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)]
HB 41 Original 2015 Regular Session Harrison
Abstract: Requires the Dept. of Education to remit payments from minimum foundation program
(MFP) funds to the Teachers' Retirement System of La. (TRSL) to cover debt payment on
unfunded accrued liability (UAL) of the system attributable to K-12 employers.
Present constitution creates the MFP to provide minimum education funding for public elementary
and secondary education schools in the state. The MFP monies are used by school districts to cover
education-related expenses, including salaries and retirement costs for the teachers and school
employees in the district. MFP monies are also received by charter schools.
Proposed law generally requires the Dept. of Education to send MFP funds to TRSL for application
toward the system's initial unfunded accrued liability (IUAL) and post-1988 UAL prior to MFP funds
being sent to school districts and charter schools. More detail on proposed law is contained below.
Calculation of Contribution Rates
Present law (R.S. 11:102) provides for the calculation of annual employer contribution rates for
employers participating in the state retirement systems, including TRSL. A part of the employer
contribution rate is an amount to fund debt service on the unfunded accrued liabilities of the
retirement system—both the unfunded accrued liability that existed as of June 30, 1988, (IUAL) and
the unfunded accrued liability (UAL) created after June 30,1988. Proposed law retains present law.
Present law establishes the employer contribution rates as a percentage of the total payroll of all
active, contributing members of the system. In general terms, the rate is calculated by dividing the
amount determined to be due to cover all costs (including payments on debt) by the payroll of active
members of the system. Proposed law retains present law.
UAL Existing as of June 30, 1988
Present constitution (Art. X, §29(E)(2)(c)) provides that the legislature annually guarantees an
amount necessary to fund payments on the IUAL debt of state retirement systems until such debt is
retired.
Proposed law (R.S. 11:102.4) requires annual payment of 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 the department to pay the required amount to the retirement system on behalf
of all employers receiving formula funds. The amount to be paid shall be divided into 12 equal
payments and paid monthly.
Proposed law further requires TRSL to calculate as a percentage of payroll the balance of the
contribution rate due pursuant to present law from contributing employers. Requires such
calculation to be reviewed and approved by the Public Retirement Systems' Actuarial Committee
(PRSAC) when the committee adopts a valuation for TRSL. Provides that participating employers
remain obligated for the remainder of their required payments to TRSL.
UAL Created after June 30, 1988
Proposed law (R.S. 11:102.5) requires annual payment of an amount sufficient to cover the portion
of the UAL payment (excluding IUAL) owed by elementary and secondary employers in TRSL from
the MFP monies before such monies are distributed to school boards.
Proposed law requires the department to pay the required amount to the retirement system on behalf
of all employers receiving formula funds. The amount to be paid shall be divided into 12 equal
payments and paid monthly.
Proposed law further requires TRSL to calculate the balance of the contribution rate due from
contributing employers as a percentage of payroll. Requires such calculation to be reviewed and
approved by the PRSAC when the committee adopts a valuation for TRSL. Provides that
participating employers remain obligated for the remainder of their required payments to TRSL.
Proposed law requires the PRSAC to meet and adopt a revised employer contribution rate for K-12
employers for FY 2015-2016, based on the provisions contained in the Act.
Effective June 12, 2015.
(Amends R.S. 11:102(D)(4)(intro. para.); Adds R.S. 11:102.4 and 102.5)