Placing the concept of income tax cuts aside, arguably the most popular aspect of Gov. Jeff Landry’s wide-ranging special session will be the opportunity for a substantive change to how teacher pay raises are handled.
The subject matter alone is certainly something no legislator, Republican or Democrat, wants to vote against. Moreover, the teacher pay issue could give comfort to nervous lawmakers who are unsure about supporting the rest of Landry’s tax-heavy package.
On the other hand, if you’re into gaming out all of the scenarios, the House and Senate could carve out the teacher pay proposal and pass it as a standalone reform, especially if lawmakers are unable to reach an agreement on the other 22 items on the governor’s special session agenda.
Teacher pay actually appears as the second item on Landry’s agenda, ahead of personal and corporate income taxes. But supportive lawmakers are quick to point out they’re backing the entire package.
“I’m going to shoot for the moon here,” says Senate Education Chair Rick Edmonds. “I’m going to go for the whole package and try to get all of it passed.”
Landry’s teacher pay proposal is complicated, but it does pull in and address the topic of unfunded accrued liability, which brings smiles to the faces of fiscal hawks.
Three trust funds that contain some $2 billion would be shut down. The funds have constitutional protection, so voters would have to approve doing so. The state would then use the money to pay down some of the Teachers’ Retirement System of Louisiana’s debt.
In exchange, school systems would be directed to use the money they save by not having to make related payments to give permanent raises to teachers at least equal to the $2,000 annual stipends educators had been getting that cost about $200 million per year.
“It’s like paying off a mortgage ahead of time,” says Trey Roche, TRSL’s executive counsel.
The money would be applied to the system’s two oldest debt schedules, for which the combined annual payments are almost $287 million, Roche says. It isn’t expected to be quite enough to pay off both schedules completely, but it’ll be close, Revenue Secretary Richard Nelson recently told lawmakers.
Edmonds sees the proposal as a win-win: give raises to teachers, while taking care of a significant chunk of the state’s retirement debt problem.
“We’re essentially refinancing some of the teacher retirement debt,” says Barry Erwin with the Council for a Better Louisiana. “And in the process of refinancing it, we get a windfall that we’re applying to the teacher pay raise.”
Some school boards in districts that have already found ways to give raises would like flexibility in how the extra cash is used. But the administration is adamant that districts should be constitutionally required to spend the money on raises.
“That’s the governor’s intent, and I know that’s the Legislature’s intent,” Edmonds says.
The teacher pay proposal might be seen as the sweetener that helps the rest of the package go down easier, though the governor’s camp says the plan as a whole is popular, noting that provisions that might have doomed it politically never made it into the package.
Offering an alternative take, Revenue and Fiscal Affairs Chair Franklin Foil recently told LaPolitics that it could be difficult to pass the entire package when the special session convenes Nov. 6 “because it’s just pretty quick and there are still a lot of unanswered questions.”
The administration wants legislators to treat their proposals as a single package. But in theory, lawmakers could pass the debt pay-down and teacher raise all by itself, Erwin says.
LaPolitics asked the Department of Education whether the debt savings would be enough to fund raises for teachers in every system statewide, and what the consequences would be to K-12 schools for losing the payments they’re currently getting from the funds that would be eliminated. The department’s spokesperson deferred to the governor’s spokesperson, who did not respond in time for publication.
Robin Cosenza with the Louisiana School Boards Association says the savings would not be enough to pay for raises for every district. She says the administration has indicated the state would contemplate providing additional assistance to those districts but has not provided details.
Nelson acknowledged to lawmakers last week that not every district would see enough savings to match the stipends teachers already are getting. He stressed the governor’s commitment to fund the difference, as well as funding permanent raises for charter schools and categories of support workers that don’t participate in the TRSL.
“The idea is to make sure that everybody gets the same pay raise at least that they’re getting right now [through stipends] permanently,” Nelson said.
He says the funds that would be eliminated currently provide about $51 million annually to schools, with half going to K-12 schools and half to higher ed. Under this plan, those revenue streams go away.
For example, almost $20 million per year goes to the Board of Regents Support Fund, which would be terminated, Regents spokesperson Chris Yandle says. Uses for that fund include grants for academic enhancements, faculty research, development projects, faculty recruitment and student scholarships, he says.
It would be up to the Legislature to decide whether, and how, to replace that revenue.
