that ranks significantly lower than most in both base compensation and retirement contributions.

For years, new higher education employees in the state have been granted 60 days to decide between an optional retirement plan, which allows them to take their accrued benefits if they choose to leave Louisiana for another job, and a more remunerative, fixed state-pension plan. Now, under the new law, current employees who have been on the job for more than five years will be granted a 12-month window to switch plans; employees of four years or fewer have until their fifth anniversary to make the switch.

Faculty and staff senate representatives, who had passed multiple resolutions in support of the bill, called the legislation a “massive win”—especially because Louisiana is one of 15 states that does not enroll public employees in social security.

“The retirement plan is incredibly important to the faculty and staff in large part because we do not receive Social Security benefits. So our participation in the retirement program is the only retirement plan which we have access to,” said Daniel Tirone, vice president of the Louisiana State University Faculty Senate.

The decision can influence not only their financial well-being, but also whether or not they stay in the Bayou State, Tirone added. “By giving faculty and staff a longer window in which to evaluate how long they’ll be within our institutions, that’ll allow them to make a more informed choice over which plan is going to work best for them,” he said.

Keeping the ‘Best and Brightest’

Louisiana lawmakers hope that offering more flexibility in choosing a retirement plan will encourage faculty and staff to stick around. Since the COVID-19 pandemic, employee retention has been a challenge for university administrators across the country—including in and around Louisiana.

Josh Duplechain, the staff senate president at LSU, said that the year-over-year staff turnover rate at his institution went from about 10 percent before COVID to more than 20 percent after.

And national data from Inside Higher Ed’s most recent provost survey show that nearly two in three (64 percent) respondents agree or strongly agree that their institution is currently seeing higher-than-usual staff turnover rates. But far fewer say they’ve taken concrete steps to counter that loss. Although three in five provosts (60 percent) said their institution has made compensation adjustments in light of inflation, only about two in five (39 percent) indicated they’d done more to retain and engage faculty members.

With the assistance of Representative Freiberg, Louisiana administrators hope to change that trend.

At a house retirement committee hearing in April, Freiberg said the bill—initially proposed by university employees—would contribute to a larger state effort to address population and workforce challenges, “particularly how we keep our best and brightest from seeking opportunities in other states.”

Kim Hunter Reed, the state commissioner of higher education, who was also present at the hearing, added that graduating approximately 40,000 students per year is not possible without great faculty and committed staff.

“We have about 6,000 employees in higher ed who are worried about whether they can afford to retire. We don’t want them to leave our state for better pay and better benefits,” she said. “This bill gives us one more tool to hang on to our great talent.”

Lawmakers on both sides of the aisle seemed to agree. Tony Bacala, the house retirement committee chair, flipped through a pile of green cards as he read off the names of the other supporters who were present.

“We have no red cards … so everybody’s for it,” he noted as he reached the end of the list.

An Imperfect First Step

Lawmakers have brought similar proposals to Louisiana’s legislative floor on eight separate occasions over the last two decades, but none was successful. Only twice did the bill even make it out of committee.

Faculty and staff advocates say that what made the difference this time was a concession regarding the recognition of accrued service.

Prior iterations of the bill included a provision that required employees who switched from an optional plan to a pension plan to receive credit for their prior years of service. “That increased the cost of the defined benefit plan, because essentially, the state was going to be asked to cover years in which employees were credited but hadn’t been contributing,” Tirone said.

But under Freiberg’s bill, an employee who switches will start at zero. Although they won’t lose what they earned under the optional retirement plan, their benefit calculations would be based on their switchover date, not when their employment began.

“So what has allowed this bill to be successful where others have failed is that it was really drafted taking into account the impediments that had hamstrung the previous efforts— the cost to the state,” Tirone added.

Philip Auter, the faculty senate president at the University of Louisiana at Lafayette, believes that, while not perfect, the bill is an important step toward improving the relationships among faculty and staff, administrators and government officials.

“When you’re first hired, you’ve got so many other things on your mind—finding a place to stay, getting your family settled—that the retirement plan might not be the first thing that you’re thinking about,” Auter said. “[This new law] gives a more equitable and consistent approach to the process.”

Auter said that although he sees the legislation as “very fair,” he is still unsure whether he will utilize it himself. After 22 years on the optional plan, Auter said that even if he switches to the defined benefits plan, he likely won’t accrue the minimum 20 years of service necessary before retirement to get a full pension.

“If I choose to switch from that point forward, it will be as if I quit one job with an optional plan and started a new job with a state retirement plan,” he said. “If I retired in 2035, I’d be 10 years vested, not 32 years vested.”

It’s a question that many late-career educators will be forced to ask: Is the juice of switching retirement plans worth the squeeze? For now, it’s simply a matter of personal preference and risk tolerance. But Duplechain, the staff representative at LSU, hopes this law will be a stepping stone for future benefit expansions.

“If you have five to seven years of service and you plan on being at LSU for the long term, it makes sense if you want to start over. But if you’ve been at LSU for 10 or more years, then it’s cost prohibitive for you to make that switch,” he said. “So the hope is maybe two, three, five years down the road, we can try to encourage another piece of legislation that would help our employees with longer tenure to make that switch without starting over.”

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