FAQs

Category: New Orleans

What's the New Orleans leave conversion lawsuit against MPERS all about?

In short, it's all about the City denying valuable retirement benefits to almost every single one of its police officers who retired on or after January 22, 2007.

On January 22, 2007, the New Orleans City Council enacted Ordinance 22493 M.C.S. irrevocably electing coverage under La. R.S. 11:2218(J), thus requiring the City to convert its retiring MPERS members’ uncompensated leave to MPERS retirement service credit.

Since Ordinance No. 22493 became effective, the City has not converted all unused earned sick leave accrued and accumulated by employees for which payment was not made at the time of retirement, as required by state law. From January 22, 2007 until May 12, 2013, no retiring MPERS member employed by the City received any retirement service credit for unused sick leave.

One member who retired on May 12, 2013 received such credit (many years later, and only after suing the City), but from May 13, 2013 until June 29, 2021, no MPERS member employed by the City received service credit for unused sick leave.

In 2021, MPERS researched the City's civil service leave rules and determined that, in its opinion, just about all (everyone but those who burned through all sick leave or already earned a maximum benefit equal to one hundred percent of their average final compensation) of its retiring police officers have been getting shortchanged by the City. The bottom line is that, reading MPERS' leave conversion law in conjunction with the City's civil service leave rules, retiring officers MUST get cashed out for the maximum amount possible under the civil service rules before any leave can be converted to MPERS retirement service credit. The leave that must be converted to MPERS retirement service credit is that which is left over, which turns out to be the portion of the sick leave that the City cannot legally pay the retiring officer for at the time of retirement. Annual leave doesn't come into play, because a retiring City police officer can receive cash for all of that leave.

Of course, the City would like the portion of sick leave that it "magically washes away" to stay in City coffers rather than be converted to MPERS retirement service credit. However, no one forced the City to irrevocably adopt the ordinance mandating leave conversion. Presumably, it did so in hopes that officers would take less sick leave, because they could rest assured that they'd be fully compensated in the long run. In fact, that sounds like an excellent policy for a City that is losing over 50 police officers every year but hopes to stem the tide.

At any rate, shortly after MPERS attempted to enforce the law correctly, New Orleans sued MPERS and lost (see the update below).

As of August 8, 2023, only approximately 25 total retiring MPERS members employed by the City have received any retirement service credit for unused sick leave. The City likely shortchanged most (if not all) of those 25 retiring members on their cash payout in order to “compensate” for the unused sick leave that was converted to MPERS retirement service credit.

Given the City's refusal to properly compensate retiring New Orleans police officers, MPERS strongly encourages all of these individuals to consult with their own private attorney before retiring. And if you are interested, you can review MPERS' Motion for Partial Summary Judgment and associated documents.

Update: On December 12, 2023, Judge Johnson signed a judgment declaring that MPERS' interpretation of Ordinance 22493 M.C.S. and La. R.S. 11:2218(J) is correct. Basically, if you retire from the City of New Orleans, then you must receive the maximum cash payout for terminal annual and sick leave. The terminal sick leave that New Orleans can't pay you must be converted to MPERS retirement credit (up to the amount that would provide you a maximum benefit equal to one hundred percent of your average final compensation). The maximum amount of sick leave that can be converted to retirement service credit is 272 days, which converts to 1.1 years of service credit. The actual amount that you must convert depends on how many sick leave hours you have at retirement. New Orleans must pay MPERS for the entire cost of the conversion in order for credit to be granted.

MPERS expects the City to file a suspensive appeal, which will delay the application of Judge Johnson's judgment. However, MPERS expects to prevail in the long run.

Also, the judgment was a partial summary judgment that did not address the prescriptive period (statute of limitations) issue. If MPERS prevails, the courts will have to decide how far the City must go back to rectify the situation.

What's the New Orleans retention payments lawsuit against MPERS all about?

In short, it's all about the City denying its police officers valuable retirement (and disability and survivor) benefits (noticing a trend here?).

As you likely know, the City has adopted a plan under which it makes certain recruitment and retention incentive payments to its police officers.

La. R.S. 11:2213(10) broadly defines earnable compensation for MPERS members as “the full amount of compensation earned by an employee for a given month, including supplemental pay paid by the state of Louisiana, but shall not include overtime.” Common sense and a plain reading of the law dictates that the recruitment and retention incentive payments are earnable compensation. Louisiana's attorney general believes so, and has since 1977. This means that both the police officers and the City must pay contributions on the compensation. The payments will fund overall higher retirement, disability, and survivor benefits for the City's police officers.

However, we assume the City didn't do its homework and budget for the employer contributions associated with the incentive payments that would be required to be paid. Or maybe it just didn't want to pay. But the City did pay at least some of the contributions, and then turned around and sued MPERS on May 17, 2023. MPERS answered, asserted affirmative defenses, and made counterclaims against the City. MPERS has no idea when this frivolous lawsuit will be resolved.

Obviously, if the City doesn't report recruitment and retention payments to MPERS as earnable compensation and pay contributions thereon, it will result in lower benefits for the City's police officers. Therefore, MPERS strongly encourages New Orleans police officers to monitor their payroll stubs like a hawk and to email our CFO, Taylor Camp, if employee contributions are not being withheld on recruitment and retention incentive payments.

What are the New Orleans Police Department partial dissolutions all about?

As of June 30, 2022, the unfunded actuarial accrued liability ("UAAL") was $788,517,441. That figure represents the actuarial present value of benefits payable to members of the fund less the present value of future normal costs attributable to the members. It is not MPERS' debt. It is debt owed by all participating MPERS employers (including New Orleans) to MPERS to fund benefit payments.

The normal cost is that portion of the actuarial present value of MPERS benefits and expenses allocated to a valuation year by the actuarial cost method. This is analogous to one year’s insurance premium. If employers only paid the normal cost each year, then the UAAL will never be paid off. In fact, Louisiana law generally requires any UAAL, once created, to be paid off by employers over a 15-year period.

How are these payments determined? As a percentage of payroll (technically, "earnable compensation"). But what happens if an employer like New Orleans goes from having a high payroll in one year to a very low payroll in the following year (because many officers quit or retired)? Well, the annual "loan payments" that are required to pay off the $788,517,441 don't go down. However, the amount that New Orleans pays does. So, who pays for the portion of the debt payment that New Orleans otherwise would have paid? Mostly, all of the other employers (Baton Rouge, Gretna, Kenner, etc.).

That's not really fair, so the Legislature enacted a law to partially rectify this situation. In New Orleans' case, the law is "triggered" by dropping by at least 50 officers from one June 30th to the next. Each June 30th that the City loses at least 50 officers ("partially dissolves"), it becomes directly responsible for another layer of a portion of the UAAL that it alone will pay over a 15 year period. This helps offset the debt that's payable by the remaining employers.

Notably, the law has a mechanism for New Orleans to cease liability for at least part of the debt payments should it increase the amount of officers by at least 50.

How does all of this affect or potentially affect your retirement check? It shouldn't, and definitely hasn't.

Has New Orleans made partial dissolution payments to MPERS? So far, they have. But they haven't paid them timely (even after MPERS' board of trustees offered to waive the interest if they did so and agreed to automatically pay electronically each month going forward). The City passed on the offer and didn't pay timely. Therefore, it had to pay MPERS interest.

Based upon recent news articles, it appears that Mayor Cantrell and her administration have promised to sue MPERS on the issue, merely because they don't like the partial dissolution statute. If it happens, MPERS will take all appropriate action against the City and any of its attorneys who sign off on a frivolous lawsuit.

 

If I retire from MPERS and go back to work for the NOPD in a non-officer capacity, will my retirement benefits be stopped?

On March 6, 2023, the Attorney General issued La. Atty. Gen. Op. No. 21-0062 about employees required to be enrolled in MPERS. In addition to police officers, any employee (1) who is employed full-time in the police services of a municipality, (2) who is under the direction of a chief of police (including, but not limited to, the superintendent of the New Orleans Police Department), (3) who is paid from the budget of the applicable police department, and (4) whose duties call for services to be rendered by one person must be enrolled in MPERS. Individuals meeting these criteria are eligible for membership in MPERS without regard to whether their positions fall within the classified or unclassified service.

Any MPERS retiree who is re-hired by the NOPD as a full-time employee in a civilian capacity on or after the opinion date of March 6, 2023 (or who first began working at least an average of thirty hours per week on or after March 6, 2023) must have their MPERS retirement benefit stopped and be re-enrolled into MPERS. 

If you don't want this to happen, don't work at least an average of thirty hours per week. Inform the City that you can only work a maximum of 29 hours per week and have them schedule you that way.

Full-time, for MPERS purposes, means an average of thirty hours per week. Apparently, the City's definition is thirty-five hours, and City employees are providing incorrect information to retired officers who are rehired in a civilian capacity.