HLS 12RS-328 ORIGINAL
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Regular Session, 2012
HOUSE BILL NO. 55
BY REPRESENTATIVE PEARSON
RETIREMENT/STATE SYSTEMS: Provides relative to final average compensation
AN ACT1
To amend and reenact R.S. 11:403(5) and 701(5)(b) through (e) and to enact R.S.2
11:701(5)(f) and Subpart P of Part II of Chapter 4 of Subtitle I of Title 11 of the3
Louisiana Revised Statutes of 1950, to be comprised of R.S. 11:331, relative to4
certain members of the Louisiana State Employees' Retirement System and certain5
postsecondary education members of the Teachers' Retirement System of Louisiana;6
to provide with respect to benefit calculation; to provide an effective date; and to7
provide for related matters.8
Notice of intention to introduce this Act has been published9
as provided by Article X, Section 29(C) of the Constitution10
of Louisiana.11
Be it enacted by the Legislature of Louisiana:12
Section 1. R.S. 11:403(5) and 701(5)(b) through (e) are hereby amended and13
reenacted and R.S. 11:701(5)(f) and Subpart P of Part II of Chapter 4 of Subtitle I of Title14
11 of the Louisiana Revised Statutes of 1950, comprised of R.S. 11:331, are hereby enacted15
to read as follows:16
SUBPART P. LEGISLATIVE INTENT17
§331. Legislative intent; certain acts18
The Legislature of Louisiana hereby declares that the intent of the provisions19
of this Title that were enacted by the Act that originated as House Bill No. __ of the20 HLS 12RS-328 ORIGINAL
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2012 Regular Session of the Legislature is to attain and maintain the actuarial1
soundness of state and statewide systems as required by the Constitution of2
Louisiana, Article X, Section 29.3
* * *4
§403. Definitions5
The following words and phrases used in this Chapter shall have the6
following meanings, unless a different meaning is clearly required by the context:7
* * *8
(5)(a)(i) "Average compensation", for a member any of the following9
members whose first employment making him eligible for membership in the system10
began on or before June 30, 2006, and for any person who receives an additional11
benefit pursuant to R.S. 11:444(A)(2)(b) or (c), 557, 582, or 602 or R.S. 24:36 whose12
first employment making him eligible for membership in one of the state systems13
occurred on or before December 31, 2010, means the average annual earned14
compensation of a state employee for the thirty-six highest months of successive15
employment, or for the highest thirty-six successive joined months of employment16
where interruption of service occurred; however, average compensation for part-time17
employees who do not use thirty-six months of full-time employment for average18
compensation purposes shall be based on the base pay the part-time employee would19
have received had he been employed on a full-time basis .:20
(aa) Public safety service employees referred to as "member" or "members"21
in R.S. 11:601(B).22
(bb) Peace officers employed by the Department of Public Safety and23
Corrections, office of state police, other than state troopers, as provided in R.S.24
11:444(A)(2)(b).25
(cc) Personnel employed by the Department of Revenue, office of alcohol26
and tobacco control, as provided in R.S. 11:444(A)(2)(c).27
(dd) Wildlife agents.28
(ee) Bridge police.29 HLS 12RS-328 ORIGINAL
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(ii) The earnings to be considered for the thirteenth through the1
twenty-fourth month shall not exceed one hundred twenty-five percent of the2
earnings of the first through the twelfth month. The earnings to be considered for the3
final twelve months shall not exceed one hundred twenty-five percent of the earnings4
of the thirteenth through the twenty-fourth month. Nothing in this Subparagraph,5
however, shall change the method of determining the amount of earned6
compensation received.7
(b)(i) "Average compensation", for a member any member not covered by the8
provisions of Subparagraph (a) of this Paragraph whose first employment making9
him eligible for membership in the system began on or after July 1, 2006, and subject10
to the limitations provided in this Subparagraph, means the average annual earned11
compensation of a state employee member for the sixty highest months of successive12
employment or for the highest sixty successive joined months of employment where13
interruption of service occurred; however, average compensation for part-time14
employees who do not use sixty months of full-time employment for average15
compensation purposes shall be based on the base pay the part-time employee would16
have received had he been employed on a full-time basis. This Item shall also be17
applicable to any judge, court officer, governor, lieutenant governor, clerk or18
sergeant-at-arms of the House of Representatives, secretary or sergeant-at-arms of19
the Senate, or state treasurer whose first employment making him eligible for20
membership in one of the state systems occurred on or after January 1, 2011.21
(ii) The earnings to be considered for persons to whom Item (i) of this22
Subparagraph applies for the thirteenth through the twenty-fourth month shall not23
exceed one hundred fifteen percent of the earnings of the first through the twelfth24
month. The earnings to be considered for the twenty-fifth through the thirty-sixth25
month shall not exceed one hundred fifteen percent of the earnings of the thirteenth26
through the twenty-fou rth month. The earnings to be considered for the27
thirty-seventh through the forty-eighth month shall not exceed one hundred fifteen28
percent of the earnings of the twenty-fifth through the thirty-sixth month. The29 HLS 12RS-328 ORIGINAL
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earnings for the final twelve months shall not exceed one hundred fifteen percent of1
the earnings of the thirty-seventh through the forty-eighth month. The limitations2
on the computation of average compensation contained in this Item shall not apply3
to any twelve-month period during which compensation increased by more than4
fifteen percent over the previous twelve-month period solely because of an increase5
in compensation by a uniform systemwide increase adopted by the state Department6
of Civil Service and approved by the governor or because of a pay adjustment7
enacted by the legislature. This Item shall also be applicable to any judge, court8
officer, member of the Louisiana Legislature, governor, lieutenant governor, clerk9
or sergeant-at-arms of the House of Representatives, secretary or sergeant-at-arms10
of the Senate, or state treasurer whose first employment making him eligible for11
membership in one of the state systems occurred on or after January 1, 2011.12
(iii) The provisions of this Subparagraph shall not apply to any person who13
receives an additional benefit pursuant to R.S. 11:444(A)(2)(b) or (c), 557, 582, or14
602 or R.S. 24:36 whose first employment making him eligible for membership in15
one of the state systems occurred on or after January 1, 2011.16
* * *17
§701. Definitions18
As used in this Chapter, the following words and phrases have the meanings19
ascribed to them in this Section unless a different meaning is plainly required by the20
context:21
* * *22
(5)23
* * *24
(b) "Average compensation", for any member who is an academic or25
administrative employee of a public institution of higher education, or who is an26
employee of the Board of Regents, the Board of Supervisors for the University of27
Louisiana System, the Board of Supervisors of Louisiana State University and28
Agricultural and Mechanical College, or the Board of Supervisors of Southern29 HLS 12RS-328 ORIGINAL
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University and Agricultural and Mechanical College, or their successors, or any1
other constitutionally established board which manages institutions of postsecondary2
education, notwithstanding any provision of Subparagraph (a) of this Paragraph,3
means his average earnable compensation for the sixty highest months of successive4
employment or for the highest sixty successive joined months of employment where5
interruption of service occurred. The computation of such average compensation6
shall be in accordance with the following guidelines:7
(i) The amount for the first through the twelfth month shall not exceed the8
compensation for the immediately preceding twelve months by more than fifteen9
percent.10
(ii) The amount for the thirteenth through the twenty-fourth month shall not11
exceed the lesser of the maximum allowable compensation amount or the actual12
compensation amount for the first through twelfth month by more than fifteen13
percent.14
(iii) The amount for the twenty-fifth through the thirty-sixth month shall not15
exceed the lesser of the maximum allowable compensation amount or the actual16
compensation amount for the thirteenth through twenty-fourth month by more than17
fifteen percent.18
(iv) The amount for the thirty-seventh through the forty-eighth month shall19
not exceed the lesser of the maximum allowable compensation amount or the actual20
compensation amount for the twenty-fifth through the thirty-sixth month by more21
than fifteen percent.22
(v) The amount for the final twelve months shall not exceed the lesser of the23
maximum allowable compensation amount or the actual compensation amount for24
the thirty-seventh through the forty-eighth month by more than fifteen percent.25
(c) The thirty-six or sixty months used for average compensation, as the case26
may be, cannot cover a period when the member receives more than three years or27
five years of service credit respectively.28 HLS 12RS-328 ORIGINAL
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(c) (d)(i) The limitations on the computation of average compensation in this1
Paragraph shall not apply to any of the twelve-month periods where compensation2
increased by more than the amount allowable in Subparagraph (a) Subparagraphs (a)3
and (b) of this Paragraph over the previous twelve-month period solely because of4
an increase in compensation by legislative act Act, by city/parish systemwide salary5
increase, or by a systemwide increase at a college or university.6
(ii) Any active member or retiree whose average compensation includes or7
would include earnable compensation received between June 30, 1995, and June 30,8
1997, as the result of a legislative act Act, a city/parish systemwide salary increase,9
or a systemwide increase at a college or university shall have his average10
compensation calculated without regard to the limitations on the computation of11
average compensation imposed in this Paragraph for that period. The provisions of12
this Item shall only apply to any such member or retiree whose employer filed with13
this system on or before July 1, 1998, a written request or application for coverage14
under this Subparagraph.15
(iii) Any retiree to whom Item (ii) of this Subparagraph applies, whose16
benefits are based, or by reason of Item (ii) of this Subparagraph would be based, on17
a calculation of average compensation which includes earnable compensation18
between June 30, 1995, and June 30, 1997, shall have his benefits recalculated in19
accordance with this Subparagraph and, if an increase in benefits results, the retiree20
shall be paid such an amount to restore any prior benefits that would have been paid21
if the benefits had originally been calculated in accordance with this Subparagraph.22
(d) (e) Provided, however, in any case where a classroom teacher changes23
employment to that of a classroom teacher in another parish, the amount for the24
twelve months of earnings in the position of a classroom teacher in the second parish25
of employment shall not exceed the compensation for the immediately preceding26
twelve months by more than twenty-five percent.27 HLS 12RS-328 ORIGINAL
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(e) (f) Notwithstanding any other provision of law to the contrary, "average1
compensation" shall not include any amount in excess of the limitation provided in2
R.S. 11:785.1.3
* * *4
Section 2. The provisions of R.S. 11:403(5) and 701(5) as amended by this Act shall5
not cause the average compensation of any member retiring on or after the effective date of6
this Act to be less than such member's average compensation as it existed before the7
effective date of this Act.8
Section 3. As soon as practicable after the effective date of this Act, the Public9
Retirement Systems' Actuarial Committee shall meet to adopt a revised valuation for the10
system, prepared as provided in R.S. 11:102, applying provisions contained in this Act. This11
valuation shall include a revised employer contribution rate for each plan within the system12
to be utilized in the fiscal year which begins on July 1, 2012. 13
Section 4. Any final judgment, rendered by a court of law, declaring the provisions14
of this Act to be unconstitutional as applicable to a particular group of members of the15
Louisiana State Employees' Retirement System or the Teachers' Retirement System of16
Louisiana, the provisions of this Act shall remain in effect and applicable to employees17
unrelated to the judgment.18
Section 5.(A) On June 30, 2012, this Act shall become applicable to members of the19
Louisiana State Employees' Retirement System and the Teachers' Retirement System of20
Louisiana who shall not be eligible for retirement by October 1, 2012.21
(B) On October 1, 2012, the provisions of this Act shall become applicable to other22
members of the Louisiana State Employees' Retirement System and the Teachers' Retirement23
System of Louisiana as provided in the Act.24
Section 6. The provisions of this Act shall become effective on June 30, 2012; if25
vetoed by the governor and subsequently approved by the legislature, this Act shall become26
effective on June 30, 2012, or on the day following such approval by the legislature,27
whichever is later.28 HLS 12RS-328 ORIGINAL
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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. 55
Abstract: Relative to the La. State Employees' Retirement System (LASERS) and the
Teachers' Retirement System of La. (TRSL) changes from a three-year to a five-year
Final Average Compensation (FAC) for state employees and higher education
employees.
Proposed law provides that it is the legislative intent of proposed law to attain and maintain
the actuarial soundness of state and statewide retirement systems as required by present
constitution (Art. X, §29).
AVERAGE COMPENSATI ON
Present law generally provides for a benefit calculation formula for members of each state
system typically consisting of: (years of service) x (accrual rate) x (final average
compensation).
Present law (R.S. 11:403(5) and 701(5)), relative to LASERS and TRSL, provides varying
periods of FAC for members of those systems ranging from three to five years. FAC periods
for LASERS and TRSL are as follows:
(1)LASERS: Rank-and-file members hired on or before June 30, 2006, have a three-
year FAC. Rank-and-file members hired after such date have a five-year FAC.
(2)LASERS: Special groups such as the governor, lieutenant governor, and legislators,
hired on or before Dec. 31, 2010, have a three-year FAC. Such members hired on
or after Jan. 1, 2011, have a five-year FAC.
(3)LASERS: Certain hazardous duty groups hired on or before Dec. 31, 2010, have a
three-year FAC. Such members hired on or after Jan. 1, 2011, have a five-year FAC.
(4)TRSL: Members hired on or before Dec. 31, 2010, have a three-year FAC. Members
hired on or after Jan. 1, 2011, have a five-year FAC.
Proposed law provides that all members of LASERS who are in "hazardous duty" jobs and
hired prior to June 30, 2006, shall retain the three-year FAC. For purposes of proposed law,
"hazardous duty" jobs are:
(1)Public safety service employees referred to as "member" or "members" in R.S.
11:601(B); peace officers employed by the Dept. of Public Safety and Corrections,
office of state police, other than state troopers, as provided in R.S. 11:444(A)(2)(b);
and personnel employed by the Dept. of Revenue, office of alcohol and tobacco
control, as provided in R.S. 11:444(A)(2)(c).
(2)Wildlife agents.
(3)Bridge police.
Proposed law further provides that all "non-hazardous duty" employees in LASERS, as
defined in proposed law, shall have a five-year FAC, regardless of the date of hire. Further HLS 12RS-328 ORIGINAL
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provides that higher education employees, as defined in proposed law, in TRSL shall have
a five-year FAC.
Proposed law requires the Public Retirement Systems' Actuarial Committee to meet to adopt
a revised valuation for the systems, prepared as provided in R.S. 11:102, applying provisions
contained in proposed law. The new valuation shall include a revised employer contribution
rate for each plan within the system to be utilized in the fiscal year which begins on July 1,
2012.
Proposed law provides a severability clause such that if a court declares any provisions of
proposed law to be unconstitutional as applicable to certain members of LASERS and TRSL,
then the provisions of the Act shall be applicable to the remaining members of the system.
Effective June 30, 2012.
(Amends R.S. 11:403(5) and 701(5)(b)-(e); Adds R.S. 11:701(5)(f) and 331)