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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), 102.2(B)(5) and (C)(6), 542(G),6
883.1(H), 1145.1(F), and 1332(G), relative to the liabilities of the state retirement7
systems; to provide for payment of such liabilities; to limit creation of certain8
additional liabilities through benefit increases; to provide relative to authorization9
of such benefit increases; to provide for an effective date; and to provide for related10
matters.11
Notice of intention to introduce this Act has been published12
as provided by Article X, Section 29(C) of the Constitution13
of Louisiana.14
Be it enacted by the Legislature of Louisiana:15
Section 1. R.S. 11:102(B)(3)(d)(v) through (viii), 102.1(B)(3)(b), (4), and (5) and16
(C)(4) and (5), 102.2(B)(3)(b) and (4) and (C)(4) and (5), 542(A)(2) and (3), (C)(1) through17
(3), and (F)(1), 883.1(A)(2) and (3), (C)(1) through (3), (F), and (G)(1), 1145.1(A), (C)(1)18
through (3), and (D), and 1332(A), (C)(1) through (3), (D), and (F) are hereby amended and19 HLS 14RS-270 ENGROSSED
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reenacted and R.S. 11:102.1(B)(6) and (C)(6), 102.2(B)(5) and (C)(6), 542(G), 883.1(H),1
1145.1(F), and 1332(G) are hereby enacted to read as follows: 2
§102. Employer contributions; determination; state systems3
* * *4
B.5
* * *6
(3) With respect to each state public retirement system, the actuarially7
required employer contribution for each fiscal year, commencing with Fiscal Year8
1989-1990, shall be that dollar amount equal to the sum of:9
* * *10
(d) That fiscal year's payment, computed as of the first of that fiscal year and11
projected to the middle of that fiscal year at the actuarially assumed interest rate,12
necessary to amortize changes in actuarial liability due to:13
* * *14
(v)(aa) Effective July 1, 2004, and beginning with Fiscal Year 1998-1999,15
the amortization period for the changes, gains, or losses of the Louisiana State16
Employees' Retirement System provided in Items (i) through (iv) of this17
Subparagraph shall be thirty years, or in accordance with standards promulgated by18
the Governmental Accounting Standards Board, from the year in which the change,19
gain, or loss occurred. The outstanding balances of amortization bases established20
pursuant to Items (i) through (iv) of this Subparagraph before Fiscal Year21
1998-1999, shall be amortized as a level dollar amount from July 1, 2004, through22
June 30, 2029. Beginning with Fiscal Year 2003-2004, and for each fiscal year23
thereafter, the outstanding balances of amortization bases established pursuant to24
Items (i) through (iv) of this Subparagraph shall be amortized as a level dollar25
amount. For the Louisiana State Employees' Retirement System, effective for the26
June 30, 2010, system valuation and beginning with Fiscal Year 2011-2012,27
amortization payments for changes in actuarial liability shall be determined in28
accordance with Subsection C of this Section.29 HLS 14RS-270 ENGROSSED
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(bb)(I) Effective for the June thirtieth valuation for the fiscal year1
immediately following the year in which the system fully liquidates an amortization2
base established in R.S. 11:102.1 and for each valuation thereafter, after any3
remaining payment required pursuant to R.S. 11:102.1, the system shall apply to the4
oldest outstanding positive amortization base of the system, without reamortization5
of such base, the system's remaining excess investment experience returns. For the6
first valuation to which this Subsubitem applies the amount of excess returns to be7
applied pursuant to the provisions of this Subsubitem shall be the excess returns up8
to the amount of excess investment experience returns as equals that year's remaining9
payment pursuant to R.S. 11:102.1. Upon complete liquidation of such amortization10
base, any remaining funds shall be applied to the next oldest outstanding positive11
amortization base, without reamortization of any such base, until no further funds12
remain or all such bases are completely liquidated. Notwithstanding any provision13
of this Subitem to the contrary, the maximum amount of excess returns to be applied14
in any subsequent year pursuant to this Subsubitem shall equal the prior year's15
maximum amount increased by the percentage increase in the system's actuarial16
value of assets for the preceding year, if any. For the purposes of this Subsubitem,17
the oldest outstanding positive amortization base shall first mean the Original18
Amortization Base until it is completely liquidated, then the Experience Account19
Amortization Base until it is completely liquidated, and then the oldest outstanding20
debt of the system excluding any amortization base established to amortize a21
particularized liability established pursuant to Subsection C of this Section or a22
liability established pursuant to Subparagraphs (2)(a) and (3)(c) of this Subsection.23
(II) Effective for the June thirtieth valuation for the fiscal year immediately24
following the year in which the system fully liquidates the last remaining25
amortization base established in R.S. 11:102.1 and for each valuation thereafter, if26
the system's investment experience for the fiscal year exceeds the system's actuarial27
assumed rate of return, the system shall apply to the oldest outstanding positive28
amortization base of the system, excluding any amortization base established to29 HLS 14RS-270 ENGROSSED
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amortize a particularized liability established pursuant to Subsection C of this1
Section or a liability established pursuant to Subparagraphs (2)(a) and (3)(c) of this2
Subsection, and without reamortization of such base, the system's excess investment3
experience returns. For the first valuation to which this Subsubitem applies, the4
amount of excess returns to be applied pursuant to the provisions of this Subsubitem5
shall be the excess returns up to the amount of excess investment experience returns6
as equals double the last payment made pursuant to Subsubitem (I) of this Subitem.7
Upon complete liquidation of such amortization base, any remaining funds shall be8
applied to the next oldest outstanding positive amortization base, without9
reamortization of any such base, until no further funds remain or all such bases are10
completely liquidated. Notwithstanding any provision of this Subitem to the11
contrary, the maximum amount of excess returns to be applied in any subsequent12
year pursuant to this Subsubitem shall equal the prior year's maximum amount13
increased by the percentage increase in the system's actuarial value of assets for the14
preceding year, if any.15
(cc) Effective for the June thirtieth valuation for the fiscal year immediately16
following the year in which the system fully liquidates the last outstanding17
amortization base established in R.S. 11:102.1 and for each valuation thereafter, the18
system shall apply to the oldest outstanding positive amortization base of the system,19
excluding any amortization base established to amortize a particularized liability20
established pursuant to Subsection C of this Section or a liability established21
pursuant to Subparagraphs (2)(a) and (3)(c) of this Subsection, and without22
reamortization of such base, any amounts that are not credited to the experience23
account due to the limits contained in R.S. 11:542(A). Upon complete liquidation24
of such amortization base, any remaining funds shall be applied to the next oldest25
such outstanding positive amortization base, without reamortization of any such26
base, until no further funds remain or all such bases are completely liquidated.27 HLS 14RS-270 ENGROSSED
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(dd) Effective for the June 30, 2014, system valuation and for each valuation1
thereafter, actuarial gains allocated to the experience account shall be amortized as2
a loss with level payments over a ten-year period.3
(vi)(aa) Effective July 1, 2004, and beginning with Fiscal Year 2000-2001,4
the amortization period for the changes, gains, or losses of the Louisiana School5
Employees' Retirement System provided in Items (i) through (iv) of this6
Subparagraph shall be thirty years, or in accordance with standards promulgated by7
the Governmental Accounting Standards Board, from the year in which the change,8
gain, or loss occurred. The outstanding balances of amortization bases established9
pursuant to Items (i) through (iv) of this Subparagraph before Fiscal Year 2000-10
2001, shall be amortized as a level dollar amount from July 1, 2004, through June 30,11
2029. Beginning with Fiscal Year 2003-2004, and for each fiscal year thereafter, the12
outstanding balances of amortization bases established pursuant to Items (i) through13
(iv) of this Subparagraph shall be amortized as a level dollar amount.14
(bb) Effective for the June 30, 2014, valuation and for each valuation15
thereafter, if the system's investment experience for the fiscal year exceeds the16
system's actuarial assumed rate of return, the system shall apply the excess17
investment experience returns, up to the first fifteen million dollars for the June 30,18
2014, valuation, to the oldest outstanding positive amortization base of the system,19
excluding any amortization base established to amortize a liability established20
pursuant to Subparagraphs (2)(a) and (3)(c) of this Subsection, and without21
reamortization of such base. Upon complete liquidation of such amortization base,22
any remaining funds shall be applied to the next oldest outstanding positive23
amortization base, without reamortization of any such base, until no further funds24
remain or all such bases are completely liquidated. Notwithstanding any provision25
of this Subitem to the contrary, the maximum amount of excess returns to be applied26
in any subsequent year pursuant to this Subitem shall equal the prior year's maximum27
amount increased by the percentage increase in the system's actuarial value of assets28
for the preceding year, if any.29 HLS 14RS-270 ENGROSSED
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(cc) Effective for the June 30, 2014, valuation and for each valuation1
thereafter, any amounts that are not credited to the experience account due to the2
limits contained in R.S. 11:1145.1(A) shall be applied to the oldest outstanding3
positive amortization base of the system, excluding any amortization base4
established to amortize a liability established pursuant to Subparagraphs (2)(a) and5
(3)(c) of this Subsection, and without reamortization of such base. Upon complete6
liquidation of such amortization base, any remaining funds shall be applied to the7
next oldest outstanding positive amortization base, without reamortization of any8
such base, until no further funds remain or all such bases are completely liquidated.9
(dd) Effective for the June 30, 2014, system valuation and for each valuation10
thereafter, actuarial gains allocated to the experience account shall be amortized as11
a loss with level payments over a ten-year period.12
(vii)(aa) Effective July 1, 2004, and beginning with Fiscal Year 2000-2001,13
the amortization period for the changes, gains, or losses of the Teachers' Retirement14
System of Louisiana provided in Items (i) through (iv) of this Subparagraph shall be15
thirty years, or in accordance with standards promulgated by the Governmental16
Accounting Standards Board, from the year in which the change, gain, or loss17
occurred. The outstanding balances of amortization bases established pursuant to18
Items (i) through (iv) of this Subparagraph before Fiscal Year 2000-2001, shall be19
amortized as a level dollar amount from July 1, 2004, through June 30, 2029.20
Beginning with Fiscal Year 2003-2004, and for each fiscal year thereafter, the21
outstanding balances of amortization bases established pursuant to Items (i) through22
(iv) of this Subparagraph shall be amortized as a level dollar amount. For the23
Teachers' Retirement System of Louisiana, effective for the June 30, 2011, system24
valuation and beginning with Fiscal Year 2012-2013, amortization payments for25
changes in actuarial liability shall be determined in accordance with Subsection D26
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 ENGROSSED
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base established in R.S. 11:102.2 and for each valuation thereafter, after any1
remaining payment required pursuant to R.S. 11:102.2, the system shall apply to the2
oldest outstanding positive amortization base of the system, without reamortization3
of such base, the system's remaining excess investment experience returns. For the4
first valuation to which this Subsubitem applies the amount of excess returns to be5
applied pursuant to the provisions of this Subsubitem shall be the excess returns up6
to the amount of excess investment experience returns as equals that year's remaining7
payment pursuant to R.S. 11:102.2. Upon complete liquidation of such amortization8
base, any remaining funds shall be applied to the next oldest outstanding positive9
amortization base, without reamortization of any such base, until no further funds10
remain or all such bases are completely liquidated. Notwithstanding any provision11
of this Subitem to the contrary, the maximum amount of excess returns to be applied12
in any subsequent year pursuant to this Subsubitem shall equal the prior year's13
maximum amount increased by the percentage increase in the system's actuarial14
value of assets for the preceding year, if any. For the purposes of this Subitem, the15
oldest outstanding positive amortization base shall first mean the Original16
Amortization Base until it is completely liquidated, then the Experience Account17
Amortization Base until it is completely liquidated, and then the oldest outstanding18
debt of the system excluding any amortization base established to amortize a19
particularized liability established pursuant to Subsection D of this Section or a20
liability established pursuant to Subparagraphs (2)(a) and (3)(c) of this Subsection.21
(II) Effective for the June thirtieth valuation for the fiscal year immediately22
following the year in which the system fully liquidates the last remaining23
amortization base established in R.S. 11:102.2 and for each valuation thereafter, if24
the system's investment experience for the fiscal year exceeds the system's actuarial25
assumed rate of return, the system shall apply to the oldest outstanding positive26
amortization base of the system, excluding any amortization base established to27
amortize a particularized liability established pursuant to Subsection D of this28
Section or a liability established pursuant to Subparagraphs (2)(a) and (3)(c) of this29 HLS 14RS-270 ENGROSSED
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Subsection, and without reamortization of such base, the system's excess investment1
experience returns. For the first valuation to which this Subsubitem applies, the2
amount of excess returns to be applied pursuant to the provisions of this Subsubitem3
shall be the excess returns up to the amount of excess investment experience returns4
as equals double the last payment made pursuant to Subsubitem (I) of this Subitem.5
Upon complete liquidation of such amortization base, any remaining funds shall be6
applied to the next oldest outstanding positive amortization base, without7
reamortization of any such base, until no further funds remain or all such bases are8
completely liquidated. Notwithstanding any provision of this Subitem to the9
contrary, the maximum amount of excess returns to be applied in any subsequent10
year pursuant to this Subsubitem shall equal the prior year's maximum amount11
increased by the percentage increase in the system's actuarial value of assets for the12
preceding year, if any.13
(cc) Effective for the June thirtieth valuation for the fiscal year immediately14
following the year in which the system fully liquidates the last outstanding15
amortization base established in R.S. 11:102.2 and for each valuation thereafter, the16
system shall apply to the oldest outstanding positive amortization base of the system,17
excluding any amortization base established to amortize a particularized liability18
established pursuant to Subsection D of this Section or a liability established19
pursuant to Subparagraphs (2)(a) and (3)(c) of this Subsection, and without20
reamortization of such base, any amounts that are not credited to the experience21
account due to the limits contained in R.S. 11:883.1(A). Upon complete liquidation22
of such amortization base, any remaining funds shall be applied to the next oldest23
such outstanding positive amortization base, without reamortization of any such24
base, until no further funds remain or all such bases are completely liquidated.25
(dd) Effective for the June 30, 2014, system valuation and for each valuation26
thereafter, actuarial gains allocated to the experience account shall be amortized as27
a loss with level payments over a ten-year period.28 HLS 14RS-270 ENGROSSED
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(viii)(aa) Effective July 1, 2009, and beginning with Fiscal Year 1992-1993,1
the amortization period for the changes, gains, or losses of the Louisiana State Police2
Retirement System provided in Items (i) through (iv) of this Subparagraph shall be3
thirty years, or in accordance with standards promulgated by the Governmental4
Accounting Standards Board, from the year in which the change, gain, or loss5
occurred. The outstanding balances of amortization bases established pursuant to6
Items (i) through (iv) of this Subparagraph before Fiscal Year 2008-2009, shall be7
amortized as a level dollar amount from July 1, 2009, through June 30, 2029.8
Beginning with Fiscal Year 2008-2009, and for each fiscal year thereafter, the9
outstanding balances of amortization bases established pursuant to Items (i) through10
(iv) of this Subparagraph shall be amortized as a level dollar amount.11
(bb) Effective for the June 30, 2014, valuation and for each valuation12
thereafter, if the system's investment experience for the fiscal year exceeds the13
system's actuarial assumed rate of return, the system shall apply the excess14
investment experience returns, up to the first five million dollars for the June 30,15
2014, valuation, to the oldest outstanding positive amortization base of the system,16
excluding any amortization base established to amortize a liability established17
pursuant to Subparagraphs (2)(a) and (3)(c) of this Subsection, and without18
reamortization of such base. Upon complete liquidation of such amortization base,19
any remaining funds shall be applied to the next oldest outstanding positive20
amortization base, without reamortization of any such base, until no further funds21
remain or all such bases are completely liquidated. Notwithstanding any provision22
of this Subitem to the contrary, the maximum amount of excess returns to be applied23
in any subsequent year pursuant to this Subsubitem shall equal the prior year's24
maximum amount increased by the percentage increase in the system's actuarial25
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 ENGROSSED
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positive amortization base of the system, excluding any amortization base1
established to amortize a liability established pursuant to Subparagraphs (2)(a) and2
(3)(c) of this Subsection, and without reamortization of such base. Upon complete3
liquidation of such amortization base, any remaining funds shall be applied to the4
next oldest outstanding positive amortization base, without reamortization of any5
such base, until no further funds remain or all such bases are completely liquidated.6
(dd) Effective for the June 30, 2014, system valuation and for each valuation7
thereafter, actuarial gains allocated to the experience account shall be amortized as8
a loss with level payments over a ten-year period.9
* * *10
§102.1. Consolidation of amortization payment schedules; Louisiana State11
Employees' Retirement System12
* * *13
B. Original amortization base.14
* * *15
(3)16
* * *17
(b) The first payment after this consolidation shall be made in Fiscal Year18
2010-2011 and the final payment in shall be made no later than Fiscal Year 2028-19
2029.20
(4)(a) In any year in which the system exceeds its actuarially-assumed rate21
of return, the first fifty million dollars of excess returns, up to the first fifty million22
for the June 30, 2014, valuation, shall be applied to the remaining balance of the23
original amortization base established in this Subsection. The maximum amount of24
excess returns to be applied in any subsequent year pursuant to the provisions of this25
Subparagraph 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.28 HLS 14RS-270 ENGROSSED
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(b) After such application, the net remaining liability shall be reamortized1
over the remaining amortization period with annual payments calculated as provided2
in this Subsection or as otherwise provided by law. Notwithstanding any provision3
of this Subparagraph to the contrary, beginning with the June 30, 2014, valuation and4
continuing with each valuation thereafter, the net remaining liability shall not be5
reamortized after application of the funds applied pursuant to the provisions of6
Subparagraph (a) of this Paragraph.7
(5) Notwithstanding the provisions of R.S. 11:102(B)(3)(c) and (5) or any8
other provision of law to the contrary, in any year through Fiscal Year 2016-2017 in9
which the system receives an overpayment of employer contributions as determined10
pursuant to R.S. 11:102(B)(2) and in any year through Fiscal Year 2016-2017 in11
which the system receives additional contributions pursuant to R.S. 11:102(B)(5),12
the amount of such overpayment or additional contribution shall be applied to the13
remaining balance of the original amortization base established pursuant to this14
Subsection. After such application, the net remaining liability shall be reamortized15
over the remaining amortization period with annual payments calculated as provided16
in this Subsection or as otherwise provided by law. Notwithstanding any provision17
of this Paragraph to the contrary, beginning with the June 30, 2014, valuation and18
continuing with each valuation thereafter, the net remaining liability shall not be19
reamortized after application of the funds applied pursuant to the provisions of this20
Paragraph.21
(6) Effective for the June 30, 2014, valuation and for each valuation22
thereafter until the base established pursuant to the provisions of this Subsection is23
completely liquidated, to such base shall be applied any amounts that are not credited24
to the experience account due to the limits contained in R.S. 11:542(A), without25
reamortization of such base.26
C. Experience account amortization base.27
* * *28 HLS 14RS-270 ENGROSSED
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(4)(a) In any year in which the excess returns of the system exceed the1
amount in Paragraph applied to the Original Amortization Base pursuant to2
Subparagraph (B)(4)(a) of this Section, the remaining excess returns, up to the next3
fifty million dollars for the June 30, 2014, valuation, of excess returns shall be4
applied to the experience account amortization base established in this Subsection.5
The maximum amount of excess returns to be applied in any subsequent year6
pursuant to the provisions of this Subparagraph shall equal the prior year's maximum7
amount increased by the percentage increase in the system's actuarial value of assets8
for the preceding year, if any.9
(b) 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 Subparagraph 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 of15
Subparagraph (a) of this Paragraph.16
(5) Notwithstanding the provisions of R.S. 11:102(B)(3)(c) and (5) or any17
other provision of law to the contrary, in any year from Fiscal Year 2017-201818
through Fiscal Year 2039-2040 in which the system receives an overpayment of19
employer contributions as determined pursuant to R.S. 11:102(B)(2) and in any year20
from Fiscal Year 2017-2018 through Fiscal Year 2039-2040 in which the system21
receives additional contributions pursuant to R.S. 11:102(B)(5), the amount of such22
overpayment or additional contribution shall be applied to the remaining balance of23
the experience account amortization base established pursuant to this Subsection.24
After such application, the net remaining liability shall be reamortized over the25
remaining amortization period with annual payments calculated as provided in this26
Subsection or as otherwise provided by law. Notwithstanding any provision of this27
Paragraph 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 ENGROSSED
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reamortized after application of the funds applied pursuant to the provisions of this1
Paragraph.2
(6) Effective for the valuation for the year in which the amortization base3
established pursuant to Subsection B of this Section is completely liquidated and for4
each valuation thereafter, to the Experience Account Amortization Base shall be5
applied any amounts that are not credited to the experience account due to the limits6
contained in R.S. 11:542(A), without reamortization of such base.7
§102.2. Consolidation of amortization payment schedules; Teachers' Retirement8
System of Louisiana9
* * *10
B. Original amortization base.11
* * *12
(3)13
* * *14
(b) The first payment shall be made in Fiscal Year 2010-2011 and the final15
payment in shall be made no later than Fiscal Year 2028-2029.16
(4)(a) In any year in which the system exceeds its actuarially-assumed rate17
of return, the first one hundred million dollars of excess returns, up to the first one18
hundred million dollars for the June 30, 2014, valuation, shall be applied to the19
remaining balance of the original amortization base established in this Subsection.20
The maximum amount of excess returns to be applied in any subsequent year21
pursuant to the provisions of this Subparagraph shall equal the prior year's maximum22
amount increased by the percentage increase in the system's actuarial value of assets23
for the preceding year, if any.24
(b) After such application, the net remaining liability shall be reamortized25
over the remaining amortization period with annual payments as provided in this26
Subsection or as otherwise provided by law. Notwithstanding any provision of this27
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 ENGROSSED
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reamortized after application of the funds applied pursuant to the provisions of1
Subparagraph (a) of this Paragraph.2
(5) Effective for the June 30, 2014, valuation and for each valuation3
thereafter until the base established pursuant to the provisions of this Subsection is4
completely liquidated, to such base shall be applied any amounts that are not credited5
to the experience account due to the limits contained in R.S. 11:883.1(A), without6
reamortization of such base.7
C. Experience account amortization base.8
* * *9
(4)(a) In any year in which the excess returns of the system exceed the10
amount in Paragraph applied to the Original Amortization Base pursuant to11
Subparagraph (B)(4)(a) of this Section, the remaining excess returns, up to the next12
one hundred million dollars for the June 30, 2014, valuation, of excess returns shall13
be applied to the experience account amortization base established in this Subsection.14
The maximum amount of excess returns to be applied in any subsequent year15
pursuant to the provisions of this Subparagraph shall equal the prior year's maximum16
amount increased by the percentage increase in the system's actuarial value of assets17
for the preceding year, if any.18
(b) After such application, the net remaining liability shall be reamortized19
over the remaining amortization period with annual payments calculated as provided20
in this Subsection or as otherwise provided by law. Notwithstanding any provision21
of this Subparagraph 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 of24
Subparagraph (a) of this Paragraph.25
(5) Notwithstanding the provisions of R.S. 11:102(B)(3)(c) and (5) or any26
other provision of law to the contrary, in any year from Fiscal Year 2009-201027
through Fiscal Year 2039-2040 in which the system receives an overpayment of28
employer contributions as determined pursuant to R.S. 11:102(B)(2) and in any year29 HLS 14RS-270 ENGROSSED
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from Fiscal Year 2009-2010 through Fiscal Year 2039-2040 in which the system1
receives additional contributions pursuant to R.S. 11:102(B)(5), the amount of such2
overpayment or additional contribution shall be applied to the remaining balance of3
the experience account amortization base established pursuant to this Subsection.4
After such application, the net remaining liability shall be reamortized over the5
remaining amortization period with annual payments calculated as provided in this6
Subsection or as otherwise provided by law. Notwithstanding any provision of this7
Paragraph to the contrary, beginning with the June 30, 2014, valuation and8
continuing with each valuation thereafter, the net remaining liability shall not be9
reamortized after application of the funds applied pursuant to the provisions of this10
Paragraph.11
(6) Effective for the valuation for the year in which the amortization base12
established pursuant to Subsection B of this Section is completely liquidated and for13
each valuation thereafter, to the Experience Account Amortization Base shall be14
applied any amounts that are not credited to the experience account due to the limits15
contained in R.S. 11:883.1(A), without reamortization of such base.16
* * *17
§542. Experience account18
A.19
* * *20
(2) The experience account shall be credited as follows:21
(a) To the extent permitted by Paragraph (3) of this Subsection and after22
allocation to the consolidated amortization bases as provided in R.S. 11:102.1 R.S.23
11:102(B)(3)(d)(v)(bb) and 102.1, as applicable, an amount not to exceed fifty24
percent of the remaining balance of the prior year's net investment experience gain25
as determined by the system's actuary.26
(b) To the extent permitted by Paragraph (3) of this Subsection, an amount27
not to exceed that portion of the system's net investment income attributable to the28
balance in the experience account during the prior year.29 HLS 14RS-270 ENGROSSED
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(3)(a) In no event shall the amount a credit be made to the account that1
would cause the balance in the experience account to exceed the reserve necessary2
to grant:3
(i) Two two permanent benefit increases as provided in determined pursuant4
to Subsection C of this Section if the system is eighty-five percent funded or greater.5
(ii) One permanent benefit increase as determined pursuant to Subsection C6
of this Section if the system is less than eighty-five percent funded.7
(b) If the system is less than eighty-five percent funded and has reserves in8
excess of the amounts provided for in Item (a)(ii) of this Paragraph, it shall not apply9
credits to the account pursuant to Subparagraph (2)(b) of this Subsection.10
* * *11
C.(1) In accordance with the provisions of this Section, the board of trustees12
may recommend to the president of the Senate and the speaker of the House of13
Representatives that the system be permitted to grant a permanent benefit increase14
to retirees, survivors, and beneficiaries whenever the conditions in Subsection F of15
this Section are satisfied and the balance in the experience account is sufficient to16
fund such benefit fully on an actuarial basis, as determined by the system's actuary.17
If the legislative auditor's actuary disagrees with the determination of the system's18
actuary, a permanent benefit increase shall not be granted. The board of trustees19
shall not grant a permanent benefit increase unless such permanent benefit increase20
has been approved by the legislature. by concurrent resolution adopted by the21
favorable vote of a majority of the elected members of each house. Any such22
permanent benefit increase granted on or before June 30, 2015, shall be limited to23
and shall only be payable based on an amount not to exceed seventy thousand dollars24
of the retiree's annual benefit. Any such permanent benefit increase granted on or25
after July 1, 2015, shall be limited to and shall only be payable based on an amount26
not to exceed sixty thousand dollars of the retiree's annual benefit. ; however,27
effective Effective for years after July 1, 1999, and on or before June 30, 2015, the28
seventy-thousand dollar limit shall be increased each year in an amount equal to any29 HLS 14RS-270 ENGROSSED
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increase in the consumer price index (U.S. city average for all urban consumers1
(CPI-U)) for the preceding year, if any. Effective on or after July 1, 2015, the sixty-2
thousand dollar limit shall be increased each year in an amount equal to any increase3
in the consumer price index, (U.S. city average for all urban consumers (CPI-U)) for4
the twelve-month period ending on the system's valuation date, if any. Any increase5
granted pursuant to the provisions of this Subsection Section shall begin on the July6
first following legislative approval, shall be payable annually, and shall equal an7
amount not to exceed be an amount equal to the lesser of:8
(a) Three percent.(b) An amount as determined in Paragraph (2) of this9
Subsection.10
(b)(2) If the The increase in the consumer price index, U.S. city average for11
all urban consumers (CPI-U), as prepared by the U.S. Department of Labor, Bureau12
of Labor Statistics, for the twelve-month period ending on the system's valuation13
date calendar year immediately preceding the permanent benefit increase is less than14
three percent, then the permanent benefit increase shall be a sum equal to the CPI-U15
increase for that prior calendar year, if any. If the balance in the experience account16
is not sufficient to fund that sum, no increase shall be granted.17
(2)(a) If the system is eighty-five percent funded or greater, three percent.18
(b) If the system is at least seventy-five percent funded but less than eighty-19
five percent funded and the legislature has not granted a benefit increase in the20
preceding fiscal year, two and one-half percent.21
(c) If the system is at least sixty-five percent funded but less than seventy-22
five percent funded and the legislature has not granted a benefit increase in the23
preceding fiscal year, two percent.24
(d) If the system is at least fifty-five percent funded but less than sixty-five25
percent funded and the legislature has not granted a benefit increase in the preceding26
fiscal year, one and one-half percent.27
(e) If the system is less than fifty-five percent funded, no increase shall be28
granted.29 HLS 14RS-270 ENGROSSED
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(3) The Subject to the limitations contained in Paragraph (1) of this1
Subsection, the percentage of each recipient's permanent benefit increase shall be2
based on the benefit being paid to the recipient on the effective date of the increase.3
* * *4
F.(1) The permanent benefit increase which is authorized by Subsection C5
of this Section shall be limited to the lesser of either two percent or an amount as6
determined in Paragraph (C)(2) Subsection C of this Section in or for any year in7
which the system does not earn an actuarial rate of return of at least eight and one-8
quarter percent interest on the investment of the system's assets.9
* * *10
G.(1) Notwithstanding any provision of this Section to the contrary, in a year11
in which the experience account balance is insufficient to fund the amount required12
pursuant to Paragraph (C)(1) of this Section, the board may make the13
recommendation provided in Paragraph (C)(1) if all of the following conditions are14
satisfied:15
(a) No benefit increase was granted in the preceding fiscal year.16
(b) The experience account balance established in the system valuation for17
the preceding fiscal year reached its maximum reserve permitted pursuant to18
Paragraph A(3) of this Section applicable to the system valuation for that valuation19
year.20
(c) The experience account balance established in the system valuation for21
the current fiscal year is insufficient to fund the maximum increase permitted22
pursuant to Paragraph (C)(2) of this Section applicable to the system valuation for23
the preceding fiscal year.24
(d) All of the insufficiency in the account is attributable to the following:25
(i) The growth of the cost of the increase, but only if that growth was26
produced solely by either or both of these events:27
(aa) Changes in the pool of the eligible recipients.28 HLS 14RS-270 ENGROSSED
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(bb) The growth in the benefit amount to which the increase applies due to1
the application of the CPI-U pursuant to the provisions of Paragraph (C)(1) of this2
Section.3
(ii) Credits to the account, if any, are insufficient to cover the growth in the4
cost of the increase.5
(2) The amount of the increase shall be equal to the amount the balance in6
the experience account will fully fund rounded to the nearest lower one-tenth of one7
percent.8
* * *9
§883.1. Experience account10
A.11
* * *12
(2) The experience account shall be credited as follows:13
(a) To the extent permitted by Paragraph (3) of this Subsection and after14
allocation to the consolidated amortization bases as provided in R.S. 11:102.2 R.S.15
11:102(B)(3)(d)(vii)(bb) and 102.2, as applicable, an amount not to exceed fifty16
percent of the remaining balance of the prior year's net investment experience gain17
as determined by the system's actuary.18
(b) To the extent permitted by Paragraph (3) of this Subsection, an amount19
not to exceed that portion of the system's net investment income attributable to the20
balance in the experience account during the prior year.21
(3)(a) In no event shall the amount a credit be made to the account that22
would cause the balance in the experience account to exceed the reserve necessary23
to grant:24
(i) Two two permanent benefit increases as provided in determined pursuant25
to Subsection C of this Section if the system is eighty-five percent funded or greater.26
(ii) One permanent benefit increase as determined pursuant to Subsection C27
of this Section if the system is less than eighty-five percent funded.28 HLS 14RS-270 ENGROSSED
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(b) If the system is less than eighty-five percent funded and has reserves in1
excess of the amounts provided for in Item (a)(ii) of this Paragraph, it shall not apply2
credits to the account pursuant to Subparagraph (2)(b) of this Subsection.3
* * *4
C.(1) In accordance with the provisions of this Section, the board of trustees5
may recommend to the president of the Senate and the speaker of the House of6
Representatives that the system be permitted to grant a permanent benefit increase7
to retirees and beneficiaries whenever the conditions in Subsection G of this Section8
are satisfied and the balance in the experience account is sufficient to fund such9
benefit fully on an actuarial basis, as determined by the system's actuary. If the10
legislative auditor's actuary disagrees with the determination of the system's actuary,11
a permanent benefit increase shall not be granted. The board of trustees shall not12
grant a permanent benefit increase unless such permanent benefit increase has been13
approved by the legislature. by concurrent resolution adopted by a favorable vote of14
a majority of the elected members of each house. Any increase granted pursuant to15
the provisions of this Section shall begin on the July first following legislative16
approval, shall be payable annually, and shall equal an amount not to exceed be an17
amount equal to the lesser of:18
(a) Three percent.(b) An amount as determined in Paragraph (2) of this19
Subsection.20
(2)(b) If the The increase in the consumer price index, U.S. city average for21
all urban consumers (CPI-U), as prepared by the U.S. Department of Labor, Bureau22
of Labor Statistics, for the twelve-month period ending on the system's valuation23
date calendar year immediately preceding the permanent benefit increase is less than24
three percent, then the permanent benefit increase shall be a sum equal to the CPI-U25
increase for that prior calendar year, if any. If the balance in the experience account26
is not sufficient to fund that sum, no increase shall be granted.27
(2)(a) If the system is eighty-five percent funded or greater, three percent.28 HLS 14RS-270 ENGROSSED
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(b) If the system is at least seventy-five percent funded but less than eighty-1
five percent funded and the legislature has not granted a benefit increase in the2
preceding fiscal year, two and one-half percent.3
(c) If the system is at least sixty-five percent funded but less than seventy-4
five percent funded and the legislature has not granted a benefit increase in the5
preceding fiscal year, two percent.6
(d) If the system is at least fifty-five percent funded but less than sixty-five7
percent funded and the legislature has not granted a benefit increase in the preceding8
fiscal year, one and one-half percent.9
(e) If the system is less than fifty-five percent funded, no increase shall be10
granted.11
(3) The Subject to the limitations contained in Subsection F of this Section,12
the percentage of each recipient's permanent benefit increase shall be based on the13
benefit being paid to the recipient on the effective date of the increase.14
* * *15
F.(1) Notwithstanding any other provisions of this Section to the contrary,16
any permanent benefit increase granted on or before June 30, 2015, shall be17
calculated only on the first seventy thousand dollars of the retiree's annual retirement18
benefit. (2) The This seventy-thousand dollar limit provided for in Paragraph (1)19
of this Subsection shall be increased each year in an amount equal to any increase20
in the consumer price index, U.S. city average for all urban consumers (CPI-U) for21
the preceding year, if any.22
(2) Notwithstanding any other provisions of this Section to the contrary, any23
permanent benefit increase granted on or after July 1, 2015, shall be calculated only24
on the first sixty thousand dollars of the retiree's annual retirement benefit. This25
sixty-thousand dollar limit shall be increased each year in an amount equal to any26
increase in the consumer price index, U.S. city average for all urban consumers (CPI-27
U) for the immediately preceding one-year period ending in June, if any.28 HLS 14RS-270 ENGROSSED
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G.(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) Subsection C of this Section in or for any year in3
which the system does not earn an actuarial rate of return of at least eight and one-4
quarter percent interest on the investment of the system's assets.5
* * *6
H.(1) Notwithstanding any provision of this Section to the contrary, in a year7
in which the experience account balance is insufficient to fund the amount required8
pursuant to Paragraph (C)(1) of this Section, the board may make the9
recommendation provided in Paragraph (C)(1) if all of the following conditions are10
satisfied:11
(a) No benefit increase was granted in the preceding fiscal year.12
(b) The experience account balance established in the system valuation for13
the preceding fiscal year reached its maximum reserve permitted pursuant to14
Paragraph (A)(3) of this Section applicable to the system valuation for that valuation15
year.16
(c) The experience account balance established in the system valuation for17
the current fiscal year is insufficient to fund the maximum increase permitted18
pursuant to Paragraph (C)(2) of this Section applicable to the system valuation for19
the preceding fiscal year.20
(d) All of the insufficiency in the account is attributable to the following:21
(i) The growth of the cost of the increase, but only if that growth was22
produced solely by either or both of these events:23
(aa) Changes in the pool of the eligible recipients.24
(bb) The growth in the benefit amount to which the increase applies due to25
the application of the CPI-U pursuant to the provisions of Paragraph (C)(1) of this26
Section.27
(ii) Credits to the account, if any, are insufficient to cover the growth in the28
cost of the increase.29 HLS 14RS-270 ENGROSSED
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(2) The amount of the increase shall be equal to the amount the balance in1
the experience account will fully fund rounded to the nearest lower one-tenth of one2
percent.3
* * *4
§1145.1. Employee Experience Account5
A.(1) The Employee Experience Account shall be credited as follows:6
(a) To the extent permitted by Paragraph (2) of this Subsection and after7
allocation as provided in R.S. 11:102(B)(3)(d)(vi)(bb), an amount not to exceed fifty8
percent of the prior year's net investment experience gain as determined by the9
system's actuary.10
(b) To the extent permitted by Paragraph (2) of this Subsection, an amount11
not to exceed that portion of the system's net investment income attributable to the12
balance in the Employee Experience Account during the prior year.13
(2)(a) In no event shall the amount a credit be made to the account that14
would cause the balance in the Employee Experience Account to exceed the reserve15
necessary to grant :16
(i) Two two cost-of-living adjustments determined pursuant to Subsection17
C of this Section if the system is eighty-five percent funded or greater.18
(ii) One permanent benefit increase as determined pursuant to Subsection C19
of this Section if the system is less than eighty-five percent funded.20
(b) If the system is less than eighty-five percent funded and has reserves in21
excess of the amounts provided for in Item (a)(ii) of this Paragraph, it shall not apply22
credits to the account pursuant to Subparagraph (1)(b) of this Subsection.23
* * *24
C.(1) In accordance with the provisions of this Section, the board of trustees25
may recommend to the president of the Senate and the speaker of the House of26
Representatives that the system be permitted to grant a cost-of-living adjustment to27
retirees and beneficiaries whenever the conditions in this Section are satisfied and28
the balance in the Employee Experience Account is sufficient to fully fund such29 HLS 14RS-270 ENGROSSED
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benefit on an actuarial basis, as determined by the system's actuary. If the legislative1
actuary disagrees with the determination of the system's actuary, a cost-of-living2
adjustment shall not be granted. The board of trustees shall not grant a cost-of-living3
adjustment as provided in this Subsection unless such cost-of-living adjustment has4
been approved by the legislature. by concurrent resolution adopted by the favorable5
vote of a majority of the elected members of each house. Any such cost-of-living6
adjustment granted on or before June 30, 2015, shall be limited to and shall only be7
payable based on an amount not to exceed eighty-five thousand dollars of the8
retiree's annual benefit. Any such cost-of-living adjustment granted on or after July9
1, 2015, shall be limited to and shall only be payable based on an amount not to10
exceed sixty thousand dollars of the retiree's annual benefit.; however, effective11
Effective for years after July 1, 2007, and on or before June 30, 2015, the eighty-five12
thousand dollar limit shall be increased each year in an amount equal to the increase13
in the Consumer Price Index (United States city average for all urban consumers14
(CPI-U)), as prepared by the United States Department of Labor, Bureau of Labor15
Statistics, for the preceding calendar year, if any. Effective on or after July 1, 2015,16
the sixty-thousand dollar limit shall be increased each year in an amount equal to any17
increase in the consumer price index (U.S. city average for all urban consumers18
(CPI-U)) for the twelve-month period ending on the system's valuation date, if any.19
Any cost-of-living adjustment granted pursuant to the provisions of this Subsection20
Section shall begin on July first following legislative approval, shall be payable21
annually, and shall equal an amount not to exceed be an amount equal to the lesser22
of:23
(a) Three percent.(b) An amount as determined in Paragraph (2) of this24
Subsection.25
(b)(2) If the The increase in the Consumer Price Index (United States city26
average for all urban consumers (CPI-U)), as prepared by the United States27
Department of Labor, Bureau of Labor Statistics, for the twelve-month period ending28
on the system's valuation date calendar year immediately preceding the cost-of-living29 HLS 14RS-270 ENGROSSED
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adjustment is less than three percent, then the cost-of-living adjustment shall be a1
sum equal to the CPI-U increase for that prior calendar year, if any. If the balance2
in the experience account is not sufficient to fund that sum, no increase shall be3
granted.4
(2)(a) If the system is eighty-five percent funded or greater, three percent.5
(b) If the system is at least seventy-five percent funded but less than eighty-6
five percent funded and the legislature has not granted a benefit increase in the7
preceding fiscal year, two and one-half percent.8
(c) If the system is at least sixty-five percent funded but less than seventy-9
five percent funded and the legislature has not granted a benefit increase in the10
preceding fiscal year, two percent.11
(d) If the system is at least fifty-five percent funded but less than sixty-five12
percent funded and the legislature has not granted a benefit increase in the preceding13
fiscal year, one and one-half percent.14
(e) If the system is less than fifty-five percent funded, no increase shall be15
granted.16
(3) The Subject to the limitations contained in Paragraph (1) of this17
Subsection, the percentage of each recipient's cost-of-living adjustment shall be18
based on the benefit being paid to the recipient on the effective date of the increase.19
* * *20
D. The cost-of-living increase which is authorized by Subsection C of this21
Section shall be limited to the lesser of either two percent or an amount determined22
as provided in Paragraph (C)(2) Subsection C of this Section in or for any year in23
which the system does not earn the required actuarial rate of return as certified by the24
system's actuary. an actuarial rate of return of at least seven and one-quarter percent25
interest on the investment of the system's assets.26
* * *27
F.(1) Notwithstanding any provision of this Section to the contrary, in a year28
in which the experience account balance is insufficient to fund the amount required29 HLS 14RS-270 ENGROSSED
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pursuant to Paragraph (C)(1) of this Section, the board may make the1
recommendation provided in Paragraph (C)(1) if all of the following conditions are2
satisfied:3
(a) No benefit increase was granted in the preceding fiscal year.4
(b) The experience account balance established in the system valuation for5
the preceding fiscal year reached its maximum reserve permitted pursuant to6
Paragraph (A)(3) of this Section applicable to the system valuation for that valuation7
year.8
(c) The experience account balance established in the system valuation for9
the current fiscal year is insufficient to fund the maximum increase permitted10
pursuant to Paragraph (C)(2) of this Section applicable to the system valuation for11
the preceding fiscal year.12
(d) All of the insufficiency in the account is attributable to the following:13
(i) The growth of the cost of the increase, but only if that growth was14
produced solely by either or both of these events:15
(aa) Changes in the pool of the eligible recipients.16
(bb) The growth in the benefit amount to which the increase applies due to17
the application of the CPI-U pursuant to the provisions of Paragraph (C)(1) of this18
Section.19
(ii) Credits to the account, if any, are insufficient to cover the growth in the20
cost of the increase.21
(2) The amount of the increase shall be equal to the amount the balance in22
the experience account will fully fund rounded to the nearest lower one-tenth of one23
percent.24
* * *25
§1332. Employee Experience Account26
A.(1) The Employee Experience Account shall be credited as follows:27
(a) To the extent permitted by Paragraph (2) of this Subsection and after the28
allocation as provided in R.S. 11:102(B)(3)(d)(viii)(bb), an amount not to exceed29 HLS 14RS-270 ENGROSSED
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fifty percent of the prior year's net investment experience gain as determined by the1
system's actuary.2
(b) To the extent permitted by Paragraph (2) of this Subsection, an amount3
not to exceed that portion of the system's net investment income attributable to the4
balance in the Employee Experience Account during the prior year.5
(2)(a) In no event shall the amount a credit be made to the account that6
would cause the balance in the Employee Experience Account to exceed the reserve7
necessary to grant :8
(i) Two two cost-of-living adjustments determined pursuant to Subsection9
C of this Section if the system is eighty-five percent funded or greater.10
(ii) One permanent benefit increase as determined pursuant to Subsection C11
of this Section if the system is less than eighty-five percent funded.12
(b) If the system is less than eighty-five percent funded and has reserves in13
excess of the amounts provided for in Item (a)(ii) of this Paragraph, it shall not apply14
credits to the account pursuant to Subparagraph (1)(b) of this Subsection.15
* * *16
C.(1) In accordance with the provisions of this Section, the board of trustees17
may recommend to the president of the Senate and the speaker of the House of18
Representatives that the system be permitted to grant a cost-of-living adjustment to19
retirees and beneficiaries whenever the conditions in this Section are satisfied and20
the balance in the Employee Experience Account is sufficient to fully fund such21
benefit on an actuarial basis, as determined by the system's actuary. If the legislative22
actuary disagrees with the determination of the system's actuary, a cost-of-living23
adjustment shall not be granted. The board of trustees shall not grant a cost-of-living24
adjustment as provided in this Subsection unless such cost-of-living adjustment has25
been approved by the legislature. by concurrent resolution adopted by the favorable26
vote of a majority of the elected members of each house. Any such cost-of-living27
adjustment granted on or before June 30, 2015, shall be limited to and shall only be28
payable based on an amount not to exceed eighty-five thousand dollars of the29 HLS 14RS-270 ENGROSSED
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retiree's annual benefit. Any such cost-of-living adjustment granted on or after July1
1, 2015, shall be limited to and shall only be payable based on an amount not to2
exceed sixty thousand dollars of the retiree's annual benefit. ; however, effective3
Effective for years after July 1, 2007, and on or before June 30, 2015, the eighty-five4
thousand dollar limit shall be increased each year in an amount equal to the increase5
in the Consumer Price Index consumer price index (United States city average for6
all urban consumers (CPI-U)), as prepared by the United States Department of7
Labor, Bureau of Labor Statistics, for the preceding calendar year, if any. Effective8
on or after July 1, 2015, the sixty-thousand dollar limit shall be increased each year9
in an amount equal to any increase in the consumer price index (U.S. city average10
for all urban consumers (CPI-U)) for the twelve-month period ending on the system's11
valuation date, if any. Any adjustment granted pursuant to the provisions of this12
Subsection Section shall begin on July first following legislative approval, shall be13
payable annually, and shall equal an amount not to exceed be an amount equal to the14
lesser of:15
(a) Three percent.(b) An amount as determined in Paragraph (2) of this16
Subsection.17
(b)(2) If the The increase in the Consumer Price Index consumer price index18
(United States city average for all urban consumers (CPI-U)), as prepared by the19
United States Department of Labor, Bureau of Labor Statistics, for the twelve-month20
period ending on the system's valuation date calendar year immediately preceding21
the cost-of-living adjustment is less than three percent, then the cost-of-living22
adjustment shall be a sum equal to the CPI-U increase for that prior calendar year,23
if any. If the balance in the experience account is not sufficient to fund that sum, no24
increase shall be granted.25
(2)(a) If the system is eighty-five percent funded or greater, three percent.26
(b) If the system is at least seventy-five percent funded but less than eighty-27
five percent funded and the legislature has not granted a benefit increase in the28
preceding fiscal year, two and one-half percent.29 HLS 14RS-270 ENGROSSED
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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, no increase shall be7
granted.8
(3) The Subject to the limitations contained in Paragraph (1) of this9
Subsection, the percentage of each recipient's cost-of-living adjustment shall be10
based on the benefit being paid to the recipient on the effective date of the increase.11
* * *12
D. The cost-of-living increase which is authorized by Subsection C of this13
Section shall be limited to the lesser of either two percent or an amount determined14
as provided in Paragraph (C)(2) Subsection C of this Section in or for any year in15
which the system does not earn the required actuarial rate of return as certified by the16
system's actuary. an actuarial rate of return of at least seven percent interest on the17
investment of the system's assets.18
* * *19
F. In addition to the cost-of-living adjustment authorized by Subsection C20
of this Section, the board of trustees may grant a supplemental cost-of-living21
adjustment to all retirees and beneficiaries who are at least age sixty-five, which22
shall consist of an amount equal to two percent of the benefit being received on the23
date of the adjustment. In order to grant such supplemental cost-of-living24
adjustment, the board of trustees shall recommend to the president of the Senate and25
the speaker of the House of Representatives that the system be permitted to grant26
such supplemental cost-of-living adjustment to retirees and beneficiaries whenever27
the balance in the Employee Experience Account is sufficient to fully fund such28
benefit on an actuarial basis, as determined by the system's actuary. If the legislative29 HLS 14RS-270 ENGROSSED
HB NO. 1225
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are additions.
actuary disagrees with the determination of the system's actuary, such supplemental1
cost-of-living adjustment shall not be granted. The board of trustees shall not grant2
such supplemental cost-of-living adjustment as provided in this Subsection unless3
such supplemental cost-of-living adjustment has been approved by the legislature .4
by concurrent resolution adopted by the favorable vote of a majority of the elected5
members of each house. Any such supplemental cost-of-living adjustment paid on6
or before June 30, 2015, shall be limited to and shall only be payable based on an7
amount not to exceed eighty-five thousand dollars of the retiree's annual benefit .8
Any such supplemental cost-of-living adjustment paid on or after July 1, 2015, shall9
be limited to and shall only be payable based on an amount not to exceed sixty10
thousand dollars of the retiree's annual benefit. ; however, effective Effective on and11
for years after July 1, 2007, and on or before June 30, 2015, the eighty-five thousand12
dollar limit shall be increased each year in an amount equal to the increase in the13
Consumer Price Index consumer price index (United States city average for all urban14
consumers (CPI-U)), as prepared by the United States Department of Labor, Bureau15
of Labor Statistics, for the preceding calendar year, if any. Effective on and after16
July 1, 2015, the sixty-thousand dollar limit shall be increased each year in an17
amount equal to the increase in the consumer price index (United States city average18
for all urban consumers (CPI-U)), as prepared by the United States Department of19
Labor, Bureau of Labor Statistics, for the twelve-month period ending on the20
system's valuation date, if any. Any cost-of-living adjustment granted pursuant to the21
provisions of this Subsection shall begin on July first following legislative approval22
and shall be payable annually.23
G.(1) Notwithstanding any provision of this Section to the contrary, in a year24
in which the experience account balance is insufficient to fund the amount required25
pursuant to Paragraph (C)(1) of this Section, the board may make the26
recommendation provided in Paragraph (C)(1) if all of the following conditions are27
satisfied:28
(a) No benefit increase was granted in the preceding fiscal year.29 HLS 14RS-270 ENGROSSED
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(b) The experience account balance established in the system valuation for1
the preceding fiscal year reached its maximum reserve permitted pursuant to2
Paragraph (A)(3) of this Section applicable to the system valuation for that valuation3
year.4
(c) The experience account balance established in the system valuation for5
the current fiscal year is insufficient to fund the maximum increase permitted6
pursuant to Paragraph (C)(2) of this Section applicable to the system valuation for7
the preceding fiscal year.8
(d) All of the insufficiency in the account is attributable to the following:9
(i) The growth of the cost of the increase, but only if that growth was10
produced solely by either or both of these events:11
(aa) Changes in the pool of the eligible recipients.12
(bb) The growth in the benefit amount to which the increase applies due to13
the application of the CPI-U pursuant to the provisions of Paragraph (C)(1) of this14
Section.15
(ii) Credits to the account, if any, are insufficient to cover the growth in the16
cost of the increase.17
(2) The amount of the increase shall be equal to the amount the balance in18
the experience account will fully fund rounded to the nearest lower one-tenth of one19
percent.20
Section 2. In order to assure uniform implementation of the provisions of this Act,21
the systems shall jointly prepare and present to the House and Senate committees on22
retirement a written policy explaining in detail each aspect of system procedure that will be23
applied in the implementation of this Act. The policy shall be submitted to the committees24
no later than September 2, 2014. The House and Senate committees on retirement shall meet25
jointly prior to December 31, 2014, to review and consider approval of the policy.26
Section 3. The provisions of Sections 1 and 2 of this Act shall become effective if27
and when the Acts which originated as Senate Bill Nos. 16, 18, 19, and 21 of the 201428
Regular Session of the Legislature of Louisiana become effective.29 HLS 14RS-270 ENGROSSED
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Section 4. The provisions of this Section and Section 3 of this Act shall become1
effective on June 30, 2014; if this Act is vetoed by the governor and subsequently approved2
by the legislature, the provisions of this Section and Section 3 of this Act shall become3
effective on June 30, 2014, or on the day following such approval by the legislature,4
whichever is later.5
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 (La. State Employees' Retirement
System (LASERS); Teachers' Retirement System of La. (TRSL); La. 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 the granting of 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 base called the Original Amortization Base (OAB), and the debts of the system
incurred 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 HLS 14RS-270 ENGROSSED
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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
and the EAAB, the system shall continue to pay the full amount of indexed payments to its
oldest outstanding debt. Excludes particularized liabilities and employer contribution
variance liabilities from the 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 been completely liquidated, requires the system to apply
remaining sums and subsequent payments to the next oldest debt, until all system debts are
completely liquidated. Excludes employer contribution variance liabilities from the oldest
outstanding debt.
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.
Proposed law requires debts created by funds being moved into an experience account to be
amortized over a 10-year period. HLS 14RS-270 ENGROSSED
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are additions.
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, to the extent permitted by the two benefit increase cap, the
experience account is credited with interest attributable to the amount in the account during
the prior year. Proposed law provides that interest may only be credited up to the applicable
one or two benefit increase cap. Further provides that if a system dips below 85% funded,
no interest may be credited to the account while the reserves in the account exceed the one
benefit increase cap.
Present law 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.
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 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 changes the hurdle from the system's actuarial rate of return to an actuarial rate
of return of 7.25%.
Present law for 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 changes the hurdle from the system's actuarial rate of return to an actuarial rate
of return of 7%.
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. HLS 14RS-270 ENGROSSED
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Proposed law authorizes each system to grant a partial benefit increase, regardless of funded
ratio or achieved rate of return, if all of the following criteria are met:
(1)No benefit increase was granted in the preceding fiscal year.
(2)The experience account balance in the preceding fiscal year had reached its
maximum reserve for that valuation year.
(3)The experience account balance in the current fiscal year is no longer enough to fund
the maximum increase due to either or both of the following:
(a)Growth in the cost of the increase based on changes in the pool of eligible
recipients, growth in the benefit amount due to the indexing of the CPI-U, or
both.
(b)Credits to the account in the current fiscal year, if any, are insufficient to
cover the growth in the cost of the increase.
In the event all of the criteria in proposed law are met, the systems are authorized to provide
an increase equal to the amount the balance in the experience account will fully fund
rounded down to the lower 0.1%.
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
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. Further provides that the legislature approve the
increase. Proposed law retains present law. HLS 14RS-270 ENGROSSED
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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 relative to 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.
Uniform Implementation
Proposed law requires the four state retirement systems to submit a joint report to the House
and Senate Committees on Retirement detailing the system procedures that will be used to
implement the Act. Requires the policy to be submitted no later than Sept. 2, 2014.
Requires the committees on retirement to meet jointly to review the policy prior to Dec. 31,
2014.
Effective if and when SB Nos. 16, 18, 19, and 21 of the 2014 RS become effective.
(Amends R.S. 11:102(B)(3)(d)(v)-(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)-(3), and (F)(1),
883.1(A)(2) and (3), (C)(1)-(3), (F), and (G)(1), 1145.1(A), (C)(1)-(3), and (D), and
1332(A), (C)(1)-(3), (D), and (F); Adds R.S. 11:102.1(B)(6) and (C)(6), 102.2(B)(5) and
(C)(6), 542(G), 883.1(H), 1145.1(F), and 1332(G))
Summary of Amendments Adopted by House
Committee Amendments Proposed by House Committee on Retirement to the original
bill.
1. Adds provisions to each system requiring a 10-year amortization for debt
established by removing money from the general pool of assets and crediting it
to the experience account.
2. Adds provision authorizing each system to grant a partial benefit increase under
certain circumstances.
3. Excludes particularized liabilities (for LASERS and TRSL) and employer
contribution variance debts (for all four systems) from required payments on
"oldest" debt of the system.
4. Removes provision requiring joint report by systems to the Public Retirement
Systems' Actuarial Committee.
5. Adds provision requiring joint report by systems to the House and Senate
Committees on Retirement.
6. Removes proposed law changes with respect to the role of system boards in
granting benefit increases.
7. For LSERS and STPOL, adds provisions establishing each system's current
assumed rate of return as a threshold for granting a benefit increase above 2%.
8. Removes provisions restricting granting of benefit increases to every other year
when the system is above 85% funded.