House Education Committee advances bill to make teacher raises permanent using savings from paying down retirement debt

The House Education Committee on Nov. 12 advanced House Bill 5, a measure that would direct school systems to use savings from paying down part of the Teachers' Retirement System of Louisiana’s unfunded accrued liability (UAL) to provide permanent salary increases for school employees.

Rep. Brett Bakula, the bill’s sponsor, told the committee the measure is intended to work in tandem with a separate constitutional amendment (HB 7) that he said would free roughly $2 billion to pay down UAL. "This bill obviously is tied to HB 7," Bakula said, explaining the legislature's plan to use the one-time resource to reduce annual retirement payments and free recurring dollars for employee pay.

Bakala and staff provided estimates for the savings that would result if the UAL payment were reduced; Bakula described a first-year reduction in retirement payments of about $289 million, roughly $207 million of that for K–12 and roughly $75–76 million for higher education. He cautioned those are simulations and that local district variables — hiring changes, prior raises and other factors — could change actual savings, producing shortfall scenarios his office estimated could total as little as about $70,000 or, in a higher-variance estimate, up to several million dollars statewide.

The bill would require school systems that "realize a savings" from the UAL payoff to use those savings primarily to provide permanent increases of $2,000 for certificated staff and $1,000 for noncertificated staff. Bakula said the intent is to convert recent one-time stipends into permanent salary increases, not to create a one-year stipend.

Representative Brass offered an amendment to address two issues: (1) require that any remaining shortfall be provided in the state’s Minimum Foundation Program (MFP) if a district’s realized savings are insufficient to fund the increases, and (2) limit how any excess realized savings could be used. After committee discussion and data requests, Brass agreed to remove the paragraph restricting use of excess funds and the committee adopted the revised amendment (deleting the restriction) by unanimous consent. Staff had read the amendment as Amendment Set No. 83; earlier technical clarifications from staff were adopted as Amendment Set No. 38.

Members pressed for more district-level simulations before floor consideration. Rep. Carver and others asked how the proposed $3,000 combined raise ($2,000/$1,000) would move Louisiana toward the southern regional average for teacher pay; staff and sponsors said district-level and cost-of-living impact analyses had not been completed for the committee hearing and would be provided later. "In some districts we'll be there or above," Bakula said, but he acknowledged he had not run a full cost-of-living comparison.

Several members, including Rep. Freiberg, warned that the trust funds HB 7 would alter have historically supported targeted programs (early childhood slots, textbooks, foreign language teachers). Freiberg said restricting the use of excess savings could prevent districts from using funds for those programs; Brass responded his intent was not to strip existing program funding and he would work with staff to refine language.

Witnesses who spoke in support emphasized the fiscal rationale and potential long-term savings from reducing interest costs on UAL. Dr. Keith Corville, executive director of the Associated Professional Educators Louisiana, called the approach "genius," saying, "Paying off debt ... and committing that to teacher pay raise at no additional recurring cost to the state" creates recurring budgetary room. Larry Carter, president of the Louisiana Federation of Teachers and School Employees, said his union supports the bill’s goal to make prior stipends permanent and strengthen recruitment and retention, while noting remaining concerns the parties were continuing to address with the governor's office.

The committee approved the adopted amendments without objection and Rep. Carlson moved to report HB 5 as amended; with no objections, the committee reported the bill with amendments by unanimous consent. The bill is scheduled for further consideration on the House floor.