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Regular Session, 2011
HOUSE BILL NO. 332
BY REPRESENTATIVE PEARSON AND SENATOR GAUTREAUX
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
RETIREMENT/STATE-STWIDE: Relative to the Municipal Employees' Retirement
System (MERS), the Municipal Police Employees' Retirement System (MPERS),
and the Firefighters' Retirement System (FRS), implements the recommendations of
the Funding Review Panel by providing for board membership, benefit calculation,
maintaining employer contribution rates at certain amounts, and employee
contribution rates
AN ACT1
To amend and reenact R.S. 11:62(3) and (6), 108(B)(3)(b), (C), and (D)(introductory2
paragraph), 1732(15), 2213(4), 2225(A)(2)(a) and (6), and 2252(4), to enact R.S.3
11:107.2 and 108(F)(3), and to repeal R.S. 11:231(A)(4) and (7) and (C)(1)(b),4
relative to the Firefighters' Retirement System, the Municipal Employees' Retirement5
System, and the Municipal Police Employees' Retirement System; to provide relative6
to the funding of such systems; to implement the recommendations of the Funding7
Review Panel; to provide for membership of the boards of trustees; to provide for the8
setting of employer contribution rates under certain circumstances; to provide for9
employee contribution rates; to provide for benefit calculation; to provide for10
continuation of the duties of the Funding Review Panel; to provide an effective date;11
and to provide for related matters.12
Notice of intention to introduce this Act has been published13
as provided by Article X, Section 29(C) of the Constitution14
of Louisiana.15
Be it enacted by the Legislature of Louisiana:16
Section 1. R.S. 11:62(3) and (6), 108(B)(3)(b), (C), and (D)(introductory paragraph),17
1732(15), 2213(4), 2225(A)(2)(a) and (6), and 2252(4) are hereby amended and reenacted18
and R.S. 11:107.2 and 108(F)(3) are hereby enacted to read as follows: 19 HLS 11RS-409 ENGROSSED
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§62. Employee contribution rates established1
Employee contributions to state and statewide public retirement systems shall2
be paid at the following rates, except as otherwise provided by law:3
* * *4
(3) Firefighters' Retirement System - 8%. :5
(a) Any member whose earnable compensation is less than or equal to the6
poverty guidelines issued by the United States Department of Health and Human7
Services according to the size of the member's family unit - 8%.8
(b) Any member whose earnable compensation is more than the poverty9
guidelines issued by the United States Department of Health and Human Services10
according to the size of the member's family unit:11
If the total contribution12
for the fiscal year expressed13
as a percentage of payroll after14
applying all required tax The employee contribution15
contributions is: shall be:16
21.0% or below 8.0%17
21.01% to 21.75% 8.25%18
21.76% to 22.5% 8.5%19
22.51% to 23.25% 8.75%20
23.26% to 24.0% 9.0%21
24.01% to 24.75% 9.25%22
24.76% to 25.5% 9.5%23
25.51% to 26.25% 9.75%24
26.26% or above 10.0%25
* * *26
(6) Municipal Police Employees' Retirement System - 8%. :27 HLS 11RS-409 ENGROSSED
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(a) Any member whose earnable compensation is less than or equal to the1
poverty guidelines issued by the United States Department of Health and Human2
Services according to the size of the member's family unit - 7.5%.3
(b) Any member whose earnable compensation is more than the poverty4
guidelines issued by the United States Department of Health and Human Services5
according to the size of the member's family unit:6
If the total contribution7
for the fiscal year expressed8
as a percentage of payroll after9
applying all required tax The employee contribution10
contributions is: shall be:11
21.0% or below 7.5%12
21.01% to 21.75% 7.75%13
21.76% to 22.5% 8.0%14
22.51% to 23.25% 8.25%15
23.26% to 24.0% 8.5%16
24.01% to 24.75% 8.75%17
24.76% to 25.5% 9.25%18
25.51% to 26.25% 9.5%19
26.26% to 27.0% 9.75%20
27.01% or above 10.0%21
* * *22
§107.2. Employer contributions; maintaining rates; reducing rate decreases;23
Firefighters' Retirement System; Municipal Police Employees' Retirement24
System25
A. The provisions of this Section shall apply to the following statewide26
public retirement systems or funds, hereinafter referred to in this Section as27
"systems":28
(1) The Firefighters' Retirement System.29 HLS 11RS-409 ENGROSSED
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(2) The Municipal Police Employees' Retirement System.1
B. Notwithstanding the provisions of R.S. 11:103 and 104, in any fiscal year2
during which the recommended net direct employer contribution rate would3
otherwise be decreased for any system, the board of trustees of the system is hereby4
authorized to either:5
(1) Maintain the previous fiscal year's net direct employer contribution rate6
at the time that the decrease would otherwise occur according to R.S. 11:103.7
(2) Set the employer contribution rate at any point between the previous8
year's net direct employer contribution rate and the recommended net direct9
employer contribution rate that would otherwise occur pursuant to R.S. 11:103.10
C. Any excess funds resulting from the board's exercise of its authority11
pursuant to Subsection B of this Section shall be combined with any contribution12
surplus, or offset by any contribution shortfall, and the resulting balance, if greater13
than zero, shall be applied, until exhausted, exclusively for and in the order of the14
following purposes:15
(1) To reduce the outstanding balance of any unfunded accrued liability16
existing as of the end of Fiscal Year 1988-1989, if any; however, the future payments17
for such unfunded accrued liability shall continue to be made according to the18
original amortization schedule established in compliance with the requirements of19
Article X, Section 29(E)(3) of the Constitution of Louisiana until the outstanding20
balance is fully liquidated.21
(2) To reduce the outstanding amortization charge base or bases with the22
greatest number of outstanding payments; however, the future payments on the base23
or bases shall continue to be made according to the original amortization schedule24
until the outstanding balance is fully liquidated.25
D. The board's exercise of its authority pursuant to Subsection B of26
thisSection shall not cause the employer contribution rate to exceed fifteen percent27
in any fiscal year.28 HLS 11RS-409 ENGROSSED
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§108. Funding Review Panel1
* * *2
B. The panel shall be composed of two committees, the advisory committee3
of seven members and the recommendations committee of seven members.4
* * *5
(3)6
* * *7
(b) At the first meeting in Fiscal Year 2010-2011, and at the first meeting in8
each fiscal year thereafter, the panel shall elect from the members of the9
recommendations committee a chairman and vice chairman of the panel. If the state10
treasurer is elected chairman or vice chairman, his designee shall serve in such office11
at any meeting of the panel at which he represents the treasurer.12
* * *13
C.(1) The panel shall meet not less than monthly if practical. The treasurer14
shall call the first meeting of the panel on or before August 31, 2005, and shall15
preside until the panel elects a chairman and vice chairman.16
(2) The treasurer shall call the first meeting for Fiscal Year 2010-2011 on or17
before August 31, 2010. The treasurer or his designee shall preside until the panel18
elects a chairman and vice chairman.19
(3) The treasurer shall call the first meeting in each fiscal year on or before20
August thirty-first. The treasurer or his designee shall preside until the panel elects21
a chairman and vice chairman.22
D. The panel shall undertake a continuous and comprehensive review of the23
actuarial funding and benefit structure of the Firefighters' Retirement System, the24
Municipal Employee s' Retirement System, and the Municipal Police Employees'25
Retirement System, including but not limited to the following:26
* * *27
F.28
* * *29 HLS 11RS-409 ENGROSSED
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(3) On or before February first, in even-numbered years, and on or before1
March first, in odd-numbered years, the panel shall submit to the House and Senate2
committees on retirement and to the legislative auditor a report containing its3
recommendations for increasing the actuarial soundness of each system and for4
providing an affordable benefit for members of each system.5
* * *6
§1732. Definitions7
The following words and phrases, as used in this Chapter, unless a different8
meaning is plainly required by the context, shall have the following meaning:9
* * *10
(15)(a) "Final compensation", for a member whose first employment making11
him eligible for membership in the system began on or before June 30, 2006, means12
the average monthly earnings during the highest thirty-six consecutive months or13
joined months if service was interrupted. The earnings to be considered for the14
thirteenth through the twenty-f ourth months shall not exceed one hundred15
twenty-five fifteen percent of the earnings for the first through the twelfth months.16
The earnings to be considered for the final twelve months shall not exceed one17
hundred twenty-five fifteen percent of the earnings of the thirteenth through the18
twenty-fourth months.19
(b) "Final compensation", for a member whose first employment making him20
eligible for membership in the system began on or after July 1, 2006, means the21
average monthly earnings during the highest sixty consecutive months or joined22
months if service was interrupted. The earnings to be considered for the thirteenth23
through the twenty-fourth months shall not exceed one hundred twenty-five fifteen24
percent of the earnings for the first through the twelfth months. The earnings to be25
considered for the twenty-fifth through the thirty-sixth month shall not exceed one26
hundred twenty-five fifteen percent of the earnings for the thirteenth through the27
twenty-fourth month. The earnings to be considered for the thirty-seventh through28
the forty-eighth month shall not exceed one hundred twenty-five fifteen percent of29 HLS 11RS-409 ENGROSSED
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the earnings for the twenty-fifth through the thirty-sixth month. The earnings to be1
considered for the final twelve months shall not exceed one hundred twenty-five2
fifteen percent of the earnings of the thirty-seventh through the forty-eighth month.3
* * *4
§2213. Definitions5
The following words and phrases, as used in this Subpart, unless a different6
meaning is plainly required by context, shall have the following meaning:7
* * *8
(4) "Average final compensation" shall mean the average annual earned9
compensation of an employee for any period of thirty-six successive or joined10
months of service as an employee during which the said earned compensation was11
the highest. In case of interruption of employment, the thirty-six month period shall12
be computed by joining employment periods immediately preceding and succeeding13
the interruption. The earnings to be considered for the thirteenth through the14
twenty-fourth months shall not exceed one hundred fifteen percent of the earnings15
for the first through the twelfth months. The earnings to be considered for the final16
twelve months shall not exceed one hundred fifteen percent of the earnings of the17
thirteenth through the twenty-fourth months.18
* * *19
§2225. Administration20
A. Board of trustees:21
* * *22
(2)(a) The board shall consist of eleven fifteen trustees as follows: Seven23
members, three of whom shall not be chiefs of police but shall be active contributing24
members of the system with ten or more years of creditable service, and four of25
whom shall be active contributing chiefs of police, with four or more years of26
creditable service provided that no municipal police department shall have more than27
one member and one chief of police on the board at the same time, and two of whom28
shall be; Two regular retirees of the system, one retired from Chiefs District I and29 HLS 11RS-409 ENGROSSED
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one retired from Chiefs District II as those districts are comprised in Subparagraphs1
(b) and (c) of this Paragraph, Paragraph; and Four exofficio trustees to include the2
chairman of the House of Representatives Committee on Retirement or his designee,3
and the chairman of the Senate Committee on Retirement or his designee, the4
commissioner of administration or his designee, and the state treasurer or his5
designee; and two mayors appointed by the Louisiana Municipal Association from6
municipalities having police departments participating in the system, to serve at the7
pleasure of the Louisiana Municipal Association. The retired trustees shall be8
elected by the retired members of the system for a term of five years with the first9
retired trustees' terms to commence on July 1, 1997. Whenever the term of a board10
member expires, the term of the newly elected board member shall be for a term of11
five years. The director of the retirement system shall be selected by the eleven12
members of the board board of trustees. Election of members shall be under such13
rules and regulations as the board of trustees shall establish.14
* * *15
(6) Each trustee shall be entitled to one vote on the board. Six Eight trustees16
shall constitute a quorum for any board meeting, and a majority vote of the trustees17
present shall be necessary for a decision by the trustees at any meeting of the board.18
* * *19
§2252. Definitions20
The following words and phrases, as used in this Chapter, unless a different21
meaning is plainly required by context, shall have the following meaning:22
* * *23
(4) "Average final compensation" shall mean the average annual earned24
compensation of an employee for any period of thirty-six successive or joined25
months of service as an employee during which the said earned compensation was26
the highest. In case of interruption of employment, the thirty-six month period shall27
be computed by joining employment periods immediately preceding and succeeding28
the interruption. The earnings to be considered for the thirteenth through the29 HLS 11RS-409 ENGROSSED
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twenty-fourth months shall not exceed one hundred fifteen percent of the earnings1
for the first through the twelfth months. The earnings to be considered for the final2
twelve months shall not exceed one hundred fifteen percent of the earnings of the3
thirteenth through the twenty-fourth months.4
* * *5
Section 2. R.S. 11:231(A)(4) and (7) and (C)(1)(b) are hereby repealed in their6
entirety.7
Section 3. The provisions of R.S. 11:1732(15), 2213(4), and 2252(4) as amended by8
this Act shall not cause the average compensation of any member retiring on or after the9
effective date of this Act to be less than such member's average compensation as it existed10
before the effective date of this Act.11
Section 4. This Act shall become effective on July 1, 2011; if vetoed by the governor12
and subsequently approved by the legislature, this Act shall become effective on July 1,13
2011, or on the day following such approval by the legislature, whichever is later.14
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Pearson HB No. 332
Abstract: Relative to the Firefighters' Retirement System (FRS), the Municipal Employees'
Retirement System (MERS), and the Municipal Police Employees' Retirement
System (MPERS), implements the recommendations of the Funding Review Panel
(FRP) by providing for board membership, employer contributions, employee
contributions, changes to "anti-spiking" provisions, and providing for the
continuation of the duties of the FRP.
Present law (R.S. 11:108) establishes the FRP to study funding and benefit provisions of
FRS, MERS, and MPERS, including but not limited to retirement eligibility, benefit
calculation, contributions, actuarial assumptions, and cost-of-living adjustment criteria, and
to report findings and recommendations to the House and Senate committees on retirement
and to the legislative auditor on or before March 15, 2011.
Proposed law provides that the FRP shall meet continuously in fulfillment of its duties and
shall issue reports to the House and Senate committees on retirement and to the legislative
auditor annually.
Board Membership (MPERS)
Present law (R.S. 11:2225(A)) provides for 11 members of the MPERS board of trustees as
follows: HLS 11RS-409 ENGROSSED
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(1)Three active members who are not chiefs of police.
(2)Four active members who are chiefs of police.
(3 Two retirees.
(4)The chairman of the House Committee on Retirement.
(5)The chairman of the Senate Committee on Retirement.
Proposed law provides for four additional members on the MPERS board of trustees:
(1)The commissioner of administration.
(2)The state treasurer.
(3)Two mayors appointed by the Louisiana Municipal Association (LMA)
Employer Contributions (FRS and MPERS)
Proposed law (R.S. 11:107.2) permits the FRS and MPERS boards, in any year in which the
recommended net direct employer contribution rate would decrease from the previous fiscal
year, to maintain the previous year's employer contribution rate or to set the rate for the
upcoming fiscal year somewhere between the previous year's rate and the recommended rate.
Proposed law further provides that any excess funds resulting from the FRS and MPERS
boards exercise of authority pursuant to proposed law may be used for the following
purposes and in the following order:
(1)To reduce the outstanding balance of any unfunded accrued liability (UAL) existing
as of the end of FY 1988-1989, if any.
(2)To reduce the outstanding UAL amortization charge base or bases with the greatest
number of outstanding payments.
Employee Contributions (FRS and MPERS)
Present law (R.S. 11:62) requires employee contributions of 8% for members of FRS and
7.5% for members of MPERS.
Proposed law retains the employee contribution rates in present law for members of FRS and
MPERS whose earned compensation is below the poverty level as provided by the U.S.
Dept. of Health and Human Services. For members whose earned compensation is above
the poverty level, the employee contribution shall fluctuate depending on the combined
system rate of employer and employee contributions according to the following schedule:
FRS
If the total contribution
for the fiscal year expressed
as a percentage of payroll is: The employee rate shall be:
21.0% or below 8.0%
21.01% to 21.75% 8.25%
21.76% to 22.5% 8.5%
22.51% to 23.25% 8.75%
23.26% to 24.0% 9.0%
24.01% to 24.75% 9.25% HLS 11RS-409 ENGROSSED
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24.76% to 25.5% 9.5%
25.51% to 26.25% 9.75%
26.26% or above 10.0%
MPERS
If the total contribution
for the fiscal year expressed
as a percentage of payroll is: The employee rate shall be:
21.0% or below 7.5%
21.01% to 21.75% 7.75%
21.76% to 22.5% 8.0%
22.51% to 23.25% 8.25%
23.26% to 24.0% 8.5%
24.01% to 24.75% 8.75%
24.76% to 25.5% 9.25%
25.51% to 26.25% 9.5%
26.26% to 27.0% 9.75%
27.01% or above 10.0%
Anti-spiking (FRS, MERS, and MPERS)
Present law (R.S. 11:1732(15)), relative to MERS, provides that, for purposes of retirement
benefit computation, average compensation of a member hired on or before June 30, 2006,
shall be based on the 36 highest successive months of employment or on the highest 36
successive joined months of employment where interruption of service occurred. The
earnings to be considered for the first, second, and last 12-month period shall not increase
by more than 25% (anti-spiking provisions) over the previous 12-month period.
Present law, relative to MERS provides that, for any member hired on or after July 1, 2006,
average compensation shall be calculated over a 60-month period, and the anti-spiking
provisions prohibit a year-over-year increase in earnings of more than 25% each year of such
period.
Present law (R.S. 11:231 and 2213(4)), relative to MPERS, provides that, for purposes of
retirement benefit computation, average compensation of a member shall be based on the
36 highest successive months of employment or on the highest 36 successive joined months
of employment where interruption of service occurred. The earnings to be considered for the
first, second, and last 12-month period shall not increase by more than 25% (anti-spiking
provisions) over the previous 12-month period.
Present law (R.S. 11:2252(4)), relative to FRS, provides that, for purposes of retirement
benefit computation, average compensation of a member shall be based on the 36 highest
successive months of employment or on the highest 36 successive joined months of
employment where interruption of service occurred. No anti-spiking provisions apply.
Proposed law retains present law with regard to calculating average compensation, but
imposes 15% anti-spiking in calculating the benefits for members of FRS, MERS, and
MPERS.
Proposed law further provides, as a transition provision, that proposed law shall not cause
the average compensation of any member retiring on or after the effective date of proposed
law to be less than such member's average compensation as it existed under present law.
Effective July 1, 2011.
(Amends R.S. 11:62(3) and (6), 108(B)(3)(b), (C), and (D)(intro. para.), 1732(15), 2213(4), HLS 11RS-409 ENGROSSED
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2225(A)(2)(a) and (6), and 2252(4); Adds R.S. 11:107.2 and 108(F)(3); Repeals R.S.
11:231(A)(4) and (7) and (C)(1)(b))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Retirement to the original
bill.
1. Adds the membership of the MPERS board of trustees two mayors appointed by
the Louisiana Municipal Association.