Louisiana House Bill HB43

Louisiana 2014 Regular Session

• Introduced: 3/10/14
• Refer: 3/10/14

Caption

Provides for application of remaining funds in the Teachers' Retirement System of La.'s experience account, after payment of a permanent benefit increase to eligible retirees and beneficiaries, to specified debt of the system (OR DECREASE APV)

Impact

The introduction of HB 43 is set to reduce the overall unfunded liability of the retirement system by allowing the application of surplus funds from the experience account to the OAB. Although this will create a relief effect on current debt obligations, it will extend the payment period for some of these liabilities. Thus, while the immediate financial pressure on the General Fund and local sources may decrease, the legislative action results in a shift in how the state's financial responsibilities are managed in the long term.

Summary

House Bill 43, introduced by Representative J. Kevin Pearson, addresses the financial management of the Teachers’ Retirement System's experience account. The bill stipulates that any funds remaining in the experience account after a permitted permanent benefit increase (PBI) for retirees must be transferred back to the Regular Benefit Account to reduce the Original Amortization Base (OAB) of the system's debt. This measure aims to optimize financial resources within the retirement system by ensuring that unallocated funds are effectively used to mitigate outstanding liabilities.

Sentiment

The sentiment surrounding HB 43 seems largely favorable among legislators concerned about fiscal responsibility and the sustainability of the retirement system. However, there are concerns regarding the implications for future financial flexibility, as transferring assets could limit the capacity for subsequent benefit increases or adjustments based on investment performance. There is an acknowledgment that while this measure taps into available resources now, it may restrict future budgetary maneuvers.

Contention

Notably, critics warn that there might be unease regarding the potentiality of future amendments to the PBI formula, which may not follow the historical or expected allocation processes. Since HB 43 introduces more control over the flow of funds, stakeholders may express concern about how this will affect the granting of benefits to retirees. Furthermore, the bill's adjustments might be perceived as overly conservative or restrictive, which could elicit pushback from advocates wanting flexibility in benefit administration.