SLS 15RS-159 ORIGINAL
2015 Regular Session
SENATE BILL NO. 18
BY SENATOR ADLEY
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
TEACHERS RETIREMENT. Provides for higher education liability payments. (6/30/15)
1 AN ACT
2 To enact Part XII of Chapter 2 of Subtitle II of Title 11, to be comprised of R.S. 11:961
3 through 966, relative to the payment of the unfunded accrued liability of the
4 Teachers' Retirement System of Louisiana; to allow certain participating employers
5 to elect to pay their proportional share of the unfunded accrued liabilities and to
6 incur no further liabilities; to provide for the calculation of the necessary payment
7 associated with this election; to provide for review of the calculation; to provide for
8 funding of the necessary payments; to provide for the powers and duties of the board
9 of trustees of the retirement system concerning the necessary payments; to provide
10 for an effective date; and to provide for related matters.
11 Notice of intention to introduce this Act has been published.
12 Be it enacted by the Legislature of Louisiana:
13 Section 1. Part XII of Chapter 2 of Subtitle II of Title 11, comprised of R.S. 11:961
14 through 966, is hereby enacted to read as follows:
15 PART XII. HIGHER EDUCATION LIABILITY P AYMENTS
16 §961. Application
17 The provisions of this Part shall apply to:
Page 1 of 6
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 18
SLS 15RS-159 ORIGINAL
1 (1) The Board of Regents created pursuant to Article VIII, Section 5 of
2 the Constitution of Louisiana.
3 (2) The Board of Supervisors for the University of Louisiana System
4 created pursuant to Article VIII, Section 6 of the Constitution of Louisiana.
5 (3) The Board of Supervisors of Louisiana State University and
6 Agricultural and Mechanical College created pursuant to Article VIII, Section
7 7 of the Constitution of Louisiana.
8 (4) The Board of Supervisors of Southern University and Agricultural
9 and Mechanical College created pursuant to Article VIII, Section 7 of the
10 Constitution of Louisiana.
11 (5) The Board of Supervisors of Community and Technical Colleges
12 created pursuant to Article VIII, Section 7.1 of the Constitution of Louisiana.
13 (6) Any institution under the authority of the Board of Regents or one
14 of the boards of supervisors listed in this Section.
15 §962. Purpose
16 The purpose of this Part is to provide for payment of the unfunded
17 accrued liability of the Teachers' Retirement System of Louisiana attributable
18 to public post-secondary employers participating in the retirement system.
19 §963. Definitions
20 As used in this Part, the following terms have the meanings ascribed,
21 unless another meaning is clearly required by context:
22 (1) "Board" means the board of the Teachers' Retirement System of
23 Louisiana as defined in R.S. 11:701.
24 (2) "Contributions" means the employer contributions required
25 pursuant to R.S. 11:102 and the employee contributions required pursuant to
26 R.S. 11:62.
27 (3) "Elector" means an employer or group of employers collectively
28 making an election pursuant to this Part.
29 (4) "Employer" means any of the public post-secondary entities listed in
Page 2 of 6
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 18
SLS 15RS-159 ORIGINAL
1 R.S. 11:961.
2 (5) "Governing authority" means one of the entities listed in R.S.
3 11:961(1) through (5).
4 (6) "System" means the Teachers' Retirement System of Louisiana
5 established pursuant to R.S. 11:702.
6 §964. Election to extinguish unfunded accrued liability
7 A. Any employer or group of employers may elect to pay to the system
8 an amount calculated on an actuarial basis which extinguishes the unfunded
9 accrued liability attributable to the elector. This election may be made at any
10 time by written notification to the board of trustees of the system. The
11 notification shall include the prospective date on which the elector plans to
12 extinguish his unfunded accrued liability. The governing authority of the elector
13 shall have final prior approval of this election, subject to review by the Board
14 of Regents.
15 B. Notwithstanding any provision of R.S. 11:102 or any other law to the
16 contrary, as a result of this election, the elector shall be released from the
17 requirement to remit any contributions to the system that, absent such election,
18 would be due and payable on and after the first of the month the elector chooses
19 in its notification. No further actuarial liabilities, funded or unfunded, shall
20 accrue attributable to the elector after the date selected.
21 §965. Liability calculation; source of funding
22 A.(1) The actuary for the system shall provide the board and the elector
23 with a calculation of the unfunded accrued liability attributable to that elector
24 within thirty days of the system's receipt of the notification required by R.S.
25 11:964(A). This calculation shall determine the liability projected to the date
26 selected pursuant to R.S. 11:964(A), and shall account for the reimbursement
27 of all contributions remitted by the elector to the system during the fiscal year
28 in which the election is made.
29 (2) The elector may request that the actuarial cost of expected future
Page 3 of 6
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 18
SLS 15RS-159 ORIGINAL
1 permanent benefit increases be included in this calculation. At the time the
2 elector pays to the system the amount calculated pursuant to Paragraph (1) of
3 this Subsection, the elector may also pay the amount calculated pursuant to this
4 Paragraph and have the system continue to include the elector's retirees,
5 survivors, and beneficiaries in increases granted to other system retirees,
6 survivors, and beneficiaries. However, the elector may instead use the funds to
7 provide permanent benefit increases directly, through annuity contracts or by
8 any other means.
9 B. At the elector's option and expense, a properly-credentialed actuary
10 may prepare an independent calculation for the elector.
11 C. The calculations prepared pursuant to Subsections A and B of this
12 Section shall be presented to the legislative auditor's actuary for review.
13 D.(1) The Public Retirement Systems' Actuarial Committee (PRSAC)
14 shall consider the determinations of the system actuary, the elector's actuary,
15 and the legislative auditor's actuary. In case of a disagreement, PRSAC shall
16 have final authority regarding which calculation is actuarially appropriate as
17 determined by a majority vote of the members of the committee. The amount
18 so determined shall be paid to the system by the elector.
19 (2)(a) Within ten days, the chairman of PRSAC shall provide written
20 notification to the chairman of the Joint Legislative Committee on the Budget
21 (JLCB) of PRSAC's decision as to the actuarially-appropriate calculation for
22 review by JLCB.
23 (b) Any review of PRSAC's decision shall be conducted by JLCB within
24 the ten days immediately following receipt of PRSAC's determination. The
25 amount calculated by PRSAC shall be paid to the system by the elector.
26 E. The amount determined pursuant to this Section shall be valid for
27 three months following approval by PRSAC, after which monthly interest shall
28 accrue at the board-approved actuarial valuation rate.
29 F. Funding for the payment required pursuant to this Section may be
Page 4 of 6
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 18
SLS 15RS-159 ORIGINAL
1 derived from any source including the proceeds of revenue bonds issued by one
2 or more of the governing authorities.
3 §966. Duties of the Teachers' Retirement System of Louisiana board of trustees
4 In furtherance of the purpose and requirements of this Part, the system
5 board shall have the duty to:
6 (1) Assure that no further liabilities accrue by:
7 (a) Taking any and all steps required by the board's fiduciary duty
8 pursuant to R.S. 11:261 through 269 to prohibit actions or events which may
9 result in the accrual of additional liabilities that would require employer
10 contributions over and above the amount due and payable pursuant to R.S.
11 11:965.
12 (b) Transferring, as appropriate, the control or administrative functions
13 of any programs or accounts to the elector; provided, however, that the board
14 shall not be required to transfer any funds out of the system trust, except as
15 provided for in R.S. 11:965(A).
16 (2) Use all necessary means to make the retirement system and its
17 members, beneficiaries, and retirees whole on an actuarial basis, if an elector
18 does not complete the requirements for the election pursuant to this Part.
19 Section 2. This Act shall become effective upon signature by the governor or, if not
20 signed by the governor, upon expiration of the time for bills to become law without signature
21 by the governor, as provided by Article III, Section 18 of the Constitution of Louisiana. If
22 vetoed by the governor and subsequently approved by the legislature, this Act shall become
23 effective on the day following such approval.
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Margaret M. Corley.
DIGEST
SB 18 Original 2015 Regular Session Adley
Proposed law applies to the following employers:
(1)The Board of Regents.
Page 5 of 6
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 18
SLS 15RS-159 ORIGINAL
(2)The Board of Supervisors for the University of Louisiana System.
(3)The Board of Supervisors of Louisiana State University A&M.
(4)The Board of Supervisors of Southern University A&M.
(5)The Board of Supervisors of Community and Technical Colleges.
(6)Any institution under the authority of the Board of Regents or one of the boards of
supervisors listed above.
Present law provides for membership in the Teachers' Retirement System of Louisiana
(Teachers') for certain full-time unclassified employees of postsecondary education
institutions, systems, and boards based on their employers' participation in Teachers'.
Present law provides for calculation of accrued system liabilities created by certain
experience of the system including the value of benefits awarded to retirees and other system
beneficiaries or earned by active members, including members working after participation
in the Deferred Retirement Option Plan (DROP); demographics; and market factors.
Provides for calculation of system assets. Provides for determination of the unfunded
accrued liability by comparing the liabilities accrued with the assets held.
Present law provides for employer and employee contributions to Teachers' to fund liabilities
accrued within the system.
Proposed law retains present law and provides these employers with an option to elect to pay
for their proportionate share of the existing system liabilities and to incur no additional
liabilities at the system.
Proposed law provides for actuarial calculations and legislative review of the payment
necessary to extinguish the proportionate share of the unfunded accrued liabilities of the
electing employer. Provides for additional calculations and payments of future permanent
benefit increases to the elector's retirees, survivors, and beneficiaries. Provides that funding
for the payments may come from any source including bond proceeds.
Present law provides for powers and duties of the Teachers' board of trustees, including
certain fiduciary obligations.
Proposed law retains present law and imposes additional duties upon the board as follows:
(1)To prevent any additional liabilities from accruing if those liabilities would be the
financial responsibility of an electing employer.
(2)To protect the system in the event an electing employer fails to pay its obligation.
Effective upon signature of the governor or lapse of time for gubernatorial action.
(Adds Part XII of Chapter 2 of Subtitle II of Title 11, comprised of R.S. 11:961 through 966)
Page 6 of 6
Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.