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Regular Session, 2012
SENATE BILL NO. 740
BY SENATOR GUILLORY
RETIREMENT BENEFITS. Provides relative to certain experience accounts. (6/30/12)
AN ACT1
To amend and reenact R.S. 11:542(A)(2) and (3), (B)(introductory paragraph), and (F)(2),2
883.1(A)(2) and (3), (B)(introductory paragraph), and (G)(2) and to enact Subpart3
P of Part II of Chapter 4 of Subtitle I of Title 11 of the Louisiana Revised Statutes4
of 1950, to be comprised of R.S. 11:331, and R.S. 11:542(A)(4), (B)(4), (F)(3), and5
883.1(A)(4), (B)(4), and (G)(3), relative to certain accounts of the Louisiana State6
Employees' Retirement System and the Teachers' Retirement System of Louisiana;7
to provide for calculation and application of credits and debits to the systems'8
experience accounts; to provide for subaccounts; to provide for an effective date; and9
to provide for related matters.10
Notice of intention to introduce this Act has been published.11
Be it enacted by the Legislature of Louisiana:12
Section 1. R.S. 11:542(A)(2) and (3), (B)(introductory paragraph), and (F)(2),13
883.1(A)(2) and (3), (B)(introductory paragraph), and (G)(2) are hereby amended and14
reenacted and Subpart P of Part II of Chapter 4 of Subtitle I of Title 11 of the Louisiana15
Revised Statutes of 1950, comprised of R.S. 11:331, and R.S. 11:542(A)(4), (B)(4), and16
(F)(3), and 883.1(A)(4), (B)(4), and (G)(3) are hereby enacted to read as follows:17 SB NO. 740
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SUBPART P. LEGISLATIVE INTENT1
§331. Legislative intent; certain Acts2
The Legislature of Louisiana hereby declares that the intent of the3
provisions of this Title that were enacted by the Act that originated as Senate4
Bill No. ____of the 2012 Regular Session is to attain and maintain the actuarial5
soundness of state and statewide systems as required by the Constitution of6
Louisiana, Article X, Section 29.7
* * *8
§542. Experience account9
A.10
* * *11
(2) The experience account shall be credited as follows:12
(a) To the extent permitted by Paragraph Paragraphs (3) and (4) of this13
Subsection and after allocation to the consolidated amortization bases as provided14
in R.S. 11:102.1, an amount not to exceed fifty percent of the remaining balance of15
the prior year's net investment experience gain as determined by the system's actuary.16
(b) To the extent permitted by Paragraph Paragraphs (3) and (4) of this17
Subsection, an amount not to exceed that portion of the system's net investment18
income attributable to the balance in the experience account during the prior year.19
(3)(a) The experience account shall contain two subaccounts: the20
"hazardous duty" subaccount and the "rank-and-file" subaccount. The21
liabilities attributable to the active members and retirees covered by the two22
subaccounts shall be determined in each actuarial valuation beginning with the23
June 30, 2012, valuation, and the ratio of each group's liabilities to the total24
liability shall be determined. The experience account allocation for any year25
shall be divided between the subaccounts based on this ratio.26
(b)(i) The hazardous duty subaccount shall be applicable to members27
and retirees from any of the following groups:28
(aa) Public safety service employees referred to as "member" or29 SB NO. 740
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"members" in R.S. 11:601(B).1
(bb) Peace officers employed by the Department of Public Safety and2
Corrections, office of state police, other than state troopers, as provided in R.S.3
11:444(A)(2)(b).4
(cc) Personnel employed by the Department of Revenue, office of alcohol5
and tobacco control, as provided in R.S. 11:444(A)(2)(c).6
(dd) Wildlife agents.7
(ee) Bridge police.8
(ff) Members of the Hazardous Duty Services Plan.9
(ii) The rank-and-file subaccount shall be applicable to any member or10
retiree not covered by Item (i) of this Subparagraph.11
(4) In no event shall the amount in the experience account either12
subaccount exceed the reserve necessary to grant two permanent benefit increases13
to the retirees covered by that subaccount as provided in Subsection C of this14
Section.15
B. The experience account subaccounts shall be debited as follows:16
* * *17
(4) The rank-and-file subaccount shall be debited for its proportionate18
share of the system's net investment experience losses during the prior year.19
The share of such losses shall be based on the ratio determined pursuant to20
Subparagraph (A)(3)(a) of this Section.21
* * *22
F.23
* * *24
(2) No permanent benefit increase for retirees covered by the hazardous25
duty subaccount shall be authorized based on any actuarial valuation in which both26
of the following apply:27
(a) The system fails to earn an actuarial rate of return which exceeds the28
board-approved actuarial valuation rate.29 SB NO. 740
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(b) The system is less than eighty percent funded.1
(3) No permanent benefit increase for retirees covered by the rank-and-2
file subaccount shall be authorized based on any actuarial valuation in which3
the system is less than eighty percent funded.4
* * *5
§883.1. Experience account6
A.7
* * *8
(2) The experience account shall be credited as follows:9
(a) To the extent permitted by Paragraph Paragraphs (3) and (4) of this10
Subsection and after allocation to the consolidated amortization bases as provided11
in R.S. 11:102.2, an amount not to exceed fifty percent of the remaining balance of12
the prior year's net investment experience gain as determined by the system's actuary.13
(b) To the extent permitted by Paragraph Paragraphs (3) and (4) of this14
Subsection, an amount not to exceed that portion of the system's net investment15
income attributable to the balance in the experience account during the prior year.16
(3)(a) The experience account shall contain two subaccounts: the17
"postsecondary education" subaccount and the "K-through-12" subaccount.18
The liabilities attributable to the active members and retirees covered by the19
two subaccounts shall be determined in each actuarial valuation beginning with20
the June 30, 2012, valuation, and the ratio of each group's liabilities to the total21
liability shall be determined. The experience account allocation for any year22
shall be divided between the subaccounts based on this ratio.23
(b)(i) The postsecondary education subaccount shall be applicable to24
each of the following groups of members and retirees:25
(aa) Academic and administrative employees of a public institution of26
higher education.27
(bb) Employees of the Board of Regents, the Board of Supervisors for the28
University of Louisiana System, the Board of Supervisors of Louisiana State29 SB NO. 740
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University and Agricultural and Mechanical College, or the Board of1
Supervisors of Southern University and Agricultural and Mechanical College,2
or of the successor to one of these boards.3
(cc) Employees of any other constitutionally established board which4
manages institutions of postsecondary education.5
(ii) The K-through-12 subaccount shall be applicable to any member or6
retiree not covered by Item (i) of this Subparagraph.7
(4) In no event shall the amount in the experience account either8
subaccount exceed the reserve necessary to grant two permanent benefit increases9
to the retirees covered by that subaccount as provided in Subsection C of this10
Section.11
B. The experience account subaccounts shall be debited as follows:12
* * *13
(4) The postsecondary education subaccount shall be debited for its14
proportionate share of the system's net investment experience losses during the15
prior year. The share of such losses shall be based on the ratio determined16
pursuant to Subparagraph (A)(3)(a) of this Section.17
* * *18
G.19
* * *20
(2) No permanent benefit increase for retirees covered by the K-through-21
12 subaccount shall be authorized based on any actuarial valuation in which both22
of the following apply:23
(a) The system fails to earn an actuarial rate of return which exceeds the24
board-approved actuarial valuation rate.25
(b) The system is less than eighty percent funded.26
(3) No permanent benefit increase for retirees covered by the27
postsecondary education subaccount shall be authorized based on any actuarial28
valuation in which the system is less than eighty percent funded.29 SB NO. 740
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* * *1
Section 2.(A) As soon as practicable after the effective date of this Act, the Public2
Retirement Systems' Actuarial Committee shall meet to adopt a revised valuation for the3
system prepared as provided in R.S. 11:102. This valuation shall include a revised employer4
contribution rate for each plan within the system to be utilized in the fiscal year which begins5
on July 1, 2012. This valuation shall incorporate all changes enacted by the legislature in the6
2012 Regular Session. 7
(B) The Public Retirement Systems' Actuarial Committee is authorized to adopt an8
actuarial valuation or revised employer contribution rate to be utilized in the fiscal year9
which begins on July 1, 2012, calculated in accordance with R.S. 11:102, which has been10
prepared on behalf of the division of administration by a member of the American Academy11
of Actuaries who meets the qualification requirements of the academy to issue a particular12
statement of actuarial opinion.13
Section 3. If a final judgment declares any of the provisions of this Act14
unconstitutional or unconstitutional as applied to a particular class of employees, the other15
provisions of this Act shall remain in effect and also shall be applicable to all employees16
who are not in the class.17
Section 4. This Act shall become effective on June 30, 2012; if vetoed by the18
governor and subsequently approved by the legislature, this Act shall become effective on19
June 30, 2012, or on the day following such approval by the legislature, whichever is later.20
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 Margaret M. Corley.
DIGEST
Guillory (SB 740)
Present law establishes experience accounts in Louisiana State Employees' Retirement
System (LASERS) and Teachers' Retirement System of Louisiana (TRSL) to fund
permanent benefit increases for retirees of each system.
Proposed law provides for division of the experience accounts into subaccounts.
Relative to LASERS, proposed law divides the experience account into a "hazardous duty"
subaccount and a "rank-and-file" subaccount and provides definitions for what types of
employees and retirees are covered by each subaccount. Relative to TRSL, proposed law
divides the experience account into a "postsecondary education" subaccount and a "K- SB NO. 740
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through-12" subaccount and specifies which employees and retirees are covered by each.
Present law authorizes the debiting of experience accounts by the following amounts:
1. An amount equal to that portion of the system's net investment loss attributable to
the balance in the experience account during the prior year.
2. An amount sufficient to fund a permanent benefit increase.
Proposed law retains present law for each subaccount and further authorizes the debiting of
the rank-and-file subaccount and the postsecondary education subaccount by its
proportionate share of the system's net investment experience losses during the prior year.
Present law provides that no benefit increase shall be authorized if a system's actuarial
valuation shows both of the following:
1. The system failed to earn an actuarial rate of return in excess of the board approved
rate.
2.The system is less than 80% funded.
Proposed law retains present law for the hazardous duty and the K-through-12 subaccounts.
Proposed law requires that no benefit increase shall be authorized for the rank-and-file or
the postsecondary education subaccount retirees if the actuarial valuation for the system
shows that the system as a whole is less than 80% funded.
Further requires the Public Retirement Systems' Actuarial Committee (PRSAC) to meet as
soon as practicable after the effective date of proposed law to adopt a revised actuarial
valuation containing a revised employer contribution rate taking into account all changes to
the law enacted by the legislature in the 2012 Regular Session.
Further authorizes PRSAC to adopt an actuarial valuation or revised employer contribution
rate proposed by the division of administration to be utilized in FY 2012-2013, which has
been prepared by a qualified actuary from the American Academy of Actuaries.
Effective June 30, 2012.
(Amends R.S. 11:542(A)(2) and (3), (B)(intro. para.), and (F)(2), and 883.1(A)(2) and (3),
(B)(intro. para.), and (G)(2); adds R.S. 11:331, 542(A)(4), (B)(4), and (F)(3), and
883.1(A)(4), (B)(4), and (G)(3))
Summary of Amendments Adopted by Senate
Committee Amendments Proposed by Senate Committee on Retirement to the
original bill
1. Proposed law requires that no benefit increase shall be authorized for the
rank-and-file or the postsecondary education subaccount retirees if the
actuarial valuation for the system shows that the system as a whole is less
than 80% funded.