Louisiana school boards lose first round over retirement system

If employers stay in the business long enough and continue to employ people to run that business, employment litigation is likely to arise at some point. Employment law issues are a natural result of business but employers should understand that there are options other than winding up in a courtroom every time a claim is raised. Disagreements and other issues can be dealt with through settlement discussions, arbitration and even mediation. When the discussion process breaks down, that is when parties may find themselves in court.

A recent employment issue related to retirement benefits was heard in court. School boards across the state of Louisiana filed a lawsuit against the state’s retirement system because the school boards felt that they shouldn’t have to use funds from the Minimum Foundation Program (MFP) to pay their employer’s contributions to Louisiana’s retirement system.

MFP provides basic aid annually to public schools for operations costs and teacher pay.

At the heart of the dispute is whose obligation it is to pay the employer’s share of contributions to the retirement system: the state or each individual school board. The 47 school boards that filed suit feel that the state’s legislature should create a separate fund to pay the employer’s contributions directly into the system.

A district judge dismissed the lawsuit. The judge felt that the legislature was already funding the employer’s contributions through the MFP and that there was plenty of funding in the MFP to cover all normal costs of running the school, in addition to employer’s contributions. The Louisiana School Boards Association is considering an appeal.

Although not all employers have the MFP available to cover employer’s contributions to a retirement plan, this case demonstrates how issues around retirement benefits do occur. Employers provide benefits to employees at a cost. Employers facing a lawsuit over retirement or other benefits should seek counsel from an attorney with a background in these matters.

Source: The Advocate, “Appeal considered in retirement system case,” Joe Gyan Jr., April 19, 2013