Lafayette files suit against Municipal Employees' Retirement System of Louisiana
Lafayette Consolidated Government (LCG) has filed a lawsuit against the Municipal Employees Retirement System (MERS) of Louisiana on the basis of MERS' recent demand in the amount of $14,787,012 for unfunded accrued liability (UAL).
According to an actuary, MERS is incorrectly calculating the unfunded accrued liability. The Lafayette Consolidated Government states MERS’ calculation is grossly inaccurate and requests the court review and declare a correct calculation of any amount that may be owed by the Lafayette Consolidated Government to MERS.
The Lafayette Consolidated Government has requested a declaratory judgment for the suit, which is a binding judgment from a court defining the legal relationship between both parties and their rights.
In 2010, LCG moved new employees from the Parochial Employees’ Retirement System of Louisiana (PERS) to the Municipal Employees Retirement System of Louisiana. Since that time, MERS’ rates have increased significantly, causing LCG’s contribution requirements to double. For the benefit of employees and taxpayers, the Lafayette Consolidated Government again changed retirement systems for the new employees back to PERS beginning in November 2020. Employees who were hired before this date remained members of Municipal Employees Retirement System of Louisiana.
Both moves in 2010 and in 2020 required successful legislative action which passed in 2020 (Louisiana ACT 298). Subsequently, Lafayette Consolidated Government acknowledged financial responsibility for the UAL for retirees and has made payments totaling more than $2.9m in good faith since the legislation passed.
This matter was escalated last week when the Municipal Employees Retirement System of Louisiana board of trustees requested that the State Treasurer or any department or agency of the State withhold funds from the LCG as payment due to incorrect UAL amount. Lafayette Consolidated Government officials maintain they have been working in good faith with MERS to agree on the correct amount owed for retirees.
Chief Administrative Officer Cydra Wingerter said, “During the past two years, we have worked through the list of employees submitted by MERS. We have both been able to agree on who should be properly included and the correct UAL due. In many cases, the agreed upon list was significantly less than the amount initially claimed by MERS.” In an effort to fairly solve this matter, the Lafayette Consolidated Government requested the court intervene with a declaratory judgment to set the amount that is due and the correct method of calculating the UAL going forward.
LCG acknowledges its financial responsibility for its retirees’ UAL as dictated in ACT 298. According to City-Parish Attorney Greg Logan, “MERS is taking an aggressive position based on incorrect application of the statutes and normally accepted actuarial methods. We have an obligation to pay the appropriate actuarial UAL for certain employees up to the day they separated from service.” Logan continued, “However, MERS is seeking UAL on employees that should not be included; and therefore, their calculations are wrong as they are based on the wrong assumptions.”
LCG maintains it has paid for vested members. “MERS is failing to take into account the companion statute, and they are attempting to saddle LCG with MERS costs not owed by LCG,” Logan stated.
According to LCG’s retirement records, a substantial number of non-vested employees withdrew their employee contribution upon leaving LCG’s employment. Under this circumstance, MERS retains the employer contributions and the earnings and experiences no UAL as a result because the employee surrendered their future returns or benefits.
In March of 2020, both City and Parish Councils unanimously passed an ordinance allowing for new employees to join PERS. As required in that local ordinance, the Councils have been provided regular, timely updates as necessary on the UAL payments to MERS totaling $2,925,804.13.
This article originally appeared on Lafayette Daily Advertiser: Municipal Employees Retirement System of Louisiana is facing a lawsuit
