2014 REGULAR SESSION
ACTUARIAL NOTE HB 45
Page 1 of 3
House Bill 45 HLS 14RS-711
Original
Author: Representative Seabaugh
Date: March 19, 2014
LLA Note HB 45.01
Organizations Affected:
Teachers’ Retirement System of
Louisiana
OR DECREASE APV
The Note was prepared by the Actuarial Services Department of the Office of the
Legislative Auditor. The attachment of the Note to HB 45 provides compliance
with the requirements of R.S. 24:521.
Bill Header: RETIREMENT/STATE SYSTEMS: Provides relative to membership in state retirement systems for certain new hires.
Cost Summary:
The estimated actuarial and fiscal impact of the proposed legislation is summarized below. Actuarial costs pertain to changes in the
actuarial present value of future benefit payments. A cost is denoted by “Increase” or a positive number. Savings are denoted by
“Decrease” or a negative number.
Actuarial Cost/(Savings) to Retirement Systems and OGB Decrease
Total Five Year Fiscal Cost
Expenditures $0
Revenues Decrease
Estimated Actuarial Impact:
The chart below shows the estimated change in the actuarial present value of future benefit payments, if any, attributable to the
proposed legislation. A cost is denoted by “Increase” or a positive number. Savings are denoted by “Decrease” or a negative number.
Present value costs associated with administration or other fiscal concerns are not included in these values.
Increase (Decrease) in
Actuarial Cost (Savings) to: The Actuarial Present Value
All Louisiana Public Retirement Systems Decrease
Other Post Retirement Benefits $0
Total Decrease
Estimated Fiscal Impact:
The chart below shows the estimated fiscal impact of the proposed legislation. This represents the effect on cash flows for
government entities including the retirement systems and the Office of Group Benefits. Fiscal costs include estimated administrati ve
costs and costs associated with other fiscal concerns. A fiscal cost is denoted by “Increase” or a positive number. F iscal savings are
denoted by “Decrease” or a negative number.
EXPENDITURES 2014-15 2015-16 2016-17 2017-2018 2018-2019 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated 0 0 0 0 0 0
Stat Deds/Other 0 0 0 0 0 0
Federal Funds 0 0 0 0 0 0
Local Funds 0 0 0 0 0 0
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
REVENUES 2014-15 2015-16 2016-17 2017-2018 2018-2019 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated Decrease Decrease Decrease Decrease Decrease Decrease
Stat Deds/Other 0 0 0 0 0 0
Federal Funds 0 0 0 0 0 0
Local Funds 0 0 0 0 0 0
Annual Total Decrease Decrease Decrease Decrease Decrease Decrease
2014 REGULAR SESSION
ACTUARIAL NOTE HB 45
Page 2 of 3
Bill Information:
Current Law
Under R.S. 11:701(33)(viii) of current law, a “teacher” eligible to become a member of the Teachers’ Retirement System of
Louisiana (TRSL) includes the following persons:
1. The president and staff of the Louisiana Federation of Teachers who were members of TRSL prior to such employment.
2. The president or secretary and staff of the Louisiana Association of Educators.
3. The director and staff of the Associated Professional Educators of Louisiana.
4. The director and staff of the Louisiana Resource Center for Educators.
Proposed Law
Under HB 45, a “teacher” eligible to become a member of TRSL shall include the following persons:
1. The president and staff of the Louisiana Federation of Teachers hired by the federation before September 1, 2014, who
were members of TRSL prior to such employment.
2. The president or secretary and staff of the Louisiana Association of Educators, hired by the association before September
1, 2014.
3. The director and staff of the Associated Professional Educators of Louisiana, hired by the association before September
1, 2014.
4. The director and staff of the Louisiana Resource Center for Educators hired by the center before September 1, 2014.
Employees of these associations hired on or after September 1, 2014, will not be allowed to become members of TRSL.
Implications of the Proposed Changes
HB 45 provides that employee s of the above named organizations hired on or after September 1, 2014, shall not be members of
TRSL.
Cost Analysis:
Analysis of Actuarial Costs
Retirement Systems
The actuarial present value of future benefit payments under HB 45 will decrease because employees of the named
organizations hired on or after September 1, 2014, will not be able to participate and earn benefit credits under TRSL.
HB 45 will not change the current value of the accrued liability or the current value of the unfunded accrued liability.
However, the accrued liability in the future will be less than what it would have been otherwise.
Future normal costs as a dollar amount will decrease because fewer persons will be participating in TRSL. Future normal
costs as a percentage of pay may increase or decrease but given the small number of persons potentially affected, the increase
or decrease will be negligible.
Future amortization payments as a dollar amount will not change. However, amortization contributions that would have
otherwise been charged to future payrolls for future hires of the named employers will now be charged against the payrolls
of employers still participating in TRSL. The effect on other employers will be negligible.
Other Post Retirement Benefits
It is expected that actuarial costs associated with post-employment benefits other than pensions will decrease if employees of
the named employers participate in group life and health insurance programs that provide benefits subsequent to retirement.
However, if these employers are providing such benefits, they are doing so as private employers and not through any
government programs of the state or its political subdivisions.
2014 REGULAR SESSION
ACTUARIAL NOTE HB 45
Page 3 of 3
Analysis of Fiscal Costs
HB 45 will have the following effect on fiscal costs during the five year measurement period.
Expenditures:
1. Expenditures from General Funds will increase. The named organizations will not be contributing toward amortization
costs relative to the payrolls of the employees hired after September 1, 2014. The savings realized by the named
organizations will be spread over the remaining employers participating in TRSL. However, the increase in expenditures
will be small to the point of being negligible.
2. Expenditures from TRSL (Agy Self-Generated) will decrease to the extent that there are one or more new hires at one or
more of the named organizations and one or more of these new employees should terminate employment within the five
year fiscal measurement period. Under current law, TRSL would refund employee contributions to the terminating
employee. Under HB 45, no such refund would be given. This decrease in expenditures is assumed to be negligible.
3. Expenditures from the named organizations will decrease because it will no longer be necessary for the organizations to
contribute to TRSL. However, because the organizations are private entities, expenditures from General Funds and
Local Funds will not change.
4. Expenditures from Local Funds will increase. The named organizations will not be contributing toward amortization
costs relative to the payrolls of employees hired after September 1, 2014. The savings realized by the named
organizations will be spread over the remaining employers participating in TRSL. However, the increase in expenditures
will be small to the point of being negligible
Revenues:
• TRSL revenues (Agy Self-Generated) will decrease because it will no longer receive contributions from the named
organizations or their employees.
According to TRSL the costs associated with communicating the proposed legislation to the impacted employers are minimal and
can be absorbed in the system’s existing budget.
Actuarial Data, Methods and Assumptions
This actuarial note was prepared using actuarial data, methods, and assumptions as disclosed in the most recent actuarial valuation report approved by PRSAC. The actuary signing this note may or may not agree with or endorse these assumptions. He is using
this data, methods and assumptions to provide consistency with the actuary for the retirement systems who may be providing
testimony to the Senate and House retirement committees.
Actuarial Caveat
There is nothing in HB 45 that will compromise the signing actuary’s ability to present an unbiased statement of actuarial opinion.
Actuarial Credentials:
Paul T. Richmond is the Manager of Actuarial Services for the Louisiana Legislative Auditor. He is an Enrolled Actuary, a member of the American Academy of Actuaries, a member of the Society of Actuaries and has met the Qualification Standards of
the American Academy of Actuaries necessary to render the actuarial opinion contained herein.
Dual Referral:
Senate House
13.5.1: Annual Fiscal Cost ≥ $100,000 6.8(F)(1): Annual Fiscal Cost ≥ $100,000
13.5.2: Annual Tax or Fee Change ≥ $500,000 6.8(F)(2): Annual Revenue Reduction ≥ $100,000
6.8(G): Annual Tax or Fee Change ≥ $500,000