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Regular Session, 2014
SENATE BILL NO. 27
BY SENATOR WALSWORTH
STATE EMPLOYEE RET. Provides for a supplemental benefit increase. (2/3 -
CA10s29(F)) (6/30/14)
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 published.6
Be it enacted by the Legislature of Louisiana:7
Section 1. R.S. 11:542.1 is hereby amended and reenacted to read as follows: 8
ยง542.1. Supplemental cost-of-living increases for 2007; payment from experience9
account10
A. The legislature hereby acknowledges that providing generous retirement11
benefits for our state employees is an important element of the complete12
compensation package the state offers such employees for their public service. In13
order to maintain the purchasing power of a retiree's benefit, periodic increases in the14
benefit amount are necessary to offset the increases in the cost of ordinary living15
expenses. When the timing of such increases is infrequent or erratic, it becomes16
difficult for such increases to protect the retiree from falling behind financially.17 SB NO. 27
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words in boldface type and underscored are additions.
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. city average for all items (CPI-U).9
C.(1) The legislature has provided for an employee experience account, a10
mechanism for determining each year whether a cost-of-living benefit increase may11
be granted and the amount of any such increase that is permitted. The provisions of12
R.S. 11:542 prohibit any cost-of-living increase paid from experience account funds13
from being in excess of three percent, helping to limit the expense of granting each14
such increase to a reasonable level. Additionally, if the growth in the CPI-U for the15
preceding calendar year is less than three percent, then the statutorily permissible16
increase from the experience account is also of this lesser percent.17
(2)(a) For an increase payable on July 1, 2007, the application of the18
experience account mechanism results in a determination that, if the system properly19
complies with all other requirements of the experience account statute and subject20
to the approval of the legislature, the board of trustees of the Louisiana State21
Employees' Retirement System may grant an increase to eligible retirees, survivors,22
and beneficiaries equal to the CPI-U for the 2006 calendar year of two and one-half23
percent.24
(b) For an increase payable on July 1, 2014, the application of the25
experience account mechanism results in a determination that, subject to the26
approval of the legislature, eligible retirees, survivors, and beneficiaries shall27
receive an increase equal to the CPI-U for the 2013 calendar year of one and28
one-half of one percent.29 SB NO. 27
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D.(1) (a) Considering the factual and policy statements in Subsections A, B,1
and C of this Section, and taking into account that retired state employees did not2
receive a cost-of-living increase for three consecutive years due to market conditions3
and the deficit in the experience account, the legislature finds that, for the July 1,4
2007, cost-of-living increase payable pursuant to the experience account statute,5
permitting the board to grant the maximum three-percent increase allowable pursuant6
to the provisions of the experience account statute without regard to the CPI-U helps7
preserve the purchasing power of retired state employees, their survivors, and8
beneficiaries without creating an undue financial burden on the state or the9
taxpayers.10
(b) Considering the factual and policy statements in Subsections A, B,11
and C of this Section, and taking into account that retired state employees did12
not receive a benefit increase for five consecutive years due to market13
conditions, the legislature finds that, for the July 1, 2014, permanent benefit14
increase payable pursuant to the experience account statute, granting a15
supplemental increase of an amount to be determined later without regard to16
the CPI-U helps preserve the purchasing power of retired state employees, their17
survivors, and beneficiaries without creating an undue financial burden on the18
state or the taxpayers.19
(2)(a) Notwithstanding the provisions of R.S. 11:542(B)(2) and (C)(1) and20
(2) limiting any increase granted from experience account funds and payable July 1,21
2007, to two and one-half percent, the board of trustees of the Louisiana State22
Employees' Retirement System is authorized to grant from the funds in the23
experience account a supplemental cost-of-living increase of one-half of one percent,24
which may be paid beginning July 1, 2007, provided all other requirements of R.S.25
11:542 are met and the total level of the increase granted does not exceed three26
percent.27
(b) Notwithstanding the provisions of R.S. 11:542(B)(2) and (C)(1) and28
(2) limiting any increase granted from experience account funds and payable29 SB NO. 27
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July 1, 2014, to one and one-half of one percent, the legislature grants from the1
funds in the experience account a supplemental permanent benefit increase of2
an amount to be determined later, to be paid beginning July 1, 2014, provided3
all other requirements of R.S. 11:542 are met and the total level of the increase4
granted does not exceed the sum of the CPI-U and the amount to be determined5
later.6
E.(1) Except for the authority to grant a supplemental one-half of one percent7
increase payable July 1, 2007, nothing in this Section shall be construed to grant the8
board of trustees of the Louisiana State Employees' Retirement System any9
additional authority to grant or to recommend to the legislature that it be permitted10
to grant a cost-of-living increase greater than the increase as calculated pursuant to11
the provisions of R.S. 11:542 as they exist on June 30, 2007.12
(2) Nothing in this Section shall be construed to grant the board of13
trustees of the Louisiana State Employees' Retirement System any additional14
authority to recommend that the legislature grant a permanent benefit increase15
greater than the increase as calculated pursuant to the provisions of R.S. 11:542.16
Section 2. A. The actuarial cost of the benefit provisions of this Act shall be funded17
from the experience account of the Louisiana State Employees' Retirement System in18
compliance with Article X, Section 29(F) of the Constitution of Louisiana.19
B. The additional actuarial cost, if any, of the benefit provisions of this Act not20
funded from the experience account shall be funded with increased employer contributions21
in compliance with Article X, Section 29(F) of the Constitution of Louisiana.22
Section 3. This Act shall become effective on June 30, 2014; if vetoed by the23
governor and subsequently approved by the legislature, this Act shall become effective on24
June 30, 2014, or on the day following such approval by the legislature, whichever is later.25 SB NO. 27
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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. 11:542), relative to the La. State Employees' Retirement System
(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, 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. 11:542.1)