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Regular Session, 2014
HOUSE BILL NO. 34
BY REPRESENTATIVE JONES
RETIREMENT/COLAS: Provides a supplemental benefit increase to qualifying retirees
and beneficiaries of the La. State Employees' Retirement System
AN ACT1
To amend and reenact R.S. 11:542.1, relative to increases of benefits received from the2
Louisiana State Employees' Retirement System; to provide for a supplemental3
permanent benefit increase; to provide for funding; to provide for an effective date;4
and to provide for related matters.5
Notice of intention to introduce this Act has been published6
as provided by Article X, Section 29(C) of the Constitution7
of Louisiana.8
Be it enacted by the Legislature of Louisiana:9
Section 1. R.S. 11:542.1 is hereby amended and reenacted to read as follows: 10
§542.1. Supplemental cost-of-living increase for 2007 increases; payment from11
experience account12
A. The legislature hereby acknowledges that providing generous retirement13
benefits for our state employees is an important element of the complete14
compensation package the state offers such employees for their public service. In15
order to maintain the purchasing power of a retiree's benefit, periodic increases in the16
benefit amount are necessary to offset the increases in the cost of ordinary living17
expenses. When the timing of such increases is infrequent or erratic, it becomes18
difficult for such increases to protect the retiree from falling behind financially.19 HLS 14RS-645 ORIGINAL
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B. The legislature recognizes that while providing periodic cost-of-living1
benefit increases is necessary to preserve the standard of living of our retired state2
employees, such increases have a price which is ultimately paid by the taxpayers3
through allocation of employer contributions to the system. Increases should4
therefore be limited to a reasonable level to prevent the expense of such increases5
from causing an undue burden on the state fisc and, by extension, on the taxpayers.6
Additionally, such increases are not meant to function as pay raises but merely to7
maintain the standard of living of the recipients, keeping pace with the Consumer8
Price Index for All Urban Consumers, U.S. United States city average for all items9
(CPI-U).10
C.(1) The legislature has provided for an employee experience account, a11
mechanism for determining each year whether a cost-of-living benefit increase may12
be granted and the amount of any such increase that is permitted. The provisions of13
R.S. 11:542 prohibit any cost-of-living increase paid from experience account funds14
from being in excess of three percent, helping to limit the expense of granting each15
such increase to a reasonable level. Additionally, if the growth in the CPI-U for the16
preceding calendar year is less than three percent, then the statutorily permissible17
increase from the experience account is also of this lesser percent.18
(2)(a) For an increase payable on July 1, 2007, the application of the19
experience account mechanism results in a determination that, if the system properly20
complies with all other requirements of the experience account statute and subject21
to the approval of the legislature, the board of trustees of the Louisiana State22
Employees' Retirement System may grant an increase to eligible retirees, survivors,23
and beneficiaries equal to the CPI-U for the 2006 calendar year of two and one-half24
percent.25
(b) For an increase payable on July 1, 2014, the application of the experience26
account mechanism results in a determination that, subject to the approval of the27
legislature, those eligible to receive a benefit increase pursuant to R.S.11:542 shall28 HLS 14RS-645 ORIGINAL
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receive an increase equal to the CPI-U for the 2013 calendar year of one and one-half1
of one percent.2
D.(1)(a) Considering the factual and policy statements in Subsections A, B,3
and C of this Section, and taking into account that retired state employees did not4
receive a cost-of-living increase for three consecutive years due to market conditions5
and the deficit in the experience account, the legislature finds that, for the July 1,6
2007, cost-of-living increase payable pursuant to the experience account statute,7
permitting the board to grant the maximum three-percent increase allowable pursuant8
to the provisions of the experience account statute without regard to the CPI-U helps9
preserve the purchasing power of retired state employees, their survivors, and10
beneficiaries without creating an undue financial burden on the state or the11
taxpayers.12
(b) Considering the factual and policy statements in Subsections A, B, and13
C of this Section, and taking into account that retired state employees did not receive14
a benefit increase for five consecutive years due to market conditions, the legislature15
finds that, for the July 1, 2014, permanent benefit increase payable pursuant to the16
experience account statute, granting a supplemental increase of an amount to be17
determined without regard to the CPI-U helps preserve the purchasing power of18
those eligible for such increases without creating an undue financial burden on the19
state or the taxpayers.20
(2)(a) Notwithstanding the provisions of R.S. 11:542(B)(2) and (C)(1) and21
(2) limiting any increase granted from experience account funds and payable July 1,22
2007, to two and one-half percent, the board of trustees of the Louisiana State23
Employees' Retirement System is authorized to grant from the funds in the24
experience account a supplemental cost-of-living increase of one-half of one percent,25
which may be paid beginning July 1, 2007, provided all other requirements of R.S.26
11:542 are met and the total level of the increase granted does not exceed three27
percent.28 HLS 14RS-645 ORIGINAL
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(b) Notwithstanding the provisions of R.S. 11:542(B)(2) and (C)(1) and (2)1
limiting any increase granted from experience account funds and payable July 1,2
2014, to one and one-half of one percent, the legislature grants, from the funds in the3
experience account, a supplemental permanent benefit increase of an amount to be4
determined, to be paid beginning July 1, 2014, provided all other requirements of5
R.S. 11:542 are met and the total level of the increase granted does not exceed the6
sum of the CPI-U and the amount to be determined. Notwithstanding any provision7
of this Subparagraph to the contrary, no further action on the part of the legislature8
shall be required in order to grant the supplemental benefit authorized by this9
Subparagraph.10
E.(1) Except for the authority to grant a supplemental one-half of one percent11
increase payable July 1, 2007, nothing in this Section shall be construed to grant the12
board of trustees of the Louisiana State Employees' Retirement System any13
additional authority to grant or to recommend to the legislature that it be permitted14
to grant a cost-of-living increase greater than the increase as calculated pursuant to15
the provisions of R.S. 11:542 as they exist on June 30, 2007.16
(2) Nothing in this Section shall be construed to grant the board of trustees17
of the Louisiana State Employees' Retirement System any additional authority to18
recommend that the legislature grant a permanent benefit increase greater than the19
increase as calculated pursuant to the provisions of R.S. 11:542.20
Section 2.(A) The actuarial cost of the benefit provisions of this Act shall be funded21
from the experience account of the Louisiana State Employees' Retirement System in22
compliance with Article X, Section 29(F) of the Constitution of Louisiana.23
(B) The additional actuarial cost, if any, of the benefit provisions of this Act not24
funded from the experience account shall be funded with increased employer contributions25
in compliance with Article X, Section 29(F) of the Constitution of Louisiana.26
Section 3. This Act shall become effective on June 30, 2014; if vetoed by the27
governor and subsequently approved by the legislature, this Act shall become effective on28
June 30, 2014, or on the day following such approval by the legislature, whichever is later.29 HLS 14RS-645 ORIGINAL
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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)]
Jones HB No. 34
Abstract: Authorizes a supplemental benefit increase for certain retirees and beneficiaries
of the La. State Employees' Retirement System (LASERS).
Present law (R.S. 11:542), relative to LASERS, provides for the accumulation of certain
system funds in an "experience account". Provides for utilization of these funds for
permanent benefit increases (PBIs), sometimes called cost-of-living adjustments or COLAs,
for retirees and beneficiaries of the system. Provides for determination of eligibility for and
the amount of any increase paid with these funds.
Proposed law provides for a supplemental benefit increase for those eligible for a PBI
pursuant to present law providing for the experience account. Provides that this increase
shall be an additional amount to be determined.
Present law requires a concurrent resolution adopted by the legislature as part of the process
of granting a PBI pursuant to present law. Proposed law provides that no further action is
required by the legislature in order for the system to pay the PBI granted by proposed law.
In compliance with Art. X, §29(F) of the state constitution, proposed law requires that the
actuarial cost of proposed law be funded with money from the system's experience account.
Further provides that any additional actuarial cost be funded with additional employer
contributions.
Effective June 30, 2014.
(Amends R.S. 11:542.1)