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Regular Session, 2014
SENATE BILL NO. 17
BY SENATOR LONG
TEACHERS RETIREMENT. Provides for a supplemental benefit increase. (2/3 - CA
10s29(F)) (6/30/14)
AN ACT1
To amend and reenact R.S. 11:883.1.1, relative to increases of benefits received from the2
Teachers' Retirement System of Louisiana; to provide for a supplemental permanent3
benefit increase; to provide for funding; to provide for an effective date; and to4
provide for related matters.5
Notice of intention to introduce this Act has been published.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 11:883.1.1 is hereby amended and reenacted to read as follows: 8
ยง883.1.1. Supplemental cost-of-living increases for 2007; payment from experience9
account10
A. The Constitution of Louisiana requires the legislature to provide for the11
retirement of teachers and other employees of the public educational system of the12
state. The legislature finds that providing generous retirement benefits for our public13
educational employees is an important element of the complete compensation14
package the state provides for service in Louisiana's public educational system. In15
order to maintain the purchasing power of the benefit of a retiree of the Teachers'16
Retirement System of Louisiana, periodic increases in the benefit amount are17 SB NO. 17
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necessary to offset increases in the cost of ordinary living expenses. When the timing1
of such increases is infrequent or erratic, it becomes difficult for such increases to2
protect the retiree from falling behind financially.3
B. The legislature recognizes that while providing periodic cost-of-living4
benefit increases is necessary to preserve the standard of living of our retired public5
educational system employees, such increases have a price which is ultimately paid6
by the taxpayers through allocation of employer contributions to the system.7
Increases should therefore be limited to a reasonable level, to prevent the expense8
of such increases from causing an undue burden on the state and local fisc and9
therefore on the taxpayers. Additionally, such increases are not meant to function as10
pay raises, but merely to maintain the standard of living of the recipients, keeping11
pace with the Consumer Price Index for All Urban Consumers, U.S. city average for12
all items (CPI-U).13
C.(1) The legislature has provided for an employee experience account, a14
mechanism for determining each year whether a cost-of-living benefit increase may15
be granted and the amount of any such increase that is permitted. The provisions of16
R.S. 11:883.1 prohibit any cost-of-living increase paid from experience account17
funds from being in excess of three percent, helping to limit the expense of granting18
each such increase to a reasonable level. Additionally, if the growth of the CPI-U is19
less than three percent, then the increase from the experience account is also of this20
lesser percent.21
(2)(a) For an increase payable on July 1, 2007, the application of the22
experience account mechanism results in a determination that, if the system properly23
complies with all other requirements of the experience account statute and subject24
to the approval of the legislature, the board of trustees of the Teachers' Retirement25
System of Louisiana may grant an increase to eligible retirees, survivors, and26
beneficiaries equal to the CPI-U for the 2006 calendar year of two and one-half27
percent.28
(b) For an increase payable on July 1, 2014, the application of the29 SB NO. 17
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experience account mechanism results in a determination that, subject to the1
approval of the legislature, eligible retirees, survivors, and beneficiaries shall2
receive an increase equal to the CPI-U for the 2013 calendar year of one and3
one-half of one percent.4
D.(1)(a) Considering the factual and policy statements in Subsections A, B,5
and C of this Section, and taking into account that retired employees of the public6
educational system have not received a cost-of-living increase for four consecutive7
years due to market conditions and the lack of sufficient funds in the experience8
account, the legislature finds that, for the July 1, 2007, cost-of-living increase9
payable pursuant to the experience account statute, permitting the board to grant the10
maximum three-percent increase allowable pursuant to the provisions of the11
experience account statute without regard to the CPI-U helps preserve the purchasing12
power of retired employees of the public educational system, their survivors, and13
beneficiaries without creating an undue financial burden on the state or the14
taxpayers.15
(b) Considering the factual and policy statements in Subsections A, B,16
and C of this Section, and taking into account that retired employees of the17
public educational system did not receive a benefit increase for five consecutive18
years due to market conditions, the legislature finds that, for the July 1, 2014,19
permanent benefit increase payable pursuant to the experience account statute,20
granting a supplemental increase of an amount to be determined later without21
regard to the CPI-U helps preserve the purchasing power of retired employees22
of the public educational system, their survivors, and beneficiaries without23
creating an undue financial burden on the state or the taxpayers.24
(2)(a) Notwithstanding the provisions of R.S. 11:883.1(B)(2) and (C)(1) and25
(2) limiting any increase granted from experience account funds and payable July 1,26
2007, to two and one-half percent, the board of trustees of the Teachers' Retirement27
System of Louisiana is authorized to grant from the funds in the experience account28
a supplemental cost-of-living increase of one-half of one percent, which may be paid29 SB NO. 17
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beginning July 1, 2007, providing all other requirements of R.S. 11:883.1 are met1
and the total level of the increase granted does not exceed three percent.2
(b) Notwithstanding the provisions of R.S. 11:883.1(B)(2) and (C)(1) and3
(2) limiting any increase granted from experience account funds and payable4
July 1, 2014, to one and one-half of one percent, the legislature grants from the5
funds in the experience account a supplemental permanent benefit increase of6
an amount to be determined later, to be paid beginning July 1, 2014, provided7
all other requirements of R.S. 11:883.1 are met and the total level of the8
increase granted does not exceed the sum of the CPI-U and the amount to be9
determined later.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 Teachers' Retirement System of Louisiana any additional13
authority to grant or to recommend to the legislature that it be permitted to grant a14
cost-of-living increase greater than the increase as calculated pursuant to the15
provisions of R.S. 11:883.1 as they exist on June 30, 2007.16
(2) Nothing in this Section shall be construed to grant the board of17
trustees of the Teachers' Retirement System of Louisiana any additional18
authority to recommend that the legislature grant a permanent benefit increase19
greater than the increase as calculated pursuant to the provisions of R.S.20
11:883.1.21
Section 2. A. The actuarial cost of the benefit provisions of this Act shall be funded22
from the experience account of the Teachers' Retirement System of Louisiana in compliance23
with Article X, Section 29(F) of the Constitution of Louisiana.24
B. The additional actuarial cost, if any, of the benefit provisions of this Act not25
funded from the experience account shall be funded with increased employer contributions26
in compliance with Article X, Section 29(F) of the Constitution of Louisiana.27
Section 3. This Act shall become effective on June 30, 2014; if vetoed by the28
governor and subsequently approved by the legislature, this Act shall become effective on29 SB NO. 17
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June 30, 2014, or on the day following such approval by the legislature, whichever is later.1
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Laura Gail Sullivan.
DIGEST
Present law (R.S. 11:883.1), relative to the Teachers' Retirement System of La. (Teachers
or TRSL), 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, survivors, 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 retirees, survivors, and
beneficiaries eligible for a PBI pursuant to present experience account law. Provides that this
increase shall be an additional amount to be determined later.
Effective June 30, 2014.
(Amends R.S. 11:883.1.1)