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Regular Session, 2011
SENATE BILL NO. 6
BY SENATOR GAUTREAUX
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
TEACHERS RETIREMENT. Provides for continued payment of the unfunded accrued
liability portion of employer contributions after participation ceases. (6/30/11)
AN ACT1
To enact R.S. 11:887.1, relative to the Teachers' Retirement System of Louisiana; to provide2
for payment of unfunded accrued liability by an employer that withdraws some or3
all of its employees from the retirement system; to provide for all other withdrawal4
liabilities of such employers; to provide for determination of amount of withdrawal5
liability payment and collection of same; to provide an effective date; and to provide6
for related matters.7
Notice of intention to introduce this Act has been published.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 11:887.1 is hereby enacted to read as follows:10
ยง887.1. Unfunded accrued liability; payment by employing agency11
A.(1)(a) Notwithstanding any other provision of law to the contrary, if12
an employing agency is authorized by law to terminate its participation in the13
retirement system and terminates participation for all of its employees, such14
employing agency shall remit to the retirement system its proportionate share15
of any unfunded actuarial accrued liability of the retirement system, as further16
provided in this Section.17 SB NO. 6
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(b) Notwithstanding any other provision of law to the contrary, if an1
employing agency terminates its participation in the retirement system as2
authorized by administrative action, contract, or other legally authorized3
action, and terminates participation for all of its employees, any entity4
authorizing such termination shall remit to the retirement system the employing5
agency's proportionate share of any unfunded actuarial accrued liability of the6
retirement system, as further provided in this Section.7
(c) Notwithstanding any other provision of law to the contrary, if an8
employing agency whose employees are not members of the retirement system,9
hires any employee previously employed by another employing agency whose10
employees were members of the retirement system there shall be no obligation11
on the part of the hiring employing agency for any unfunded accrued liability12
resulting from the employee's previous employment.13
(2) Notwithstanding any other provision of law to the contrary, if an14
employing agency terminates its participation in the retirement system for some15
of its employees by eliminating positions held by such employees through16
privatization, the employer shall remit to the retirement system its17
proportionate share of any unfunded actuarial accrued liability, as further18
provided in this Section.19
(3)(a) Notwithstanding any other provision of law to the contrary, if a20
school or entity under an employer's jurisdiction is converted to any other21
governance model and, by administrative action, contract, or other legally22
authorized action, the prospective employing entity is permitted by the23
employer to terminate its participation or forgo participation in the retirement24
system, the employer shall remit to the retirement system the proportionate25
share of any unfunded actuarial accrued liability, as further provided in this26
Section.27
(b) Notwithstanding any other provision of law to the contrary, if a28
school or entity under an employer's jurisdiction is transferred to any other29 SB NO. 6
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entity and the receiving entity permits the prospective employing agency, as1
applicable, to terminate participation or forgo participation in the retirement2
system, the receiving entity shall remit to the retirement system the3
proportionate share of any unfunded actuarial accrued liability, as further4
provided in this Section.5
(4) For purposes of this Section, the following terms shall have the6
following meanings:7
(a) "Proportionate share of any unfunded accrued liability" shall mean8
the unfunded accrued liability, if any, which is attributable to benefits accrued9
by or granted to employees and retirees of the employing agency which was10
established during the period of time that the employing agency was a11
participating employer with the retirement system or, with respect to12
Paragraph (A)(3) of this Section, during the period of time the school or entity13
was under the employer's jurisdiction.14
(b) "Privatization" shall mean the elimination of positions eligible for15
membership in the retirement system without eliminating the services provided16
or delivered or the functions performed, and the outsourcing, contracting for17
the service or function with a private employer, or utilization of any other legal18
mechanism having the same effect, with the result that the service or function19
previously provided, delivered, or performed by an employee in a retirement20
system-covered position is now provided, delivered, or performed by a person21
or persons in positions which are not eligible for system coverage.22
B.(1) The actuary employed by the retirement system shall determine23
the amounts required to be remitted pursuant to this Section as of the June24
thirtieth immediately prior to the respective date of the termination of25
participation, elimination of positions, or conversion or transfer of the school26
or entity.27
(2)(a) Should the entity responsible for payment disagree with the28
amounts determined by the retirement system actuary, such entity may appeal29 SB NO. 6
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to the Public Retirement Systems' Actuarial Committee within thirty days of1
receipt of the invoice.2
(b) The legislative auditor shall perform an independent determination3
of the amounts due and in the event his calculation disagrees with that of the4
retirement system actuary, the committee shall meet and render a final5
determination. In the event the calculations agree, the invoice shall be due as6
provided in this Section.7
(3) The amounts due pursuant to this Section shall, at the option of the8
employing agency, be paid either in a lump sum or in equal monthly payments9
with interest at the retirement system's actuarial valuation rate amortized over10
ten years or less.11
C. Should an employing agency fail to make payment pursuant to this12
Section timely, the amount due shall be collected in the same manner as13
authorized by R.S. 11:886 and 887.14
Section 2. The provisions of this Act shall apply to any employing agency15
participating in the retirement system in any plan year ending on or after June 30, 2011.16
Section 3. This Act shall become effective on June 30, 2011; if vetoed by the17
governor and subsequently approved by the legislature, this Act shall become effective on18
June 30, 2011, or on the day following such approval by the legislature, whichever is later.19
The original instrument was prepared by Lauren Bailey. The following
digest, which does not constitute a part of the legislative instrument, was
prepared by Dawn Romero Watson.
DIGEST
Gautreaux (SB 6)
Present law does not provide for a mechanism for an employer to withdraw some or all of
its employees from the Teachers' Retirement System of Louisiana (TRSL).
Proposed law relative to TRSL provides that if an employing agency is authorized by law
to terminate its participation in the retirement system and terminates its participation for
some or all of its employees, such employing agency shall remit to the retirement system its
share of any unfunded accrued liability (UAL) of the retirement system existing on the June
30
th
immediately prior to the date of the employing agency's termination.
Proposed law defines "proportionate share of any unfunded accrued liability" and
"privatization" for purposes of proposed law. SB NO. 6
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Proposed law provides that the amounts due shall be determined by the actuary employed
by the system and shall be paid in a lump sum or amortized over ten years or less in equal
monthly payments with interest either at the retirement system's actuarial valuation rate, at
the option of the employer. Provides that the calculation shall account for any legacy costs
attributable to the employing agency's retirees.
Proposed law provides that should an employing agency fail to make payment the amount
due shall be collected in the same manner as authorized by present law (R.S. 11:886 and
887).
Effective June 30, 2011.
(Adds R.S. 11:887.1)
Summary of Amendments Adopted by Senate
Senate Floor Amendments to engrossed bill.
1. Adds definition for "privatization".