2015 REGULAR SESSION
ACTUARIAL NOTE HB 48
Page 1 of 3
House Bill 48 HLS 15RS-373
Engrossed F with Senate Floor
Amendment #2444
Author: Representative Major
Thibaut
Date: June 9, 2015
LLA Note HB 48.04
Organizations Affected:
Louisiana Assessors’ Retirement
Fund
EGF NO IMPACT APV
This Note has been prepared by the Actuarial Services Department of the Office of
the Legislative Auditor. The attachment of this Note to HB 48 provides
compliance with the requirements of R.S. 24:521
Bill Header: RETIREMENT/ASSESSORS: Provides relative to the authority of the Louisiana Assessors’ Retirement Fund to fund
cost-of-living increases with funding deposit account balances.
Cost Summary:
The estimated actuarial and fiscal impact of the proposed legislative 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 to Retirement Systems $0
Total Five Year Fiscal Cost
Expenditures $0
Revenues $0
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.
Change in the
Actuarial Cost to: Actuarial Present Value
All Louisiana Public Retirement Systems $0
Other Post Retirement Benefits $0
Total $0
Estimated Fiscal Impact:
The chart below shows the estimated fiscal impact of the proposed legislation. This represents the effect on cash flows for the
retirement systems and other government entities.. Fiscal costs include estimated administrative costs and costs associated with other
fiscal concerns. A fiscal cost is denoted by “Increase” or a positive number. Actuarial or fiscal savings are denoted by “Decrease” or
a negative number.
EXPENDITURES 2015-16 2016-17 2017-18 2018-19 2019-20 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 2015-16 2016-17 2017-18 2018-19 2019-20 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
2015 REGULAR SESSION
ACTUARIAL NOTE HB 48
Page 2 of 3
Bill Information:
Current Law
Current law provides for the establishment of a Funding Deposit Account (FDA) in each of the following statewide retirement
systems:
1. The Assessors’ Retirement Fund (ASSR).
2. The Clerks’ of Court Retirement and Relief Fund (CCRS).
3. The Municipal Employees’ Retirement System of Louisiana (MERS).
4. The Parochial Employees’ Retirement System of Louisiana (PERS).
5. The Registrars of Voters Employees’ Retirement System (RVRS).
Dollars set aside in this account may be used for the following purposes.
1. Pay down the system’s unfunded accrued liability (UAL).
2. Decrease the employer contribution rate.
Proposed Law
Under HB 48, monies in each statewide systems’ FDA may also be used to provide for cost of living increases (COLAs).
Implications of the Proposed Changes
Certain statewide retirement systems will be authorized to fund COLAs with the assets the system has set aside in the FDA.
Cost Analysis:
Analysis of Actuarial Costs
HB 48 does not contain any benefit provision having an actuarial cost.
Retirement Systems
HB 48 is permissive in that it allows certain statewide retirement systems to use assets in the Funding Deposit Account
(FDA) to pay for COLAs. It does not require that it be used for that purpose.
The existence of FDA assets has no effect on employer contribution requirements as calculated by the system actuary. These
assets were raised from extra contributions made by employers in order to provide a reserve. This reserve is currently used at
the discretion of the board of trustees to reduce fluctuations in employer contributions from year to year. If the board of
trustees is also allowed to use FDA assets as the source of funding for COLAs, then its ability to provide contribution
stability will be reduced.
HB 48 does not itself establish any additional liability. However, it does provide the board of trustees with more flexibility
that it may use to pre-fund COLAs while at the same time properly managing the level of employer contributions required
from participating employers.
Other Post-Employment Benefits
There are no actuarial costs associated with HB 48 for post-employment benefits other than pensions.
Analysis of Fiscal Costs
HB 48 will have the following effects on fiscal costs during the five year measurement period.
Expenditures:
Expenditures will not change as a result of the proposed legislation.
Revenues:
Revenues will not change as a result of the proposed legislation.
Each of the boards of trustees of such statewide retirement systems already has the authority under current law to maintain
employer contribution rates above the minimum required contribution rate. HB 48 does change the rules pertaining to this
authority.
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 adopted by PRSAC. 2015 REGULAR SESSION
ACTUARIAL NOTE HB 48
Page 3 of 3
Actuarial Caveat
There is nothing in HB 48 that will compromise the signing actuary’s ability to present an unbiased statement of actuarial opinion.
Actuarial Credentials:
Paul T. Richmond is the actuary 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