SLS 12RS-125 RE-REENGROSSED Page 1 of 8 Coding: Words which are struck through are deletions from existing law; words in boldface type and underscored are additions. Regular Session, 2012 SENATE BILL NO. 52 BY SENATOR GUILLORY RETIREMENT SYSTEMS. Increases the employee contribution rate for certain members of state retirement systems. (7/1/12) AN ACT1 To amend and reenact R.S. 11:62(5)(a), (c), and (e) and (11)(c) and to enact R.S.2 11:62(11)(d) and 102(D), relative to certain members of the Louisiana State3 Employees' Retirement System and certain postsecondary education members of the4 Teachers' Retirement System of Louisiana; to increase employee contribution rates;5 and to provide for related matters.6 Notice of intention to introduce this Act has been published.7 Be it enacted by the Legislature of Louisiana:8 Section 1. R.S. 11:62(5)(a), (c), and (e) and (11)(c) are hereby amended and9 reenacted and R.S. 11:62(11)(d) and 102(D) are hereby enacted to read as follows:10 §62. Employee contribution rates established11 Employee contributions to state and statewide public retirement systems shall12 be paid at the following rates, except as otherwise provided by law:13 * * *14 (5) Louisiana State Employees' Retirement System:15 (a) Judges, court officers, the governor, lieutenant governor, and legislators:16 (i) Judges and court officers whose first employment making them17 SB NO. 52 SLS 12RS-125 RE-REENGROSSED Page 2 of 8 Coding: Words which are struck through are deletions from existing law; words in boldface type and underscored are additions. eligible for membership in one of the state systems occurred on or before1 December 31, 2010 - 11.5%.2 (ii) Employees , other than judges and court officers in Item (i) of this3 Subparagraph, whose first employment making them eligible for membership in4 one of the state systems occurred on or before December 31, 2010 - :5 (aa) Until the later of June 30, 2014, or the date in (bb) - 11.5%.6 (bb) Beginning the July first following the employee's first merit increase7 of a minimum of four percent awarded on or after July 2, 2013, the employee's8 contribution rate shall increase by 0.5% each fiscal year for four consecutive9 years.10 (ii) (iii) Employees, other than judges in Item (iii) (iv) of this Subparagraph,11 whose first employment making them eligible for membership in one of the state12 systems occurred on or after January 1, 2011 - :13 (aa) Until the later of June 30, 2014, or the date in (bb) - 8%.14 (bb) Beginning the July first following the employee's first merit increase15 of a minimum of four percent awarded on or after July 2, 2013, the employee's16 contribution rate shall increase by 0.5% each fiscal year for four consecutive17 years.18 (iii) (iv) Judges holding positions specified in R.S. 11:553(1), (3) through (5),19 (7), and (10) through (15) whose first employment making them eligible for20 membership in one of the state systems occurred on or after January 1, 2011 - 13%.21 * * *22 (c) Clerk and sergeant at arms of the House of Representatives and secretary23 and sergeant at arms of the Senate:24 (i) Employees whose first employment making them eligible for membership25 in one of the state systems occurred on or before December 31, 2010 - :26 (aa) Until the later of June 30, 2014, or the date in (bb) - 9.5%.27 (bb) Beginning the July first following the employee's first merit increase28 of a minimum of four percent awarded on or after July 2, 2013, the employee's29 SB NO. 52 SLS 12RS-125 RE-REENGROSSED Page 3 of 8 Coding: Words which are struck through are deletions from existing law; words in boldface type and underscored are additions. contribution rate shall increase by 0.5% each fiscal year for four consecutive1 years.2 (ii) Employees whose first employment making them eligible for membership3 in one of the state systems occurred on or after January 1, 2011 -:4 (aa) Until the later of June 30, 2014, or the date in (bb) - 8%.5 (bb) Beginning the July first following the employee's first merit increase6 of a minimum of four percent awarded on or after July 2, 2013, the employee's7 contribution rate shall increase by 0.5% each fiscal year for four consecutive8 years.9 * * *10 (e) All others:11 (i) Members of the optional retirement plan - 7.5%.12 (ii) Employed Employees who are not members of the optional retirement13 plan employed on or before June 30, 2006 - :14 (aa) Until the later of June 30, 2014, or the date in (bb) - 7.5%.15 (bb) Beginning the July first following the employee's first merit increase16 of a minimum of four percent awarded on or after July 2, 2013, the employee's17 contribution rate shall increase by 0.5% each fiscal year for four consecutive18 years.19 (ii) (iii) Employed Employees who are not members of the optional20 retirement plan employed on or after July 1, 2006 -:21 (aa) Until the later of June 30, 2014, or the date in (bb) - 8%.22 (bb) Beginning the July first following the employee's first merit increase23 of a minimum of four percent awarded on or after July 2, 2013, the employee's24 contribution rate shall increase by 0.5% each fiscal year for four consecutive25 years.26 * * *27 (11) Teachers' Retirement System of Louisiana:28 * * *29 SB NO. 52 SLS 12RS-125 RE-REENGROSSED Page 4 of 8 Coding: Words which are struck through are deletions from existing law; words in boldface type and underscored are additions. (c) Except as provided in Subparagraph (d) of this Paragraph, members who1 are employees of an institution of postsecondary education, the Board of Regents,2 or a postsecondary education management board who are not members of the3 optional retirement plan:4 (i) Until the later of June 30, 2014, or the date in (ii) - 8%.5 (ii) Beginning the July first following the employee's first merit increase6 of a minimum of four percent awarded on or after July 2, 2013, the employee's7 contribution rate shall increase by 0.5% each fiscal year for four consecutive8 years.9 (d) All others, including members employed by institutions of10 postsecondary education or postsecondary education management boards for11 the sole purpose of providing instruction or administrative services at the12 primary or secondary level, including at any lab school and the Louisiana13 School for Math, Science, and the Arts, - 8%.14 * * *15 §102. Employer contributions; determination; state systems16 * * *17 D.(1) Notwithstanding any provision of this Section, R.S. 11:102.1, or18 R.S. 11:102.2 to the contrary, the additional contributions to the Louisiana State19 Employees' Retirement System and the Teachers' Retirement System of20 Louisiana resulting from R.S. 11:62 as amended by the Act which originated as21 Senate Bill No. 52 of the 2012 Regular Session, net of the increase in reserve22 necessary to fund the increase in future refunds to employees, shall be applied23 to the outstanding balance of the original amortization base of each system24 without reamortization of such base and until the base is fully liquidated.25 (2) After liquidation of the original amortization base, the additional26 contributions shall be applied to the outstanding balance of the experience27 account amortization base without reamortization of such base and until such28 base is fully liquidated.29 SB NO. 52 SLS 12RS-125 RE-REENGROSSED Page 5 of 8 Coding: Words which are struck through are deletions from existing law; words in boldface type and underscored are additions. (3) After the liquidation of the experience account amortization base, the1 additional contributions shall continue to be applied toward the balance of the2 oldest outstanding positive amortization base until all such bases are fully3 liquidated.4 Section 2. The Public Retirement Systems' Actuarial Committee may adopt an5 actuarial valuation to be utilized in the fiscal year which begins on July 1, 2013, calculated6 in accordance with R.S. 11:102, which has been prepared on behalf of the Division of7 Administration by a member of the American Academy of Actuaries who meets the8 qualification requirements of the academy to issue a particular statement of actuarial9 opinion.10 Section 3.(A) Because the legislature finds and declares that questions of law may11 be raised by some persons with respect to the constitutionality of some of the provisions of12 this Act, the public welfare requires that such questions of law be resolved with expedition13 prior to such time as its provisions take effect in order to avoid disruption of the orderly14 implementation of its provisions. Therefore, the legislature finds that an expedited hearing15 schedule for actions filed relative to the constitutionality of any provision of this Act should16 be immediately made available in order to avoid confusion by the public. Therefore, any17 domiciliary of this state may institute an action in the Nineteenth Judicial District Court18 seeking a declaratory judgment to determine the constitutionality of the provisions of this19 Act. In the interest of further expediting this procedure, the Nineteenth Judicial District20 Court, First Circuit Court of Appeal, and Louisiana Supreme Court are urged to minimize21 all unnecessary delays in order to resolve any questions of law no later than thirty days prior22 to the prefiling deadline for retirement legislation for the 2013 regular legislative session,23 and the courts may suspend all applicable rules of court for this limited purpose.24 (B) The retirement systems shall provide for the orderly and equitable25 implementation of the provisions of this Act. Such implementation shall be consistent with26 the duties required of the systems' fiduciaries. Notwithstanding any other provision of this27 Act or law to the contrary, and if required by the duties of the systems' fiduciaries, the28 implementation of this Act may be delayed until a final nonappealable judgment is rendered29 SB NO. 52 SLS 12RS-125 RE-REENGROSSED Page 6 of 8 Coding: Words which are struck through are deletions from existing law; words in boldface type and underscored are additions. in any action instituted on or before June 30, 2013, challenging the constitutionality of the1 provisions of this Act.2 Section 4. If a final judgment declares the provisions of this Act unconstitutional as3 they relate to a particular group of employees, the provisions of this Act shall remain in4 effect and applicable to employees unrelated to the judgment.5 Section 5. The provisions of this Act and the provisions of the Acts which originated6 as Senate Bill No. 47 and Senate Bill No. 749 of the 2012 Regular Session shall not apply7 to any member of the Teachers' Retirement System of Louisiana whose membership in the8 system is based solely on employment in a public elementary or secondary school.9 Section 6. The provisions of this Act shall not be applied to any employee for any10 fiscal year in which the average of the actuarially required payments for the unfunded11 accrued liability for the previous four fiscal years is less than the average of the actuarially12 required payment for the four fiscal years that precede the current valuation year.13 Section 7. This Act shall become effective on July 1, 2012; if vetoed by the governor14 and subsequently approved by the legislature, this Act shall become effective on July 1,15 2012, or on the day following such approval by the legislature, whichever is later.16 The original instrument was prepared by Laura Gail Sullivan. The following digest, which does not constitute a part of the legislative instrument, was prepared by J. W. Wiley. DIGEST Guillory (SB 52) Present law establishes the rates at which members of retirement systems contribute to their retirement plans ranging from 7.5% to 11.5%. Proposed law increases the contribution rates for members of the Louisiana State Employees' Retirement System (LASERS) who are employed in "nonhazardous" positions and the Teachers' Retirement System of Louisiana (TRSL) who are employed in higher education by 2 percentage points in four steps of 0.5% each. Further provides that proposed law will not occur until the later of June 30, 2014, or beginning the July first following the employee's first merit increase of a minimum of four percent awarded on or after July 2, 2013. Proposed law does not increase contribution rates for the following LASERS employees in hazardous duty jobs including certain public safety service employees and peace officers, wildlife agents, bridge police, members of the Hazardous Duty Services Plan. Also does not increase contributions for members of the optional retirement plan. Proposed law specifies that the additional employee contributions resulting from proposed law shall be applied to the unfunded accrued liability (UAL) of each system, without SB NO. 52 SLS 12RS-125 RE-REENGROSSED Page 7 of 8 Coding: Words which are struck through are deletions from existing law; words in boldface type and underscored are additions. reamortization, until all such liability is fully liquidated. Present law provides that valuations shall be presented by the Legislative Auditor's Office and the retirement system to the Public Retirement Systems' Actuarial Committee (PRSAC) for consideration. Proposed law expands the agencies which may present actuarial valuations to the Committee for consideration to include the Division of Administration, for the fiscal year beginning July 1, 2013. Proposed law provides for an expedited hearing process if proposed law is subjected to legal challenge and provides that the implementation of proposed law may be delayed until a final nonappealable judgment is rendered in any such action instituted on or before June 30, 2013. Provides for severability if a court declares any provisions of proposed law to be unconstitutional as applicable to certain members of LASERS and TRSL, retaining application of proposed law to the remaining members of the system. Proposed law will not be applied to any employee for any fiscal year in which the average of the actuarially required payments for the UAL for the previous four fiscal years is less than the average of the actuarially required payment for the four fiscal years that precede the current valuation year. Effective July 1, 2012. (Amends R.S. 11:62(5)(a), (c), and (e) and (11)(c); adds R.S. 11:62(11)(d) and 102(D)) Summary of Amendments Adopted by Senate Committee Amendments Proposed by Senate Committee on Retirement to the original bill 1. Provides that, instead of reducing the employer contribution requirements, the additional employee contributions shall be applied to the net remaining balance of the 1988 unfunded accrued liability (UAL) without reamortization of that base until the debt is fully liquidated. 2. Includes the current governor in application of proposed law. 3. Expands the agencies which may present actuarial valuations to the Public Retirement Systems' Actuarial Committee for consideration to include the Division of Administration, for purposes of determining the employer contribution rate to be remitted for the fiscal year beginning July 1, 2012. 4.Provides for an expedited hearing process. Committee Amendments Proposed by Senate Committee on Finance to the engrossed bill 1. Reduces the increased employee contribution amount from 3% of pay to 2% of pay. 2. Phases in, over four years, beginning July 1, 2013, with 0.5% increases. 3. Retains all future "savings" generated by proposed law in the system trust fund. SB NO. 52 SLS 12RS-125 RE-REENGROSSED Page 8 of 8 Coding: Words which are struck through are deletions from existing law; words in boldface type and underscored are additions. Senate Floor Amendments to reengrossed bill 1. Makes technical corrections. 2. Provides requirements for when the employee contribution rates will increase. 3. Changes "outstanding amortization" to "outstanding positive amortization". 4. Provides that implementation of proposed law may be delayed until a final nonappealable judgment is rendered in any legal challenge instituted on or before June 30, 2013. 5. Provides an exception to proposed law for employees based on the average of the actuarially required payment for the UAL for the previous four fiscal years.