Louisiana House Bill HB530

Louisiana 2011 Regular Session

• Introduced: 4/25/11
• Refer: 4/25/11
• Report Pass: 5/25/11
• Engrossed: 6/7/11

Caption

Relative to state retirement systems, increases employee contributions and average compensation for calculation of benefits (RE -$346,000,000 APV)

Impact

The legislation has notable implications for the state's approach to retirement funding, likely affecting the financial obligations of both employees and employers. By transitioning to a five-year FAC calculation, the bill aims to mitigate the financial impact on the systems caused by actuarial gains. Moreover, it states that any actuarial savings must be directed towards reducing the UAL rather than diminishing the systems' normal cost. Such measures are projected to enhance the fiscal health of the retirement systems over time, although they may also lead to increased employee contributions starting from the specified effective date.

Summary

House Bill 530 introduces significant amendments to the Louisiana State Employees' Retirement System (LASERS) and the Teachers' Retirement System of Louisiana (TRSL), specifically aiming to increase employee contributions and adjust the formula for calculating benefits, shifting from a three-year to a five-year Final Average Compensation (FAC) for state employees and higher education staff. This adjustment intends to stabilize the financial framework of these retirement systems by addressing the Unfunded Accrued Liabilities (UAL) and ensuring that the systems remain solvent for future beneficiaries.

Sentiment

The sentiment surrounding HB 530 appears mixed. Supporters advocate for it as a necessary reform to bolster the retirement systems' finances and prevent shortfalls that could affect current and future retirees. Conversely, critics express concerns about the increased financial burden on employees, particularly how it may lead to dissatisfaction among state workers who might see their take-home pay decrease. The debate indicates a striking balance between ensuring the viability of retirement systems while managing employee expectations.

Contention

A point of contention within the discussions around HB 530 lies in its implications for current and future employees, especially regarding potential constitutional challenges related to changes in benefit calculations. The provisions state that if the bill is deemed unconstitutional, it would only apply to non-vested members, leaving a portion of employees potentially unaffected. This highlights a broader issue in public policy regarding employee rights and the state’s obligations towards vested benefits, complicating the dialogue about necessary reforms in the retirement system.