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Regular Session, 2012
SENATE BILL NO. 739
BY SENATOR GUILLORY
TEACHERS RETIREMENT. Provides for employer contributions. (gov sig)
(2/3-CA 10s29(F))
AN ACT1
To amend and reenact R.S. 11:102(B)(1), (2)(introductory paragraph), (b)(introductory2
paragraph) and (ii), and (c), (3)(a) and (d)(vii), (4), and (5)(b) and 927(B) and to3
enact R.S. 11:102(D), relative to employer contribution rates for the Teachers'4
Retirement System of Louisiana; to provide for calculation of individualized5
employer contribution rates for classes of employees; to provide for system6
valuations; to provide for the employer contribution rate for the optional retirement7
plan; to provide for an effective date; and to provide for related matters.8
Notice of intention to introduce this Act has been published.9
Be it enacted by the Legislature of Louisiana:10
Section 1. R.S. 11:102(B)(1), (2)(introductory paragraph),(b)(introductory11
paragraph) and (ii), and (c), (3)(a) and (d)(vii), (4), and (5)(b) and 927(B) are hereby12
amended and reenacted and R.S. 11:102(D) is hereby enacted to read as follows: 13
§102. Employer contributions; determination; state systems14
* * *15
B.(1) Except as provided in Subsection C of this Section for the Louisiana16
State Employees' Retirement System , and in Subsection D of this Section for the17 SB NO. 739
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Teachers' Retirement System of Louisiana, except as provided in R.S. 11:102.11
and 102.2, and in Paragraph (5) of this Subsection, for each fiscal year, commencing2
with Fiscal Year 1989-1990, for each of the public retirement systems referenced in3
Subsection A of this Section, the legislature shall set the required employer4
contribution rate equal to the actuarially required employer contribution, as5
determined under Paragraph (3) of this Subsection, divided by the total projected6
payroll of all active members of each particular system for the fiscal year. Each7
entity funding a portion of a member's salary shall also fund the employer's8
contribution on that portion of the member's salary at the employer contribution rate9
specified in this Subsection.10
(2) At the end of each fiscal year, the difference between the actuarially11
required employer contribution for the fiscal year, as determined under Paragraph12
(3) of this Subsection or pursuant to Subsection C of this Section for the Louisiana13
State Employees' Retirement System or Subsection D of this Section for the14
Teachers' Retirement System of Louisiana, and the amount of employer15
contributions actually received for the fiscal year, excluding any amounts received16
for the extraordinary purchase of additional benefits or service, shall be determined.17
* * *18
(b) At the end of each fiscal year, the difference between the minimum19
employer contribution, as required by the Constitution of Louisiana, and the20
actuarially required employer contribution for the fiscal year, as determined under21
Paragraph (3) of this Subsection or pursuant to Subsection C of this Section for the22
Louisiana State Employees' Retirement System or Subsection D of this Section23
for the Teachers' Retirement System of Louisiana, shall be determined and24
applied in accordance with the following provisions:25
* * *26
(ii) Except as provided in Paragraph (5) of this Subsection, annual27
contributions required in accordance with this Subsection, or the constitutional28
minimum if greater, may be funded in whole or in part from the employer credit29 SB NO. 739
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account, provided the employee contribution rate or rates for the system as set forth1
in R.S. 11:62 has or have been reduced to an amount equal to or less than fifty2
percent of the annual normal cost for the system or the plan as provided in3
Subsection C or D of this Section, rounded to the nearest one-quarter percent.4
* * *5
(c) Except as provided in R.S. 11:102.1 and 102.2, differences occurring for6
any other reason shall be added to or subtracted from the following fiscal year's7
actuarially required employer contribution in accordance with Subparagraph (3)(c)8
of this Subsection or with Subsection C of this Section for the Louisiana State9
Employees' Retirement System or Subsection D of this Section for the Teachers'10
Retirement System of Louisiana.11
(3) With respect to each state public retirement system, the actuarially12
required employer contribution for each fiscal year, commencing with Fiscal Year13
1989-1990, shall be that dollar amount equal to the sum of:14
(a) The employer's normal cost for that fiscal year, computed as of the first15
of the fiscal year using the system's actuarial funding method as specified in R.S.16
11:22 and taking into account the value of future accumulated employee17
contributions and interest thereon, such employer's normal cost rate multiplied by the18
total projected payroll for all active members to the middle of that fiscal year. For19
the Louisiana State Employees' Retirement System, effective for the June 30, 2010,20
system valuation and beginning with Fiscal Year 2011-2012, the normal cost shall21
be determined in accordance with Subsection C of this Section. For the Teachers'22
Retirement System of Louisiana, effective for the June 30, 2011, system23
valuation and beginning with Fiscal Year 2012-2013, the normal cost shall be24
determined in accordance with Subsection D of this Section.25
* * *26
(d) That fiscal year's payment, computed as of the first of that fiscal year and27
projected to the middle of that fiscal year at the actuarially assumed interest rate,28
necessary to amortize changes in actuarial liability due to:29 SB NO. 739
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* * *1
(vii) Effective July 1, 2004, and beginning with Fiscal Year 2000-2001, the2
amortization period for the changes, gains, or losses of the Teachers' Retirement3
System of Louisiana provided in Items (i) through (iv) of this Subparagraph shall be4
thirty years, or in accordance with standards promulgated by the Governmental5
Accounting Standards Board, from the year in which the change, gain, or loss6
occurred. The outstanding balances of amortization bases established pursuant to7
Items (i) through (iv) of this Subparagraph before Fiscal Year 2000-2001, shall be8
amortized as a level dollar amount from July 1, 2004, through June 30, 2029.9
Beginning with Fiscal Year 2003-2004, and for each fiscal year thereafter, the10
outstanding balances of amortization bases established pursuant to Items (i) through11
(iv) of this Subparagraph shall be amortized as a level dollar amount. For the12
Teachers' Retirement System of Louisiana, effective for the June 30, 2011,13
system valuation and beginning with Fiscal Year 2012-2013, amortization14
payments for changes in actuarial liability shall be determined in accordance15
with Subsection D of this Section.16
* * *17
(4) At the end of the fiscal year during which the assets of a system,18
excluding the outstanding balance due to Subparagraph (B)(3)(c) of this Section,19
exceed the actuarial accrued liability of that system, the amortization schedules20
contained in Subparagraphs (B)(3)(b) and (d) or in Subsection C of this Section for21
the Louisiana State Employees' Retirement System or Subsection D of this22
Section for the Teachers' Retirement System of Louisiana shall be fully23
liquidated and assets in excess of the actuarial accrued liability shall be amortized24
as a credit in accordance with the provisions of Subparagraph (B)(3)(d) of this25
Section.26
(5)27
* * *28
(b) At the end of each fiscal year, the difference, if any, by which the amount29 SB NO. 739
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of contributions received from payment of all employer contributions at the fixed1
minimum employer contribution rate established pursuant to this Paragraph exceeds2
the greater of the minimum employer contribution required by Article X, Section 293
of the Constitution of Louisiana or the statutory minimum employer contribution4
calculated according to the methodology provided for in Items (3)(d)(i) through (iv)5
of this Subsection or in Paragraph (C)(4) of this Section for the Louisiana State6
Employees' Retirement System or Paragraph (D)(4) of this Section for the7
Teachers' Retirement System of Louisiana shall be accumulated in an employer8
credit account for the respective system.9
* * *10
D.(1) This Subsection shall be applicable to the Teachers' Retirement11
System of Louisiana effective for the June 30, 2011, system valuation and12
beginning Fiscal Year 2012-2013. For purposes of this Subsection, "plan" or13
"plans" shall mean a subgroup within the system characterized by the following14
employee classifications:15
(a) School lunch Plan A.16
(b) School lunch Plan B.17
(c) Employees of an institution of postsecondary education, the Board18
of Regents, or a postsecondary education management board.19
(d) Any other specialty retirement plan provided for a subgroup of20
system members. If the legislation enacting such a plan is silent as to the21
application of this Subsection, the Public Retirement Systems' Actuarial22
Committee shall provide for the application to such plan.23
(e) All other teachers, as defined in R.S. 11:701(33).24
(2) For the Teachers' Retirement System of Louisiana, effective for the25
June 30, 2011, system valuation and beginning with Fiscal Year 2012-2013, the26
normal cost calculated pursuant to Subparagraph (B)(3)(a) of this Section, shall27
be calculated separately for each particular plan within the system. An28
employer shall pay employer contributions for each employee at the rate29 SB NO. 739
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applicable to the plan of which that employee is a member.1
(3) For the Teachers' Retirement System of Louisiana, effective for the2
June 30, 2011, system valuation and beginning with Fiscal Year 2012-2013,3
changes in actuarial liability due to legislation, changes in governmental4
organization, or reclassification of employees or positions shall be calculated5
individually for each particular plan within the system based on each plan's6
actuarial experience as further provided in Subparagraph (4)(c) of this7
Subsection.8
(4) Except as provided in Paragraph (5) of this Subsection, for each plan9
referenced in Paragraph (1) of this Subsection, the legislature shall set the10
required employer contribution rate equal to the sum of the following:11
(a) The particularized normal cost rate. The normal cost rate for each12
fiscal year shall be the employer's normal cost for employees in the plan13
computed by applying the method specified in Paragraph (B)(1) and14
Subparagraph (B)(3)(a) of this Section to the plan.15
(b) The shared unfunded accrued liability rate. A single rate shall be16
computed for each fiscal year, applicable to all plans for actuarial changes,17
gains, and losses existing on June 30, 2011, or occurring thereafter, including18
experience and investment gains and losses, which are independent of the19
existence of the plans listed in Paragraph (1) of this Subsection, the payment20
and rate therefor shall be calculated as provided in Paragraphs (B)(1) and (3)21
of this Section.22
(c) The particularized unfunded accrued liability rate. For actuarial23
changes, gains, and losses, excluding experience and investment gains and24
losses, first recognized in the June 30, 2011, valuation or in any later valuation,25
attributable to one or more, but not all, plans listed in Paragraph (1) of this26
Subsection or to some new plan or plans, created, implemented, or enacted after27
July 1, 2011, a particularized contribution rate shall be calculated as provided28
in Paragraphs (B)(1) and (3) of this Section.29 SB NO. 739
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(d) The shared gross employer contribution rate difference. The gross1
employer contribution rate difference shall be the difference between the2
minimum gross employer contribution rate provided in Paragraph (B)(5) of this3
Section and the aggregate employer contribution rate calculated pursuant to the4
provisions of Subsection B of this Section.5
(5) The employer contribution rate for the optional retirement plan shall6
be the sum of the amounts in Subparagraphs (4)(b), (c), and (d) of this7
Subsection applicable to employees in Subparagraph (1)(c) of this Subsection8
plus the employer normal cost rate contained in the system valuation adopted9
by the Public Retirement Systems' Actuarial Committee on March 8, 2012.10
(6) Each entity funding a portion of the member's salary shall also fund11
the employer's contribution on that portion of the member's salary at the12
employer contribution rate specified in this Subsection.13
(7) For purposes of Paragraph (B)(2) of this Section, the actuarially14
required employer contributions and the employer contributions actually15
received for all plans shall be totaled and treated as a single contribution.16
(8) If provisions of this Section cover matters not specifically addressed17
by the provisions of this Subsection, then those provisions shall be applicable.18
* * *19
§927. Contributions20
* * *21
B. Each employer institution and board shall contribute to the Teachers'22
Retirement System of Louisiana on behalf of each participant in the optional23
retirement plan at the same amount it would have contributed if the participant had24
been a member of the regular retirement plan of the Teachers' Retirement System of25
Louisiana rate calculated pursuant to R.S. 11:102. Upon receipt of this26
contribution, the Teachers' Retirement System of Louisiana shall promptly pay over27
to the appropriate designated company or companies an amount equal to the28
employer's portion of the normal cost contribution as determined annually in the29 SB NO. 739
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system valuation adopted by the Public Retirement Systems' Actuarial Committee,1
this on March 8, 2012. This amount to shall be credited to the participant's contract2
or contracts. The Teachers' Retirement System of Louisiana shall retain the balance3
of this contribution for application to the unfunded accrued liability of the system.4
* * *5
Section 2. The cost of this Act, if any, shall be funded with additional employer6
contributions in compliance with Article X, Section 29(F) of the Constitution of Louisiana.7
Section 3.(A) As soon as practicable after the effective date of this Act, the Public8
Retirement Systems' Actuarial Committee shall meet to adopt a revised valuation for the9
system prepared as provided in R.S. 11:102. This valuation shall include a revised employer10
contribution rate for each plan within the system to be utilized in the fiscal year which begins11
on July 1, 2012. This valuation shall incorporate all changes enacted by the legislature in the12
2012 Regular Session. 13
(B) The Public Retirement Systems' Actuarial Committee is hereby authorized to14
adopt an actuarial valuation or revised employer contribution rate to be utilized in the fiscal15
year which begins on July 1, 2012, calculated in accordance with R.S. 11:102, which has16
been prepared on behalf of the division of administration by a member of the American17
Academy of Actuaries who meets the qualification requirements of the academy to issue a18
particular statement of actuarial opinion.19
Section 4. This Act shall become effective upon signature by the governor or, if not20
signed by the governor, upon expiration of the time for bills to become law without signature21
by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If22
vetoed by the governor and subsequently approved by the legislature, this Act shall become23
effective on the day following such approval.24
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Laura Gail Sullivan.
DIGEST
Present law (R.S. 11:102) provides generally for employer contributions for state retirement
systems, including the Teachers' Retirement System of Louisiana (TRSL). Provides for a
single contribution rate to be paid by all employers participating in TRSL. SB NO. 739
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Present law, relative to the Louisiana State Employees' Retirement System (LASERS),
provides for particularized contribution rates calculated separately for the subplans in
LASERS. Provides for an employer to pay contributions for each employee at the rate
applicable to the subplan.
Proposed law provides for particularized employer contributions for TRSL employers
beginning July 1, 2012. Provides for each of the following subplans in TRSL to have a
particularized employer contribution rate:
1. School Lunch Plan A.
2. School Lunch Plan B.
3. Higher education.
4. Any other specialty retirement plan provided for a subgroup of system members.
Provides for Public Retirement Systems' Actuarial Committee to provide for
application of proposed law to any such subplan when the legislation is silent on
application.
5. All other teachers covered by TRSL.
Present law (R.S. 11:927) provides relative to the contribution rates of employers and
employees for participants in TRSL's optional retirement plan (ORP). The ORP is a defined
contribution plan available only to the following classes of individuals:
1. Academic and administrative employees of public institutions of higher education.
2. Employees of management boards of higher education institutions.
Present law provides for the employer contribution rate for the ORP to be the same as that
of the "regular" TRSL plan. Provides that TRSL retains the unfunded accrued liability
(UAL) payment and remits the remainder to the ORP provider, to be deposited in the
person's account.
Proposed law freezes the portion of the employer contribution rate to the ORP at the rate
adopted by the Public Retirement Systems' Actuarial Committee (PRSAC) on March 8,
2012. Requires the employer to pay the UAL as provided in present law.
Proposed law provides that the cost of proposed law, if any, shall be funded with additional
employer contributions in compliance with Article X, Section 29(F) of the Constitution of
Louisiana.
Proposed law requires PRSAC to meet as soon as practicable after the effective date of
proposed law to adopt a revised actuarial valuation for TRSL including a revised employer
contribution rate, taking into account all changes to the law enacted by the legislature in the
2012 R.S.
Further authorizes PRSAC to adopt an actuarial valuation or revised employer contribution
rate proposed by the division of administration to be utilized in the FY 2012-2013, which
has been prepared by a qualified actuary from the American Academy of Actuaries.
Effective upon signature of governor or lapse of time for gubernatorial action.
(Amends R.S. 11:102(B)(1), (2) (intro para), (b)(intro para) and (ii), and (c), (3)(a) and
(d)(vii), (4), and (5)(b) and 927(B); adds R.S. 11:102(D))