HLS 14RS-270 ORIGINAL
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Regular Session, 2014
HOUSE BILL NO. 1225
BY REPRESENTATIVE ROBIDEAUX AND SENATOR GUILLORY
RETIREMENT/STATE SYSTEMS: Provides relative to payment of system liabilities and
limits creation of additional liabilities
AN ACT1
To amend and reenact R.S. 11:102(B)(3)(d)(v) through (viii), 102.1(B)(3)(b), (4), and (5)2
and (C)(4) and (5), 102.2(B)(3)(b) and (4) and (C)(4) and (5), 542(A)(2) and (3),3
(C)(1) through (3), and (F)(1), 883.1(A)(2) and (3), (C)(1) through (3), (F), and4
(G)(1), 1145.1(A), (C)(1) through (3), and (D), and 1332(A), (C)(1) through (3), (D),5
and (F) and to enact R.S. 11:102.1(B)(6) and (C)(6) and 102.2(B)(5) and (C)(6),6
relative to the liabilities of the state retirement systems; to provide for payment of7
such liabilities; to limit creation of certain additional liabilities through benefit8
increases; to provide relative to authorization of such benefit increases; to provide9
for an effective date; and to provide for related matters.10
Notice of intention to introduce this Act has been published11
as provided by Article X, Section 29(C) of the Constitution12
of Louisiana.13
Be it enacted by the Legislature of Louisiana:14
Section 1. R.S. 11:102(B)(3)(d)(v) through (viii), 102.1(B)(3)(b), (4), and (5) and15
(C)(4) and (5), 102.2(B)(3)(b) and (4) and (C)(4) and (5), 542(A)(2) and (3), (C)(1) through16
(3), and (F)(1), 883.1(A)(2) and (3), (C)(1) through (3), (F), and (G)(1), 1145.1(A), (C)(1)17
through (3), and (D), and 1332(A), (C)(1) through (3), (D), and (F) are hereby amended and18
reenacted and R.S. 11:102.1(B)(6) and (C)(6) and 102.2(B)(5) and (C)(6) are hereby enacted19
to read as follows: 20 HLS 14RS-270 ORIGINAL
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§102. Employer contributions; determination; state systems1
* * *2
B.3
* * *4
(3) With respect to each state public retirement system, the actuarially5
required employer contribution for each fiscal year, commencing with Fiscal Year6
1989-1990, shall be that dollar amount equal to the sum of:7
* * *8
(d) That fiscal year's payment, computed as of the first of that fiscal year and9
projected to the middle of that fiscal year at the actuarially assumed interest rate,10
necessary to amortize changes in actuarial liability due to:11
* * *12
(v)(aa) Effective July 1, 2004, and beginning with Fiscal Year 1998-1999,13
the amortization period for the changes, gains, or losses of the Louisiana State14
Employees' Retirement System provided in Items (i) through (iv) of this15
Subparagraph shall be thirty years, or in accordance with standards promulgated by16
the Governmental Accounting Standards Board, from the year in which the change,17
gain, or loss occurred. The outstanding balances of amortization bases established18
pursuant to Items (i) through (iv) of this Subparagraph before Fiscal Year19
1998-1999, shall be amortized as a level dollar amount from July 1, 2004, through20
June 30, 2029. Beginning with Fiscal Year 2003-2004, and for each fiscal year21
thereafter, the outstanding balances of amortization bases established pursuant to22
Items (i) through (iv) of this Subparagraph shall be amortized as a level dollar23
amount. For the Louisiana State Employees' Retirement System, effective for the24
June 30, 2010, system valuation and beginning with Fiscal Year 2011-2012,25
amortization payments for changes in actuarial liability shall be determined in26
accordance with Subsection C of this Section.27
(bb)(I) Effective for the June thirtieth valuation for the fiscal year28
immediately following the year in which the system fully liquidates an amortization29 HLS 14RS-270 ORIGINAL
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base established in R.S. 11:102.1 and for each valuation thereafter, after any1
remaining payment required pursuant to R.S. 11:102.1, if the system's investment2
experience for the fiscal year exceeds the system's actuarial assumed rate of return,3
the system shall apply to the oldest outstanding positive amortization base of the4
system, without reamortization of such base, the system's remaining excess5
investment experience returns. For the first valuation to which this Subsubitem6
applies the amount of excess returns to be applied pursuant to the provisions of this7
Subsubitem shall be the excess returns up to the amount of excess investment8
experience returns as equals the last payment made on the liquidated base. Upon9
complete liquidation of such amortization base, any remaining funds shall be applied10
to the next oldest outstanding positive amortization base, without reamortization of11
any such base, until no further funds remain or all such bases are completely12
liquidated. Notwithstanding any provision of this Subitem to the contrary, the13
maximum amount of excess returns to be applied in any subsequent year pursuant14
to this Subsubitem shall equal the prior year's maximum amount increased by the15
percentage increase in the system's actuarial value of assets for the preceding year,16
if any. For the purposes of this Subsubitem, the oldest outstanding positive17
amortization base shall first mean the Original Amortization Base until it is18
completely liquidated, then the Experience Account Amortization Base until it is19
completely liquidated, and then the oldest outstanding debt of the system.20
(II) Effective for the June thirtieth valuation for the fiscal year immediately21
following the year in which the system fully liquidates the last remaining22
amortization base established in R.S. 11:102.1 and for each valuation thereafter, if23
the system's investment experience for the fiscal year exceeds the system's actuarial24
assumed rate of return, the system shall apply to the oldest outstanding positive25
amortization base of the system, without reamortization of such base, the system's26
excess investment experience returns. For the first valuation to which this27
Subsubitem applies, the amount of excess returns to be applied pursuant to the28
provisions of this Subsubitem shall be the excess returns up to the amount of excess29 HLS 14RS-270 ORIGINAL
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investment experience returns as equals the last payment made on the most recently1
liquidated base pursuant to R.S. 11:102.1 plus the last payment made pursuant to2
Subsubitem (I) of this Subitem. Upon complete liquidation of such amortization3
base, any remaining funds shall be applied to the next oldest outstanding positive4
amortization base, without reamortization of any such base, until no further funds5
remain or all such bases are completely liquidated. Notwithstanding any provision6
of this Subitem to the contrary, the maximum amount of excess returns to be applied7
in any subsequent year pursuant to this Subsubitem shall equal the prior year's8
maximum amount increased by the percentage increase in the system's actuarial9
value of assets for the preceding year, if any.10
(cc) Effective for the June thirtieth valuation for the fiscal year immediately11
following the year in which the system fully liquidates the last outstanding12
amortization base established in R.S. 11:102.1 and for each valuation thereafter, the13
system shall apply to the oldest outstanding positive amortization base of the system,14
without reamortization of such base, any amounts that are not credited to the15
experience account due to the limits contained in R.S. 11:542(A). Upon complete16
liquidation of such amortization base, any remaining funds shall be applied to the17
next oldest such outstanding positive amortization base, without reamortization of18
any such base, until no further funds remain or all such bases are completely19
liquidated.20
(vi)(aa) Effective July 1, 2004, and beginning with Fiscal Year 2000-2001,21
the amortization period for the changes, gains, or losses of the Louisiana School22
Employees' Retirement System provided in Items (i) through (iv) of this23
Subparagraph shall be thirty years, or in accordance with standards promulgated by24
the Governmental Accounting Standards Board, from the year in which the change,25
gain, or loss occurred. The outstanding balances of amortization bases established26
pursuant to Items (i) through (iv) of this Subparagraph before Fiscal Year 2000-27
2001, shall be amortized as a level dollar amount from July 1, 2004, through June 30,28
2029. Beginning with Fiscal Year 2003-2004, and for each fiscal year thereafter, the29 HLS 14RS-270 ORIGINAL
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outstanding balances of amortization bases established pursuant to Items (i) through1
(iv) of this Subparagraph shall be amortized as a level dollar amount.2
(bb) Effective for the June 30, 2014, valuation and for each valuation3
thereafter, if the system's investment experience for the fiscal year exceeds the4
system's actuarial assumed rate of return, the system shall apply the excess5
investment experience returns, up to the first fifteen million dollars for the June 30,6
2014, valuation, to the oldest outstanding positive amortization base of the system,7
without reamortization of such base. Upon complete liquidation of such8
amortization base, any remaining funds shall be applied to the next oldest9
outstanding positive amortization base, without reamortization of any such base,10
until no further funds remain or all such bases are completely liquidated.11
Notwithstanding any provision of this Subitem to the contrary, the maximum amount12
of excess returns to be applied in any subsequent year pursuant to this Subitem shall13
equal the prior year's maximum amount increased by the percentage increase in the14
system's actuarial value of assets for the preceding year, if any.15
(cc) Effective for the June 30, 2014, valuation and for each valuation16
thereafter, any amounts that are not credited to the experience account due to the17
limits contained in R.S. 11:1145.1(A) shall be applied to the oldest outstanding18
positive amortization base of the system, without reamortization of such base. Upon19
complete liquidation of such amortization base, any remaining funds shall be applied20
to the next oldest outstanding positive amortization base, without reamortization of21
any such base, until no further funds remain or all such bases are completely22
liquidated.23
(vii)(aa) Effective July 1, 2004, and beginning with Fiscal Year 2000-2001,24
the amortization period for the changes, gains, or losses of the Teachers' Retirement25
System of Louisiana provided in Items (i) through (iv) of this Subparagraph shall be26
thirty years, or in accordance with standards promulgated by the Governmental27
Accounting Standards Board, from the year in which the change, gain, or loss28
occurred. The outstanding balances of amortization bases established pursuant to29 HLS 14RS-270 ORIGINAL
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Items (i) through (iv) of this Subparagraph before Fiscal Year 2000-2001, shall be1
amortized as a level dollar amount from July 1, 2004, through June 30, 2029.2
Beginning with Fiscal Year 2003-2004, and for each fiscal year thereafter, the3
outstanding balances of amortization bases established pursuant to Items (i) through4
(iv) of this Subparagraph shall be amortized as a level dollar amount. For the5
Teachers' Retirement System of Louisiana, effective for the June 30, 2011, system6
valuation and beginning with Fiscal Year 2012-2013, amortization payments for7
changes in actuarial liability shall be determined in accordance with Subsection D8
of this Section.9
(bb)(I) Effective for the June thirtieth valuation for the fiscal year10
immediately following the year in which the system fully liquidates an amortization11
base established in R.S. 11:102.2 and for each valuation thereafter, after any12
remaining payment required pursuant to R.S. 11:102.2, if the system's investment13
experience for the fiscal year exceeds the system's actuarial assumed rate of return,14
the system shall apply to the oldest outstanding positive amortization base of the15
system, without reamortization of such base, the system's remaining excess16
investment experience returns. For the first valuation to which this Subsubitem17
applies the amount of excess returns to be applied pursuant to the provisions of this18
Subsubitem shall be the excess returns up to the amount of excess investment19
experience returns as equals the last payment made on the liquidated base. Upon20
complete liquidation of such amortization base, any remaining funds shall be applied21
to the next oldest outstanding positive amortization base, without reamortization of22
any such base, until no further funds remain or all such bases are completely23
liquidated. Notwithstanding any provision of this Subitem to the contrary, the24
maximum amount of excess returns to be applied in any subsequent year pursuant25
to this Subsubitem shall equal the prior year's maximum amount increased by the26
percentage increase in the system's actuarial value of assets for the preceding year,27
if any. For the purposes of this Subitem, the oldest outstanding positive amortization28
base shall first mean the Original Amortization Base until it is completely liquidated,29 HLS 14RS-270 ORIGINAL
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then the Experience Account Amortization Base until it is completely liquidated, and1
then the oldest outstanding debt of the system.2
(II) Effective for the June thirtieth valuation for the fiscal year immediately3
following the year in which the system fully liquidates the last remaining4
amortization base established in R.S. 11:102.2 and for each valuation thereafter, if5
the system's investment experience for the fiscal year exceeds the system's actuarial6
assumed rate of return, the system shall apply to the oldest outstanding positive7
amortization base of the system, without reamortization of such base, the system's8
excess investment experience returns. For the first valuation to which this9
Subsubitem applies, the amount of excess returns to be applied pursuant to the10
provisions of this Subsubitem shall be the excess returns up to the amount of excess11
investment experience returns as equals the last payment made on the most recently12
liquidated base pursuant to R.S. 11:102.2 plus the last payment made pursuant to13
Subsubitem (I) of this Subitem. Upon complete liquidation of such amortization14
base, any remaining funds shall be applied to the next oldest outstanding positive15
amortization base, without reamortization of any such base, until no further funds16
remain or all such bases are completely liquidated. Notwithstanding any provision17
of this Subitem to the contrary, the maximum amount of excess returns to be applied18
in any subsequent year pursuant to this Subsubitem shall equal the prior year's19
maximum amount increased by the percentage increase in the system's actuarial20
value of assets for the preceding year, if any.21
(cc) Effective for the June thirtieth valuation for the fiscal year immediately22
following the year in which the system fully liquidates the last outstanding23
amortization base established in R.S. 11:102.2 and for each valuation thereafter, the24
system shall apply to the oldest outstanding positive amortization base of the system,25
without reamortization of such base, any amounts that are not credited to the26
experience account due to the limits contained in R.S. 11:883.1(A). Upon complete27
liquidation of such amortization base, any remaining funds shall be applied to the28
next oldest such outstanding positive amortization base, without reamortization of29 HLS 14RS-270 ORIGINAL
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any such base, until no further funds remain or all such bases are completely1
liquidated.2
(viii)(aa) Effective July 1, 2009, and beginning with Fiscal Year 1992-1993,3
the amortization period for the changes, gains, or losses of the Louisiana State Police4
Retirement System provided in Items (i) through (iv) of this Subparagraph shall be5
thirty years, or in accordance with standards promulgated by the Governmental6
Accounting Standards Board, from the year in which the change, gain, or loss7
occurred. The outstanding balances of amortization bases established pursuant to8
Items (i) through (iv) of this Subparagraph before Fiscal Year 2008-2009, shall be9
amortized as a level dollar amount from July 1, 2009, through June 30, 2029.10
Beginning with Fiscal Year 2008-2009, and for each fiscal year thereafter, the11
outstanding balances of amortization bases established pursuant to Items (i) through12
(iv) of this Subparagraph shall be amortized as a level dollar amount.13
(bb) Effective for the June 30, 2014, valuation and for each valuation14
thereafter, if the system's investment experience for the fiscal year exceeds the15
system's actuarial assumed rate of return, the system shall apply the excess16
investment experience returns, up to the first five million dollars for the June 30,17
2014, valuation, to the oldest outstanding positive amortization base of the system,18
without reamortization of such base. Upon complete liquidation of such19
amortization base, any remaining funds shall be applied to the next oldest20
outstanding positive amortization base, without reamortization of any such base,21
until no further funds remain or all such bases are completely liquidated.22
Notwithstanding any provision of this Subitem to the contrary, the maximum amount23
of excess returns to be applied in any subsequent year pursuant to this Subsubitem24
shall equal the prior year's maximum amount increased by the percentage increase25
in the system's actuarial value of assets for the preceding year, if any.26
(cc) Effective for the June 30, 2014, valuation and for each valuation27
thereafter, any amounts that are not credited to the experience account due to the28
limits contained in R.S. 11:1332(A) shall be applied to the oldest outstanding29 HLS 14RS-270 ORIGINAL
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positive amortization base of the system, without reamortization of such base. Upon1
complete liquidation of such amortization base, any remaining funds shall be applied2
to the next oldest outstanding positive amortization base, without reamortization of3
any such base, until no further funds remain or all such bases are completely4
liquidated.5
* * *6
§102.1. Consolidation of amortization payment schedules; Louisiana State7
Employees' Retirement System8
* * *9
B. Original amortization base.10
* * *11
(3)12
* * *13
(b) The first payment after this consolidation shall be made in Fiscal Year14
2010-2011 and the final payment in shall be made no later than Fiscal Year 2028-15
2029.16
(4)(a) In any year in which the system exceeds its actuarially-assumed rate17
of return, the first fifty million dollars of excess returns, up to the first fifty million18
for the June 30, 2014, valuation, shall be applied to the remaining balance of the19
original amortization base established in this Subsection. The maximum amount of20
excess returns to be applied in any subsequent year pursuant to the provisions of this21
Subparagraph shall equal the prior year's maximum amount increased by the22
percentage increase in the system's actuarial value of assets for the preceding year,23
if any.24
(b) After such application, the net remaining liability shall be reamortized25
over the remaining amortization period with annual payments calculated as provided26
in this Subsection or as otherwise provided by law. Notwithstanding any provision27
of this Subparagraph to the contrary, beginning with the June 30, 2014, valuation and28
continuing with each valuation thereafter, the net remaining liability shall not be29 HLS 14RS-270 ORIGINAL
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reamortized after application of the funds applied pursuant to the provisions of1
Subparagraph (a) of this Paragraph.2
(5) Notwithstanding the provisions of R.S. 11:102(B)(3)(c) and (5) or any3
other provision of law to the contrary, in any year through Fiscal Year 2016-2017 in4
which the system receives an overpayment of employer contributions as determined5
pursuant to R.S. 11:102(B)(2) and in any year through Fiscal Year 2016-2017 in6
which the system receives additional contributions pursuant to R.S. 11:102(B)(5),7
the amount of such overpayment or additional contribution shall be applied to the8
remaining balance of the original amortization base established pursuant to this9
Subsection. After such application, the net remaining liability shall be reamortized10
over the remaining amortization period with annual payments calculated as provided11
in this Subsection or as otherwise provided by law. Notwithstanding any provision12
of this Paragraph to the contrary, beginning with the June 30, 2014, valuation and13
continuing with each valuation thereafter, the net remaining liability shall not be14
reamortized after application of the funds applied pursuant to the provisions of this15
Paragraph.16
(6) Effective for the June 30, 2014, valuation and for each valuation17
thereafter until the base established pursuant to the provisions of this Subsection is18
completely liquidated, to such base shall be applied any amounts that are not credited19
to the experience account due to the limits contained in R.S. 11:542(A), without20
reamortization of such base21
C. Experience account amortization base.22
* * *23
(4)(a) In any year in which the excess returns of the system exceed the24
amount in Paragraph applied to the Original Amortization Base pursuant to25
Subparagraph (B)(4)(a) of this Section, the remaining excess returns, up to the next26
fifty million dollars for the June 30, 2014, valuation, of excess returns shall be27
applied to the experience account amortization base established in this Subsection.28
The maximum amount of excess returns to be applied in any subsequent year29 HLS 14RS-270 ORIGINAL
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pursuant to the provisions of this Subparagraph shall equal the prior year's maximum1
amount increased by the percentage increase in the system's actuarial value of assets2
for the preceding year, if any.3
(b) After such application, the net remaining liability shall be reamortized4
over the remaining amortization period with annual payments calculated as provided5
in this Subsection or as otherwise provided by law. Notwithstanding any provision6
of this Subparagraph to the contrary, beginning with the June 30, 2014, valuation and7
continuing with each valuation thereafter, the net remaining liability shall not be8
reamortized after application of the funds applied pursuant to the provisions of9
Subparagraph (a) of this Paragraph.10
(5) Notwithstanding the provisions of R.S. 11:102(B)(3)(c) and (5) or any11
other provision of law to the contrary, in any year from Fiscal Year 2017-201812
through Fiscal Year 2039-2040 in which the system receives an overpayment of13
employer contributions as determined pursuant to R.S. 11:102(B)(2) and in any year14
from Fiscal Year 2017-2018 through Fiscal Year 2039-2040 in which the system15
receives additional contributions pursuant to R.S. 11:102(B)(5), the amount of such16
overpayment or additional contribution shall be applied to the remaining balance of17
the experience account amortization base established pursuant to this Subsection.18
After such application, the net remaining liability shall be reamortized over the19
remaining amortization period with annual payments calculated as provided in this20
Subsection or as otherwise provided by law. Notwithstanding any provision of this21
Paragraph to the contrary, beginning with the June 30, 2014, valuation and22
continuing with each valuation thereafter, the net remaining liability shall not be23
reamortized after application of the funds applied pursuant to the provisions of this24
Paragraph.25
(6) Effective for the valuation for the year in which the amortization base26
established pursuant to Subsection B of this Section is completely liquidated and for27
each valuation thereafter, to the Experience Account Amortization Base shall be28 HLS 14RS-270 ORIGINAL
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applied any amounts that are not credited to the experience account due to the limits1
contained in R.S. 11:542(A), without reamortization of such base.2
§102.2. Consolidation of amortization payment schedules; Teachers' Retirement3
System of Louisiana4
* * *5
B. Original amortization base.6
* * *7
(3)8
* * *9
(b) The first payment shall be made in Fiscal Year 2010-2011 and the final10
payment in shall be made no later than Fiscal Year 2028-2029.11
(4)(a) In any year in which the system exceeds its actuarially-assumed rate12
of return, the first one hundred million dollars of excess returns, up to the first one13
hundred million dollars for the June 30, 2014, valuation, shall be applied to the14
remaining balance of the original amortization base established in this Subsection.15
The maximum amount of excess returns to be applied in any subsequent year16
pursuant to the provisions of this Subparagraph shall equal the prior year's maximum17
amount increased by the percentage increase in the system's actuarial value of assets18
for the preceding year, if any.19
(b) After such application, the net remaining liability shall be reamortized20
over the remaining amortization period with annual payments as provided in this21
Subsection or as otherwise provided by law. Notwithstanding any provision of this22
Subparagraph to the contrary, beginning with the June 30, 3014, valuation and23
continuing with each valuation thereafter, the net remaining liability shall not be24
reamortized after application of the funds applied pursuant to the provisions of25
Subparagraph (a) of this Paragraph.26
(5) Effective for the June 30, 2014, valuation and for each valuation27
thereafter until the base established pursuant to the provisions of this Subsection is28
completely liquidated, to such base shall be applied any amounts that are not credited29 HLS 14RS-270 ORIGINAL
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to the experience account due to the limits contained in R.S. 11:883.1(A), without1
reamortization of such base.2
C. Experience account amortization base.3
* * *4
(4)(a) In any year in which the excess returns of the system exceed the5
amount in Paragraph applied to the Original Amortization Base pursuant to6
Subparagraph (B)(4)(a) of this Section, the remaining excess returns, up to the next7
one hundred million dollars for the June 30, 2014, valuation, of excess returns shall8
be applied to the experience account amortization base established in this Subsection.9
The maximum amount of excess returns to be applied in any subsequent year10
pursuant to the provisions of this Subparagraph shall equal the prior year's maximum11
amount increased by the percentage increase in the system's actuarial value of assets12
for the preceding year, if any.13
(b) After such application, the net remaining liability shall be reamortized14
over the remaining amortization period with annual payments calculated as provided15
in this Subsection or as otherwise provided by law. Notwithstanding any provision16
of this Subparagraph to the contrary, beginning with the June 30, 2014, valuation and17
continuing with each valuation thereafter, the net remaining liability shall not be18
reamortized after application of the funds applied pursuant to the provisions of19
Subparagraph (a) of this Paragraph.20
(5) Notwithstanding the provisions of R.S. 11:102(B)(3)(c) and (5) or any21
other provision of law to the contrary, in any year from Fiscal Year 2009-201022
through Fiscal Year 2039-2040 in which the system receives an overpayment of23
employer contributions as determined pursuant to R.S. 11:102(B)(2) and in any year24
from Fiscal Year 2009-2010 through Fiscal Year 2039-2040 in which the system25
receives additional contributions pursuant to R.S. 11:102(B)(5), the amount of such26
overpayment or additional contribution shall be applied to the remaining balance of27
the experience account amortization base established pursuant to this Subsection.28
After such application, the net remaining liability shall be reamortized over the29 HLS 14RS-270 ORIGINAL
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remaining amortization period with annual payments calculated as provided in this1
Subsection or as otherwise provided by law. Notwithstanding any provision of this2
Paragraph to the contrary, beginning with the June 30, 2014, valuation and3
continuing with each valuation thereafter, the net remaining liability shall not be4
reamortized after application of the funds applied pursuant to the provisions of this5
Paragraph.6
(6) Effective for the valuation for the year in which the amortization base7
established pursuant to Subsection B of this Section is completely liquidated and for8
each valuation thereafter, to the Experience Account Amortization Base shall be9
applied any amounts that are not credited to the experience account due to the limits10
contained in R.S. 11:883.1(A), without reamortization of such base.11
* * *12
§542. Experience account13
A.14
* * *15
(2) The experience account shall be credited as follows:16
(a) To the extent permitted by Paragraph (3) of this Subsection and after17
allocation to the consolidated amortization bases as provided in R.S. 11:102.1 R.S.18
11:102(B)(3)(d)(v)(bb) and 102.1, as applicable, an amount not to exceed fifty19
percent of the remaining balance of the prior year's net investment experience gain20
as determined by the system's actuary.21
(b) To the extent permitted by Paragraph (3) of this Subsection, an amount22
not to exceed that portion of the system's net investment income attributable to the23
balance in the experience account during the prior year.24
(3)(a) In no event shall the amount a credit be made to the account that25
would cause the balance in the experience account to exceed the reserve necessary26
to grant:27
(i) Two two permanent benefit increases as provided in determined pursuant28
to Subsection C of this Section if the system is eighty-five percent funded or greater.29 HLS 14RS-270 ORIGINAL
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(ii) One permanent benefit increase as determined pursuant to Subsection C1
of this Section if the system is less than eighty-five percent funded.2
(b) If the system is less than eighty-five percent funded and has reserves in3
excess of the amounts provided for in Item (a)(ii) of this Paragraph, it shall not apply4
credits to the account pursuant to Subparagraph (2)(b) of this Subsection.5
* * *6
C.(1) In accordance with the provisions of this Section, the board of trustees7
may recommend to the president of the Senate and the speaker of the House of8
Representatives that the system be permitted to legislature grant a permanent benefit9
increase to retirees, survivors, and beneficiaries whenever the conditions in10
Subsection F of this Section are satisfied and the balance in the experience account11
is sufficient to fund such benefit fully on an actuarial basis, as determined by the12
system's actuary. If the legislative auditor's actuary disagrees with the determination13
of the system's actuary, a permanent benefit increase shall not be granted. The board14
of trustees shall not grant a permanent benefit increase unless such permanent benefit15
increase has been approved by the legislature by concurrent resolution adopted by16
the favorable vote of a majority of the elected members of each house. Any such17
permanent benefit increase granted on or before June 30, 2015, shall be limited to18
and shall only be payable based on an amount not to exceed seventy thousand dollars19
of the retiree's annual benefit. Any such permanent benefit increase granted on or20
after July 1, 2015, shall be limited to and shall only be payable based on an amount21
not to exceed sixty thousand dollars of the retiree's annual benefit. ; however,22
effective Effective for years after July 1, 1999, and on or before June 30, 2015, the23
seventy-thousand dollar limit shall be increased each year in an amount equal to any24
increase in the consumer price index (U.S. city average for all urban consumers25
(CPI-U)) for the preceding year, if any. Effective on or after July 1, 2015, the sixty-26
thousand dollar limit shall be increased each year in an amount equal to any increase27
in the consumer price index, (U.S. city average for all urban consumers (CPI-U)) for28
the twelve month period ending on the system's valuation date, if any. Any increase29 HLS 14RS-270 ORIGINAL
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granted pursuant to the provisions of this Subsection Section shall begin on the July1
first following legislative approval, shall be payable annually, and shall equal an2
amount not to exceed the lesser of:3
(a) Three percent.(b) An amount as determined in Paragraph (2) of this4
Subsection.5
(b)(2) If the The increase in the consumer price index, U.S. city average for6
all urban consumers (CPI-U), as prepared by the U.S. Department of Labor, Bureau7
of Labor Statistics, for the twelve month period ending on the system's valuation date8
calendar year immediately preceding the permanent benefit increase is less than three9
percent, then the permanent benefit increase shall be a sum equal to the CPI-U10
increase for that prior calendar year, if any. If the balance in the experience account11
is not sufficient to fund that sum, no increase shall be granted.12
(2)(a) If the system is eighty-five percent funded or greater, three percent.13
(b) If the system is at least seventy-five percent funded but less than eighty-14
five percent funded and the legislature has not granted a benefit increase in the15
preceding fiscal year, two and one-half percent.16
(c) If the system is at least sixty-five percent funded but less than seventy-17
five percent funded and the legislature has not granted a benefit increase in the18
preceding fiscal year, two percent.19
(d) If the system is at least fifty-five percent funded but less than sixty-five20
percent funded and the legislature has not granted a benefit increase in the preceding21
fiscal year, one and one-half percent.22
(e) If the system is less than fifty-five percent funded or if the legislature has23
granted a benefit increase in the preceding fiscal year, no increase shall be granted.24
(3) The Subject to the limitations contained in Paragraph (1) of this25
Subsection, the percentage of each recipient's permanent benefit increase shall be26
based on the benefit being paid to the recipient on the effective date of the increase.27
* * *28 HLS 14RS-270 ORIGINAL
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F. (1)The permanent benefit increase which is authorized by Subsection C1
of this Section shall be limited to the lesser of either two percent or an amount as2
determined in Paragraph (C)(2) Subparagraph (C)(1)(b) of this Section in or for any3
year in which the system does not earn an actuarial rate of return of at least eight and4
one-quarter percent interest on the investment of the system's assets.5
* * *6
§883.1. Experience account7
A.8
* * *9
(2) The experience account shall be credited as follows:10
(a) To the extent permitted by Paragraph (3) of this Subsection and after11
allocation to the consolidated amortization bases as provided in R.S. 11:102.2 R.S.12
11:102(B)(3)(d)(vii)(bb) and 102.2, as applicable, an amount not to exceed fifty13
percent of the remaining balance of the prior year's net investment experience gain14
as determined by the system's actuary.15
(b) To the extent permitted by Paragraph (3) of this Subsection, an amount16
not to exceed that portion of the system's net investment income attributable to the17
balance in the experience account during the prior year.18
(3)(a) In no event shall the amount a credit be made to the account that19
would cause the balance in the experience account to exceed the reserve necessary20
to grant:21
(i) Two two permanent benefit increases as provided in determined pursuant22
to Subsection C of this Section if the system is eighty-five percent funded or greater.23
(ii) One permanent benefit increase as determined pursuant to Subsection C24
of this Section if the system is less than eighty-five percent funded.25
(b) If the system is less than eighty-five percent funded and has reserves in26
excess of the amounts provided for in Item (a)(ii) of this Paragraph, it shall not apply27
credits to the account pursuant to Subparagraph (2)(b) of this Subsection.28
* * *29 HLS 14RS-270 ORIGINAL
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C.(1) In accordance with the provisions of this Section, the board of trustees1
may recommend to the president of the Senate and the speaker of the House of2
Representatives that the system be permitted to legislature grant a permanent benefit3
increase to retirees and beneficiaries whenever the conditions in Subsection G of this4
Section are satisfied and the balance in the experience account is sufficient to fund5
such benefit fully on an actuarial basis, as determined by the system's actuary. If the6
legislative auditor's actuary disagrees with the determination of the system's actuary,7
a permanent benefit increase shall not be granted. The board of trustees shall not8
grant a permanent benefit increase unless such permanent benefit increase has been9
approved by the legislature by concurrent resolution adopted by a favorable vote of10
a majority of the elected members of each house. Any increase granted pursuant to11
the provisions of this Section shall begin on the July first following legislative12
approval, shall be payable annually, and shall equal an amount not to exceed the13
lesser of:14
(a) Three percent.(b) An amount as determined in Paragraph (2) of this15
Subsection.16
(2)(b) If the The increase in the consumer price index, U.S. city average for17
all urban consumers (CPI-U), as prepared by the U.S. Department of Labor, Bureau18
of Labor Statistics, for the twelve month period ending on the system's valuation date19
calendar year immediately preceding the permanent benefit increase is less than three20
percent, then the permanent benefit increase shall be a sum equal to the CPI-U21
increase for that prior calendar year, if any. If the balance in the experience account22
is not sufficient to fund that sum, no increase shall be granted.23
(2)(a) If the system is eighty-five percent funded or greater, three percent.24
(b) If the system is at least seventy-five percent funded but less than eighty-25
five percent funded and the legislature has not granted a benefit increase in the26
preceding fiscal year, two and one-half percent.27 HLS 14RS-270 ORIGINAL
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(c) If the system is at least sixty-five percent funded but less than seventy-1
five percent funded and the legislature has not granted a benefit increase in the2
preceding fiscal year, two percent.3
(d) If the system is at least fifty-five percent funded but less than sixty-five4
percent funded and the legislature has not granted a benefit increase in the preceding5
fiscal year, one and one-half percent.6
(e) If the system is less than fifty-five percent funded or if the legislature has7
granted a benefit increase in the preceding fiscal year, no increase shall be granted.8
(3) The Subject to the limitations contained in Subsection (F) of this9
Subsection, the percentage of each recipient's permanent benefit increase shall be10
based on the benefit being paid to the recipient on the effective date of the increase.11
* * *12
F.(1) Notwithstanding any other provisions of this Section to the contrary,13
any permanent benefit increase granted on or before June 30, 2015, shall be14
calculated only on the first seventy thousand dollars of the retiree's annual retirement15
benefit. (2) The This seventy-thousand dollar limit provided for in Paragraph (1)16
of this Subsection shall be increased each year in an amount equal to any increase17
in the consumer price index, U.S. city average for all urban consumers (CPI-U) for18
the preceding year, if any.19
(2) Notwithstanding any other provisions of this Section to the contrary, any20
permanent benefit increase granted on or after July 1, 2015, shall be calculated only21
on the first sixty thousand dollars of the retiree's annual retirement benefit. This22
sixty-thousand dollar limit shall be increased each year in an amount equal to any23
increase in the consumer price index, U.S. city average for all urban consumers (CPI-24
U) for the immediately preceding one-year period ending in June, if any.25
G.(1) The permanent benefit increase which is authorized by Subsection C26
of this Section shall be limited to the lesser of either two percent or an amount as27
determined in Paragraph (C)(2) Subparagraph (C)(1)(b) of this Section in or for any28 HLS 14RS-270 ORIGINAL
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year in which the system does not earn an actuarial rate of return of at least eight and1
one-quarter percent interest on the investment of the system's assets.2
* * *3
§1145.1. Employee Experience Account4
A.(1) The Employee Experience Account shall be credited as follows:5
(a) To the extent permitted by Paragraph (2) of this Subsection and after6
allocation as provided in R.S. 11:102(B)(3)(d)(vi)(bb), an amount not to exceed fifty7
percent of the prior year's net investment experience gain as determined by the8
system's actuary.9
(b) To the extent permitted by Paragraph (2) of this Subsection, an amount10
not to exceed that portion of the system's net investment income attributable to the11
balance in the Employee Experience Account during the prior year.12
(2)(a) In no event shall the amount a credit be made to the account that13
would cause the balance in the Employee Experience Account to exceed the reserve14
necessary to grant :15
(i) Two two cost-of-living adjustments determined pursuant to Subsection16
C of this Section if the system is eighty-five percent funded or greater.17
(ii) One permanent benefit increase as determined pursuant to Subsection C18
of this Section if the system is less than eighty-five percent funded.19
(b) If the system is less than eighty-five percent funded and has reserves in20
excess of the amounts provided for in Item (a)(ii) of this Paragraph, it shall not apply21
credits to the account pursuant to Subparagraph (1)(b) of this Subsection.22
* * *23
C.(1) In accordance with the provisions of this Section, the board of trustees24
may recommend to the president of the Senate and the speaker of the House of25
Representatives that the system be permitted to legislature grant a cost-of-living26
adjustment to retirees and beneficiaries whenever the conditions in this Section are27
satisfied and the balance in the Employee Experience Account is sufficient to fully28
fund such benefit on an actuarial basis, as determined by the system's actuary. If the29 HLS 14RS-270 ORIGINAL
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legislative actuary disagrees with the determination of the system's actuary, a1
cost-of-living adjustment shall not be granted. The board of trustees shall not grant2
a cost-of-living adjustment as provided in this Subsection unless such cost-of-living3
adjustment has been approved by the legislature by concurrent resolution adopted by4
the favorable vote of a majority of the elected members of each house. Any such5
cost-of-living adjustment granted on or before June 30, 2015, shall be limited to and6
shall only be payable based on an amount not to exceed eighty-five thousand dollars7
of the retiree's annual benefit. Any such cost-of-living adjustment granted on or after8
July 1, 2015, shall be limited to and shall only be payable based on an amount not9
to exceed sixty thousand dollars of the retiree's annual benefit.; however, effective10
Effective for years after July 1, 2007, and on or before June 30, 2015, the eighty-five11
thousand dollar limit shall be increased each year in an amount equal to the increase12
in the Consumer Price Index (United States city average for all urban consumers13
(CPI-U)), as prepared by the United States Department of Labor, Bureau of Labor14
Statistics, for the preceding calendar year, if any. Effective on or after July 1, 2015,15
the sixty-thousand dollar limit shall be increased each year in an amount equal to any16
increase in the consumer price index (U.S. city average for all urban consumers17
(CPI-U)) for the twelve month period ending on the system's valuation date, if any.18
Any cost-of-living adjustment granted pursuant to the provisions of this Subsection19
Section shall begin on July first following legislative approval, shall be payable20
annually, and shall equal an amount not to exceed the lesser of:21
(a) Three percent.(b) An amount as determined in Paragraph (2) of this22
Subsection.23
(b)(2) If the The increase in the Consumer Price Index (United States city24
average for all urban consumers (CPI-U)), as prepared by the United States25
Department of Labor, Bureau of Labor Statistics, for the twelve month period ending26
on the system's valuation date calendar year immediately preceding the cost-of-living27
adjustment is less than three percent, then the cost-of-living adjustment shall be a28
sum equal to the CPI-U increase for that prior calendar year, if any.29 HLS 14RS-270 ORIGINAL
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(2)(a) If the system is eighty-five percent funded or greater, three percent.1
(b) If the system is at least seventy-five percent funded but less than eighty-2
five percent funded and the legislature has not granted a benefit increase in the3
preceding fiscal year, two and one-half percent.4
(c) If the system is at least sixty-five percent funded but less than seventy-5
five percent funded and the legislature has not granted a benefit increase in the6
preceding fiscal year, two percent.7
(d) If the system is at least fifty-five percent funded but less than sixty-five8
percent funded and the legislature has not granted a benefit increase in the preceding9
fiscal year, one and one-half percent.10
(e) If the system is less than fifty-five percent funded or if the legislature has11
granted a benefit increase in the preceding fiscal year, no increase shall be granted.12
(3) The Subject to the limitations contained in Paragraph (1) of this13
Subsection, the percentage of each recipient's cost-of-living adjustment shall be14
based on the benefit being paid to the recipient on the effective date of the increase.15
* * *16
D. The cost-of-living increase which is authorized by Subsection C of this17
Section shall be limited to the lesser of either two percent or an amount determined18
as provided in Paragraph (C)(2) Subparagraph (C)(1)(b) of this Section in or for any19
year in which the system does not earn the required actuarial rate of return as20
certified by the system's actuary.21
* * *22
§1332. Employee Experience Account23
A.(1) The Employee Experience Account shall be credited as follows:24
(a) To the extent permitted by Paragraph (2) of this Subsection and after the25
allocation as provided in R.S. 11:102(B)(3)(d)(viii)(bb), an amount not to exceed26
fifty percent of the prior year's net investment experience gain as determined by the27
system's actuary.28 HLS 14RS-270 ORIGINAL
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(b) To the extent permitted by Paragraph (2) of this Subsection, an amount1
not to exceed that portion of the system's net investment income attributable to the2
balance in the Employee Experience Account during the prior year.3
(2)(a) In no event shall the amount a credit be made to the account that4
would cause the balance in the Employee Experience Account to exceed the reserve5
necessary to grant :6
(i) Two two cost-of-living adjustments determined pursuant to Subsection7
C of this Section if the system is eighty-five percent funded or greater.8
(ii) One permanent benefit increase as determined pursuant to Subsection C9
of this Section if the system is less than eighty-five percent funded.10
(b) If the system is less than eighty-five percent funded and has reserves in11
excess of the amounts provided for in Item (a)(ii) of this Paragraph, it shall not apply12
credits to the account pursuant to Subparagraph (1)(b) of this Subsection.13
* * *14
C.(1) In accordance with the provisions of this Section, the board of trustees15
may recommend to the president of the Senate and the speaker of the House of16
Representatives that the system be permitted to legislature grant a cost-of-living17
adjustment to retirees and beneficiaries whenever the conditions in this Section are18
satisfied and the balance in the Employee Experience Account is sufficient to fully19
fund such benefit on an actuarial basis, as determined by the system's actuary. If the20
legislative actuary disagrees with the determination of the system's actuary, a21
cost-of-living adjustment shall not be granted. The board of trustees shall not grant22
a cost-of-living adjustment as provided in this Subsection unless such cost-of-living23
adjustment has been approved by the legislature by concurrent resolution adopted by24
the favorable vote of a majority of the elected members of each house. Any such25
cost-of-living adjustment granted on or before June 30, 2015, shall be limited to and26
shall only be payable based on an amount not to exceed eighty-five thousand dollars27
of the retiree's annual benefit. Any such cost-of-living adjustment granted on or after28
July 1, 2015, shall be limited to and shall only be payable based on an amount not29 HLS 14RS-270 ORIGINAL
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to exceed sixty thousand dollars of the retiree's annual benefit. ; however, effective1
Effective for years after July 1, 2007, and on or before June 30, 2015, the eighty-five2
thousand dollar limit shall be increased each year in an amount equal to the increase3
in the Consumer Price Index consumer price index (United States city average for4
all urban consumers (CPI-U)), as prepared by the United States Department of5
Labor, Bureau of Labor Statistics, for the preceding calendar year, if any. Effective6
on or after July 1, 2015, the sixty-thousand dollar limit shall be increased each year7
in an amount equal to any increase in the consumer price index (U.S. city average8
for all urban consumers (CPI-U)) for the twelve month period ending on the system's9
valuation date, if any. Any adjustment granted pursuant to the provisions of this10
Subsection Section shall begin on July first following legislative approval, shall be11
payable annually, and shall equal an amount not to exceed the lesser of:12
(a) Three percent.(b) An amount as determined in Paragraph (2) of this13
Subsection.14
(b)(2) If the The increase in the Consumer Price Index consumer price index15
(United States city average for all urban consumers (CPI-U)), as prepared by the16
United States Department of Labor, Bureau of Labor Statistics, for the twelve month17
period ending on the system's valuation date calendar year immediately preceding18
the cost-of-living adjustment is less than three percent, then the cost-of-living19
adjustment shall be a sum equal to the CPI-U increase for that prior calendar year,20
if any.21
(2)(a) If the system is eighty-five percent funded or greater, three percent.22
(b) If the system is at least seventy-five percent funded but less than eighty-23
five percent funded and the legislature has not granted a benefit increase in the24
preceding fiscal year, two and one-half percent.25
(c) If the system is at least sixty-five percent funded but less than seventy-26
five percent funded and the legislature has not granted a benefit increase in the27
preceding fiscal year, two percent.28 HLS 14RS-270 ORIGINAL
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(d) If the system is at least fifty-five percent funded but less than sixty-five1
percent funded and the legislature has not granted a benefit increase in the preceding2
fiscal year, one and one-half percent.3
(e) If the system is less than fifty-five percent funded, no increase shall be4
granted.5
(3) The Subject to the limitations contained in Paragraph (1) of this6
Subsection, the percentage of each recipient's cost-of-living adjustment shall be7
based on the benefit being paid to the recipient on the effective date of the increase.8
* * *9
D. The cost-of-living increase which is authorized by Subsection C of this10
Section shall be limited to the lesser of either two percent or an amount determined11
as provided in Paragraph (C)(2) Subparagraph (C)(1)(b) of this Section in or for any12
year in which the system does not earn the required actuarial rate of return as13
certified by the system's actuary.14
* * *15
F. In addition to the cost-of-living adjustment authorized by Subsection C16
of this Section, the board of trustees may grant recommend to the legislature that a17
supplemental cost-of-living adjustment be granted to all retirees and beneficiaries18
who are at least age sixty-five, which shall consist of an amount equal to two percent19
of the benefit being received on the date of the adjustment. In order to grant such20
supplemental cost-of-living adjustment, the board of trustees shall recommend to the21
president of the Senate and the speaker of the House of Representatives that the22
system be permitted to legislature grant such supplemental cost-of-living adjustment23
to retirees and beneficiaries whenever the balance in the Employee Experience24
Account is sufficient to fully fund such benefit on an actuarial basis, as determined25
by the system's actuary. If the legislative actuary disagrees with the determination26
of the system's actuary, such supplemental cost-of-living adjustment shall not be27
granted. The board of trustees shall not grant such supplemental cost-of-living28
adjustment as provided in this Subsection unless such supplemental cost-of-living29 HLS 14RS-270 ORIGINAL
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adjustment has been approved by the legislature by concurrent resolution adopted by1
the favorable vote of a majority of the elected members of each house. Any such2
supplemental cost-of-living adjustment paid on or before June 30, 2015, shall be3
limited to and shall only be payable based on an amount not to exceed eighty-five4
thousand dollars of the retiree's annual benefit. Any such supplemental cost-of-5
living adjustment paid on or after July 1, 2015, shall be limited to and shall only be6
payable based on an amount not to exceed sixty thousand dollars of the retiree's7
annual benefit. ; however, effective Effective on and for years after July 1, 2007,8
and on or before June 30, 2015, the eighty-five thousand dollar limit shall be9
increased each year in an amount equal to the increase in the Consumer Price Index10
consumer price index (United States city average for all urban consumers (CPI-U)),11
as prepared by the United States Department of Labor, Bureau of Labor Statistics,12
for the preceding calendar year, if any. Effective on and after July 1, 2015, the sixty-13
thousand dollar limit shall be increased each year in an amount equal to the increase14
in the consumer price index (United States city average for all urban consumers15
(CPI-U)), as prepared by the United States Department of Labor, Bureau of Labor16
Statistics, for the twelve month period ending on the system's valuation date, if any.17
Any cost-of-living adjustment granted pursuant to the provisions of this Subsection18
shall begin on July first following legislative approval and shall be payable annually.19
Section 2. In order to assure uniform implementation of the provisions of this Act,20
the systems shall prepare and present to the Louisiana Legislative Auditor a written policy21
explaining in detail each aspect of system procedure that will be applied in the22
implementation of this Act. The policy shall be submitted to the auditor no later than23
September 2, 2014. After the auditor has reviewed the policy, the Public Retirement24
Systems' Actuarial Committee shall meet to review and consider approval of the policy. The25
chair of the committee shall convene a meeting for this review and consideration before26
December 31, 2014. Approval of the policy shall require a unanimous vote of all committee27
members.28 HLS 14RS-270 ORIGINAL
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Section 3. The provisions of this Act shall become effective if and when the Acts1
which originated as Senate Bill Nos. 16, 18, 19, and 21 of the 2014 Regular Session of2
Legislature become effective.3
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
Robideaux HB No. 1225
Abstract: Requires the four state retirement systems (Louisiana State Employees'
Retirement System (LASERS); Teachers' Retirement System of Louisiana (TRSL);
Louisiana School Employees' Retirement System (LSERS); and State Police
Retirement System (STPOL)) to apply certain amounts of excess investment returns
to their outstanding debt and limits creation of additional liabilities through benefit
increases.
Proposed law generally requires increased payments to outstanding debts of state retirement
systems and restricts the creation of additional system liabilities by limiting the amount and
frequency of benefit increases.
Debt Payments from Excess Returns
Proposed law, as more fully explained below, generally requires each system to apply to its
oldest debt a portion of each year's excess investment returns. The amount paid will increase
each year in proportion to the growth in the system's actuarial value of assets.
Present law (R.S. 11:102) establishes the calculation of employer contribution rates for state
retirement systems. A portion of the rate is calculated based on the that year's required
amortization payment on outstanding system debt. Proposed law retains present law.
Teachers and State Employees
Both LASER and TRSL have remaining unfunded accrued liability that existed as of June
30, 1988 (IUAL). For each system, the IUAL debt has been consolidated into an
amortization based called the Original Amortization Base (OAB) and the debts of the system
between 1988 and 2009 have been consolidated into an amortization base called the
Experience Account Amortization Base (EAAB).
Present law for LASERS (R.S. 11:102.1) requires the first $50 million of the system's excess
returns to be applied to the OAB. Further requires the next $50 million of excess returns to
be applied to the EAAB. Present law for TRSL (R.S. 11:102.2) requires the first $100
million of the system's excess returns be applied to the OAB. Further requires the next $100
million of excess returns to be applied to the EAAB.
Proposed law indexes these required payments to the percentage increase in the system's
actuarial value of assets for the preceding year. Each year the maximum amount to be
applied by the system to its OAB and EAAB shall equal the prior year's maximum payment
increased by the percentage increase in the actuarial value of assets, if any.
Proposed law further requires that upon complete liquidation of either the OAB or the
EAAB, the system shall continue to apply to the remaining debt the same indexed payments
it would have made to the fully liquidated debt. Upon complete liquidation of both the OAB HLS 14RS-270 ORIGINAL
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and the EAAB, the system shall continue to pay the full amount of indexed payments to its
oldest outstanding debt.
School Employees and State Police
Both LSERS and STPOL have completely paid their IUAL. Proposed law requires that in
any year that LSERS or STPOL has excess investment returns above its actuarially assumed
rate of return, the system must apply a certain portion of such returns to its oldest
outstanding debt. Requires LSERS to pay the first $15 million of such excess returns to its
oldest debt. Requires STPOL to pay the first $5 million of such excess returns to its oldest
debt. Further requires that the amount paid each year be increased by the percentage
increase in the system's actuarial value of assets for the preceding year. Each year the
maximum amount to be applied by the system to its oldest debt shall equal the prior year's
maximum payment increased by the percentage increase in the actuarial value of assets, if
any. Once the oldest debt has ben completely liquidated, requires the system to apply
remaining sums and subsequent payments to the next oldest debt, until all system debts are
completely liquidated.
Reamortization of Debt
Present law provides for reamortization of remaining debt after application of excess funds
to the OAB or the EAAB of a system. Proposed law provides that beginning with the June
30, 2014, valuation, such debts shall not be reamortized after application of payments
pursuant to present and proposed law.
All Four State Systems
Present law establishes an experience account in each state system. For LSERS and STPOL,
the accounts are credited with one half of the system's excess returns above its assumed
actuarial rate of return. For LASERS and TRSL, the accounts are credited with one half of
the excess returns above the system's assumed actuarial rate of return after payments are
made to the OAB and the EAAB.
Proposed law, as explained in more detail below, modifies the amount of excess returns that
may be credited to a system's experience account. Further requires that any amounts not
credited to the experience account because of limits in proposed law be applied to the oldest
debt of the system. For LASERS and TRSL, requires these amounts to first be applied to
the OAB until it is fully liquidated, then to the EAAB until it is fully liquidated, and then to
the oldest debt of the system.
Further provides that after application of any such payment pursuant to proposed law, the
remaining debt shall not be reamortized.
Experience Accounts
Experience accounts are accounts established pursuant to present law to fund permanent
benefit increases for retirees of state systems.
Present law authorizes credits to a system's experience account in an amount up to that
necessary to grant two permanent benefit increases. Proposed law retains present law for
a system that is 85% funded or better. If a system is less than 85% funded, proposed law
authorizes credits up to the amount necessary to grant one permanent benefit increase
pursuant to proposed law.
Present law provides that the experience account is credited with interest attributable to the
amount in the account during the prior year. Further provides that the account be debited
for the portion of the system's net investment loss attributable to the balance in the account
during the prior year. Proposed law retains present law. HLS 14RS-270 ORIGINAL
HB NO. 1225
Page 29 of 30
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Present law provides that a benefit increase funded by the account is limited to the lesser of
3% or the consumer price index (U.S. city average for all urban consumers (CPI-U)) for the
preceding calendar year.
Proposed law provides that a benefit increase funded by the account is limited to the lesser
of the following:
(1)The CPI-U for the twelve month period ending on the system's valuation date.
(2)(a)If the system is 85% funded or greater, 3%.
(b)If the system is at least 75% funded but less than 85% funded and the
legislature has not granted a benefit increase in the preceding year, 2.5%.
(c)If the system is at least 65% funded but less than 75% funded and the
legislature has not granted a benefit increase in the preceding year, 2%.
(d)If the system is at least 55% funded but less than 65% funded and the
legislature has not granted a benefit increase in the preceding year, 1.5%.
(e)If the system is less than 55% funded, no benefit increase shall be granted.
Present law for LASERS and TRSL provides that if the system does not attain an actuarial
rate of return of at least 8.25%, a benefit increase pursuant to present law is limited to the
lesser of 2% or the CPI-U. Proposed law retains present law.
Present law for LSERS and STPOL provides that if the system does not attain its actuarial
rate of return, a benefit increase pursuant to present law is limited to the lesser of 2% or the
CPI-U. Proposed law retains present law.
Present law for LASERS and TRSL further provides that no benefit increase shall be
granted in a year in which the system is less than 80% funded and the system fails to meet
its actuarially assumed rate of return. Proposed law retains present law.
Present law for each system establishes a portion of each retiree's benefit upon which a
benefit increase is calculated. The portions are as follows:
(1)For LASERS and TRSL, the amount is the first $70,000 of a retiree's benefit,
indexed to the CPI-U for the prior calendar year.
(2)For LSERS and STPOL, the amount is the first $85,000 of a retiree's benefit, indexed
to the CPI-U for the prior calendar year.
Proposed law retains present law for all benefit increases granted prior to July 1, 2015.
Proposed law provides that for any benefit increase granted on or after July 1, 2015, the
increase shall be calculated on the first $60,000 of a retiree's benefit, indexed to the CPI-U
for the twelve month period ending on the system's valuation date.
Present law for STPOL authorizes a supplemental benefit increase of 2% for retirees and
beneficiaries who are age 65 and older. Proposed law retains present law.
Present law provides that the amount of such supplemental benefit shall be based on the first
$85,000 of a retiree's annual benefit, indexed to the CPI-U for the prior calendar year.
Proposed law retains present law for any such benefit granted prior to July 1, 2015.
Proposed law further provides that for any supplemental increase granted on or after July 1,
2015, the increase shall be calculated on the first $60,000 of the retiree's benefit, indexed to
the CPI-U for the twelve month period ending on the system's valuation date.
Authorization of Benefit Increases HLS 14RS-270 ORIGINAL
HB NO. 1225
Page 30 of 30
CODING: Words in struck through type are deletions from existing law; words underscored
are additions.
Present constitution (La. Const. Art. X, Sec. 29) requires alteration or enactment of benefit
provisions for members of a public retirement system, plan, or fund subject to legislative
authority by an Act of the legislature.
Present law in each system's experience account provides that the board of trustees grant the
benefit increase authorized by present law. Proposed law provides that the legislature grant
the increase.
Present constitution provides that a benefit provision with an actuarial cost must receive a
two-thirds vote of the elected members of each house of the legislature in order to become
effective.
Present law in each system's experience account provides that a benefit increase be enacted
by adoption of a resolution by majority vote of the elected members of each house of the
legislature. Proposed law repeals present law.
Effective if and when SB Nos. 16, 18, 19, and 21 of the 2014 Regular Session of the
Legislature become effective.
(Amends R.S. 11:102(B)(3)(d)(v) through (viii), 102.1(B)(3)(b), (4) and (5), and (C)(4) and
(5), 102.2(B)(3)(b) and (4) and (C)(4) and (5), 542(A)(2) and (3), (C)(1) through (3), and
(F)(1), 883.1(A)(2) and (3), (C)(1) through (3), (F), and (G)(1), 1145.1(A), (C)(1) through
(3), and (D), and 1332(A), (C)(1) through (3), (D), and (F); Adds R.S. 11:102.1(B)(6) and
(C)(6) and 102.2(B)(5) and (C)(6))