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Regular Session, 2012
SENATE BILL NO. 55
BY SENATOR GUILLORY
STATE EMPLOYEE RET. Changes the system's actuarial valuation method to entry age
normal. (7/1/12)
AN ACT1
To amend and reenact R.S. 11:22(B)(6), and 102(B)(1) and to enact R.S. 11:102(D) and2
_____, relative to the actuarial valuation method of the Louisiana State Employees'3
Retirement System; to change such method from projected unit credit to entry age4
normal; to provide for the amortization of any gain or loss attributable to such5
change; to provide relative to employer contributions after such change; to provide6
for an effective date; and to provide 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. 11:22(B)(6), and (B)(1) are hereby amended and reenacted and R.S.10
11:102(D) is enacted to read as follows:11
§22. Methods of actuarial valuation established12
* * *13
B. The following funding methods shall be utilized to determine actuarially14
required contributions:15
* * *16
(6) Louisiana State Employees' Retirement System: projected unit credit entry age17 SB NO. 55
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normal.1
* * *2
§102. Employer contributions; determination; state systems3
* * *4
, C.(1) This Subsection shall be applicable to the Louisiana State Employees'5
Retirement System effective for the June 30, 2010, system valuation and beginning6
Fiscal Year 2011-2012. For purposes of this Subsection, "plan" or "plans" shall7
mean a subgroup within the system characterized by the following employee8
classifications:9
* * *10
(j) Hazardous duty plan members as provided pursuant to R.S. 11:611 et seq.11
(k) Judges as provided pursuant to R.S. 11:62(5)(a)(iii) and 444(A)(1)(a)(ii).12
* * *13
(4)(a) For each plan referenced in Paragraph (1) of this Subsection, the14
legislature shall set the required employer contribution rate equal to the sum of the15
following:16
(a)(i) The particularized normal cost rate. The normal cost rate for each fiscal year17
shall be the employer's normal cost for the plan computed by applying the method18
specified in R.S. 11:102(B)(1) and (3)(a) to the plan.19
(b)(ii) The shared unfunded accrued liability rate. A single rate shall be computed20
for each fiscal year, applicable to all plans for actuarial changes, gains, and losses21
existing on June 30, 2010, or occurring thereafter, including experience and22
investment gains and losses, which are independent of the existence of the plans23
listed in Paragraph (1) of this Subsection, the payment and rate therefor shall be24
calculated as provided in Paragraphs (B)(1) and (3) of this Section.25
(c)(iii) The particularized unfunded accrued liability rate. For actuarial changes,26
gains, and losses, excluding experience and investment gains and losses, first27
recognized in the June 30, 2010, valuation or in any later valuation, attributable to28
one or more, but not all, plans listed in Paragraph (1) of this Subsection or to some29 SB NO. 55
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new plan or plans, created, implemented, or enacted after July 1, 2010, a1
particularized contribution rate shall be calculated as provided in Paragraphs (B)(1)2
and (3) of this Section.3
(d)(iv) The shared gross employer contribution rate difference. The gross employer4
contribution rate difference shall be the difference between the minimum gross5
employer contribution rate provided in Paragraph (B)(5) of this Section and the6
aggregate employer contribution rate calculated pursuant to the provisions of7
Subsection B of this Section.8
(b) For each fiscal year beginning with Fiscal Year 2012-2013, if there9
remains a balance in the original amortization base or the experience account10
amortization base, then the employer contribution rate under Subparagraph (a)11
for the plans referenced in Paragraph (1) shall be increased by the following12
amounts:13
(i) The plan referenced in Paragraph (1)(a) 1.5%14
(ii) The plan referenced in Paragraph (1)(b) 2.0%15
(iii) The plan referenced in Paragraph (1)(c)2.0%16
(iv) The plan referenced in Paragraph (1)(d) 0.2%17
(vi) The plan referenced in Paragraph (1)(e) 0.1%18
(vi) The plan referenced in Paragraph (1)(f) 2.0%19
(vii) The plan referenced in Paragraph (1)(g)2.0%20
(viii) The plan referenced in Paragraph (1)(h)2.0%21
(ix) The plan referenced in Paragraph (1)(i) 2.0%22
(x) The plan referenced in Paragraph (1)(j) 0.0%23
(xi) The plan referenced in Paragraph (1)(k) 0.0%24
* * *25
§102.1. Consolidation of amortization payment schedules; Louisiana State26
Employees' Retirement System27
* * *28
B. Original amortization base.29 SB NO. 55
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* * *1
(6) In any year in which the system receives additional contributions2
pursuant to R.S. 11:102(C)(4)(b), the amount of such additional contribution3
shall be applied to the remaining balance of the original amortization base4
established pursuant to this Subsection. If there is no remaining balance of the5
original amortization base then the additional contributions received pursuant6
to R.S. 11:102(C)(4)(b) shall be applied to the remaining balance of the7
experience account amortization base established in Subsection (C).8
C. Experience account amortization base.9
(1) The remaining balances of outstanding amortization bases for the years10
1996, 1999 through 2004, and 2008, as specified in the system valuation adopted by11
the Public Retirement Systems' Actuarial Committee on February 5, 2009, shall be12
consolidated into a single amortization base, effective for the June 30, 2009 system13
valuation with payments beginning on July 1, 2010. Notwithstanding any other14
provision of law to the contrary, any increase in liability associated with the15
change to the entry age normal actuarial funding method shall be amortized as16
a shared unfunded accrued liability and shall be added to this base. The17
payments shall then be reamortized to maintain the original term and schedule18
of payment increases pursuant to Paragraph (3) of this Subsection.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 contribution22
shall be applied to the remaining balance of the original amortization base23
established pursuant to Subsection (B). 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 this Subsection.27
Section 2. This Act shall become effective on June 30, 2012; if vetoed by the28
governor and subsequently approved by the legislature, this Act shall become effective on29 SB NO. 55
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June 30, 2012, or on the day following such approval by the legislature, whichever is later.1
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Laura Gail 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
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 La. 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 0.7%. Provides for accumulation and application
of the additional contributions to reduce the unfunded accrued liability (UAL) of LASERS.
Effective July 1, 2012.
(Amends R.S. 11:22(B(6)) and 102(B)(1); adds 102(D) and _______)