HLS 14RS-248 ORIGINAL
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Regular Session, 2014
HOUSE BILL NO. 37
BY REPRESENTATIVE PEARSON
RETIREMENT/TEACHERS: Requires application of certain amounts of minimum
foundation program formula funds to the initial unfunded accrued liability of the
Teachers' Retirement System of Louisiana
AN ACT1
To enact R.S. 11:102.3, relative to payment of certain unfunded accrued liability of the2
Teachers' Retirement System of Louisiana; to provide relative to calculation and3
distribution of minimum foundation program funds; to provide relative to the powers4
and duties of the Department of Education; to provide relative to the powers and5
duties of the board of trustees of the retirement system; to provide relative to the6
calculation of employer contribution rates; and to provide for related matters.7
Notice of intention to introduce this Act has been published8
as provided by Article X, Section 29(C) of the Constitution9
of Louisiana.10
Be it enacted by the Legislature of Louisiana:11
Section 1. R.S. 11:102.3 is hereby enacted to read as follows: 12
§102.3. Payments by the Louisiana Department of Education to the Teachers'13
Retirement System of Louisiana14
A.(1) The Legislature of Louisiana recognizes its constitutional obligation15
to attain and maintain the actuarial soundness of the state and statewide retirement16
systems as well as its constitutional obligation to pay by 2029 the unfunded accrued17
liability of the state systems existing as of June 30, 1988. The legislature further18
recognizes that funds allocated to the minimum foundation program by the State19
Board of Elementary and Secondary Education include amounts intended to pay20
retirement costs, including funds required to pay the unfunded accrued liability of21 HLS 14RS-248 ORIGINAL
HB NO. 37
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the Teachers' Retirement System of Louisiana existing as of June 30, 1988. The1
legislature further recognizes that the State Board of Elementary and Secondary2
Education's constitutional mandate to equitably allocate minimum foundation3
program funds means the amounts intended for payment of such unfunded accrued4
liability of the retirement system are spread across all minimum foundation program5
fund recipients.6
(2) Therefore, notwithstanding any provision of law to the contrary,7
beginning Fiscal Year 2014-2015 and continuing each year thereafter until 2029, the8
legislature directs the Louisiana Department of Education, in this Section, the9
"department", to directly transmit to the Teachers' Retirement System of Louisiana,10
in this Section, the "retirement system", from the minimum foundation program an11
amount sufficient to make the annual payments required by this Section on the12
system's Original Amortization Base on behalf of all employers receiving funds13
through the minimum foundation program formula.14
B. The retirement system shall annually determine the amount of the15
mid-year amortization payment on the Original Amortization Base schedule,16
provided in the most recent system valuation adopted by the Public Retirement17
Systems Actuarial Committee, which reflects the percentage of the payment18
allocated to elementary and secondary education employers. The retirement system19
shall annually invoice the Louisiana Department of Education for this amount. The20
invoiced amount shall be reviewed and approved by the Public Retirement Systems'21
Actuarial Committee as part of the process of annually adopting an actuarial22
valuation for the Teachers' Retirement System of Louisiana.23
C. The department shall transfer the required amount to the retirement24
system on behalf of all employers receiving formula funds. The amount to be paid25
shall be divided into twelve equal payments and paid monthly.26
D. The minimum foundation program funding allocations which remain,27
following the direct payment of unfunded accrued liability retirement costs required28 HLS 14RS-248 ORIGINAL
HB NO. 37
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by this Section shall be distributed and used as otherwise provided by law and the1
formula approved by the legislature.2
E. The Teachers' Retirement System of Louisiana shall determine the3
balance of amounts due pursuant to R.S. 11:102 as a percentage of payroll, which4
shall be reviewed and approved by the Public Retirement Systems' Actuarial5
Committee as part of the process of annually adopting an actuarial valuation for the6
Teachers' Retirement System of Louisiana. Each employer that receives formula7
funds and that employs contributing members of the retirement system shall be liable8
to the retirement system for this balance of amounts due.9
Section 2. As soon as practicable after the effective date of this Act, the Public10
Retirement Systems' Actuarial Committee shall meet to adopt a revised valuation for the11
system, prepared as provided by this Act. This valuation shall include a revised employer12
contribution rate for elementary and secondary education employers in the Teachers'13
Retirement System to be utilized in the fiscal year which begins on July 1, 2014.14
Section 3. The provisions of this of this Act shall become effective on June 3, 2014;15
if vetoed by the governor and subsequently approved by the legislature, this Act shall16
become effective on July 1, 2014, or on the day following such approval by the legislature,17
whichever is later.18
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)]
Pearson HB No. 37
Abstract: Provides for an annual direct transfer of minimum foundation program (MFP)
funds from the Dept. of Education to the Teachers' Retirement System of Louisiana
(TRSL) to pay the portion of the system's required annual initial unfunded accrued
liability (IUAL) payment attributable to elementary and secondary education
employers. Provides for distribution and use pursuant to present law for all
remaining MFP funds.
Present law (R.S. 11:102) establishes the calculation for annual employer contribution rates
for employers in the state retirement systems—of which TRSL is one. Part of the annual
contribution is paid to debt service on the IUAL amount.
Present constitution creates the minimum foundation program, which is designed to provide
minimum education funding for public schools in the state. The MFP monies are used by HLS 14RS-248 ORIGINAL
HB NO. 37
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school districts to cover education-related expenses, including salaries and retirement costs
for the teachers and school employees in the district.
Proposed law requires the Dept. of Education to pay annually an amount sufficient to cover
the portion of the IUAL payment owed by elementary and secondary employers in TRSL
from the MFP monies before such monies are distributed to school boards.
Proposed law requires that TRSL annually determine what percent of the year's IUAL
payment is attributable to elementary and secondary education employers and to invoice the
Dept. of Education for that amount. Further requires the invoiced amount to be reviewed
and approved by the Public Retirement Systems' Actuarial Committee (PRSAC) when the
committee reviews and adopts an actuarial valuation for TRSL each year.
Under proposed law, the department shall transfer the required amount to the retirement
system on behalf of all employers receiving formula funds. The department shall pay 12
equal monthly payments to satisfy the obligation created by proposed law.
Proposed law further requires that TRSL to calculate the balance of amounts due from
contributing employers as a percentage of payroll. Requires such calculation to be reviewed
and approved by PRSAC when the committee adopts a valuation for TRSL. Provides that
participating employers remain obligated for the remainder of their required payments to
TRSL.
Effective June 3, 2014.
(Adds R.S. 11:102.3)