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Regular Session, 2012
SENATE BILL NO. 54
BY SENATOR GUILLORY
STATE EMPLOYEE RET. Provides for the system valuation method. (6/30/12)
AN ACT1
To amend and reenact R.S. 11:22(B)(6), 102(C)(4), and 102.1(C)(1) and to enact R.S.2
11:102.1(B)(6) and (C)(6), relative to the Louisiana State Employees' Retirement3
System; to provide for a change in actuarial valuation method; to provide for4
application of gains and losses resulting from such change; to provide for an5
effective date; 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. 11:22(B)(6), 102(C)(4), and 102.1(C)(1) are hereby amended and9
reenacted and R.S. 11:102.1(B)(6) and (C)(6) are hereby enacted to read as follows:10
§22. Methods of actuarial valuation established11
* * *12
B. The following funding methods shall be utilized to determine actuarially13
required contributions:14
* * *15
(6) Louisiana State Employees' Retirement System: projected unit credit16
entry age normal.17 SB NO. 54
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§102. Employer contributions; determination; state systems2
* * *3
C.(1) * * *4
(4)(a) For Except as provided in Subparagraph (b) of this Paragraph, for5
each plan referenced in Paragraph (1) of this Subsection, the legislature shall set the6
required employer contribution rate equal to the sum of the following:7
(a) (i) The particularized normal cost rate. The normal cost rate for each8
fiscal year shall be the employer's normal cost for the plan computed by applying the9
method specified in R.S. 11:102(B)(1) and (3)(a) to the plan.10
(b)(ii) The shared unfunded accrued liability rate. A single rate shall be11
computed for each fiscal year, applicable to all plans for actuarial changes, gains, and12
losses existing on June 30, 2010, or occurring thereafter, including experience and13
investment gains and losses, which are independent of the existence of the plans14
listed in Paragraph (1) of this Subsection, the payment and rate therefor shall be15
calculated as provided in Paragraphs (B)(1) and (3) of this Section.16
(c)(iii) The particularized unfunded accrued liability rate. For actuarial17
changes, gains, and losses, excluding experience and investment gains and losses,18
first recognized in the June 30, 2010, valuation or in any later valuation, attributable19
to one or more, but not all, plans listed in Paragraph (1) of this Subsection or to some20
new plan or plans, created, implemented, or enacted after July 1, 2010, a21
particularized contribution rate shall be calculated as provided in Paragraphs (B)(1)22
and (3) of this Section.23
(d)(iv) The shared gross employer contribution rate difference. The gross24
employer contribution rate difference shall be the difference between the minimum25
gross employer contribution rate provided in Paragraph (B)(5) of this Section and the26
aggregate employer contribution rate calculated pursuant to the provisions of27
Subsection B of this Section.28
(b) For each fiscal year beginning with Fiscal Year 2012-2013, if there29 SB NO. 54
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remains a balance in the original amortization base or the experience account1
amortization base, and if the required employer contribution rate under2
Subparagraph (a) of any plan referenced in Paragraph (1) for Fiscal Year3
2012-2013 is less than the required employer contribution rate for Fiscal Year4
2012-2013 calculated in accordance with the projected unit credit actuarial5
funding method using the actuarially-assumed rate of return which was adopted6
for Fiscal Year 2012-2013, then the employer contribution rate under7
Subparagraph (a) for such plan shall be increased by the lesser of:8
(i) The difference between the required employer contribution rate9
under Subparagraph (a) for Fiscal Year 2012-2013 and the required employer10
contribution rate for Fiscal Year 2012-2013 calculated in accordance with the11
projected unit credit actuarial funding method using the actuarially-assumed12
rate of return which was adopted for Fiscal Year 2012-2013; or13
(ii) Two percent.14
* * *15
§102.1. Consolidation of amortization payment schedules; Louisiana State16
Employees' Retirement System17
* * *18
B. Original amortization base.19
* * *20
(6) In any year in which the system receives additional contributions21
pursuant to R.S. 11:102(C)(4)(b), the amount of such additional contributions22
shall be applied to the remaining balance of the original amortization base23
established pursuant to this Subsection. If there is no remaining balance of the24
original amortization base, then the additional contributions received pursuant25
to R.S. 11:102(C)(4)(b) shall be applied to the remaining balance of the26
experience account amortization base established in Subsection (C) of this27
Section.28
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C. Experience account amortization base.1
(1) The remaining balances of outstanding amortization bases for the years2
1996, 1999 through 2004, and 2008, as specified in the system valuation adopted by3
the Public Retirement Systems' Actuarial Committee on February 5, 2009, shall be4
consolidated into a single amortization base, effective for the June 30, 2009 system5
valuation with payments beginning on July 1, 2010. Any increase in liability6
associated with the change to the entry age normal actuarial funding method7
shall be amortized as a shared unfunded accrued liability and shall be added to8
this base. The payments shall then be reamortized to maintain the original term9
and schedule of payment increases pursuant to Paragraph (3) of this Subsection.10
* * *11
(6) In any year in which the system receives additional contributions12
pursuant to R.S. 11:102(C)(4)(b), the amount of such additional contributions13
shall be applied to the remaining balance of the original amortization base14
established pursuant to Subsection (B) of this Section. If there is no remaining15
balance of the original amortization base, then the additional contributions16
received pursuant to R.S. 11:102(C)(4)(b) shall be applied to the remaining17
balance of the experience account amortization base established in this18
Subsection.19
Section 2. This Act shall become effective on July 1, 2012, unless the actuarially-20
assumed rate of return for the system set by the Public Retirement Systems' Actuarial21
Committee for fiscal year 2012-2013 is equal to 8.25%. If the actuarially-assumed rate of22
return for the system set by the Public Retirement Systems' Actuarial Committee for fiscal23
year 2012-2013 is equal to 8.25% then the provisions of this Act shall be null and void, and24
shall not become effective.25
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Laura Sullivan.
DIGEST
Present constitution (Art. X, Sect. 29(E)(1)) provides that the legislature shall establish, by
law, the particular method of actuarial valuation to be employed by each state or statewide SB NO. 54
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retirement system for purposes of attaining and maintaining the actuarial soundness of such
system.
Present law (R.S. 11:4(A)(1)(a)) provides that the Louisiana State Employees' Retirement
System (LASERS) is a state retirement system.
Proposed law retains present law.
Present law (R.S. 11:22(B)(6)) provides that LASERS' valuation method shall be projected
unit credit.
Proposed law changes the LASERS valuation method to entry age normal.
Present law (R.S. 11:102) provides for required employer contributions to state retirement
systems including LASERS.
Proposed law provides that the LASERS employer contribution rate shall be the rate
determined pursuant to present law plus additional contributions. Provides for accumulation
and application of the additional contributions to reduce the unfunded accrued liability
(UAL) of LASERS.
Effective June 30, 2012.
(Amends R.S. 11:22(B)(6), 102(C)(4), and 102(C)(1) ; adds R.S. 11:102.2(B)(6) and (C)(6))