2015 REGULAR SESSION
ACTUARIAL NOTE S B 20
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Senate Bill 20 SLS 15RS-126
Reengrossed with Senate Floor
Legislative Bureau Amendment #750,
Senate Floor Amendment #998, and
Senate Floor Amendment #1015
Author: Senator Gerald Long
Date: April 30, 2015
LLA Note SB 20.03
Organizations Affected:
Teachers’ Retirement System of
Louisiana
RE +$322,581 APV
This Note has been prepared by the Actuarial Services Department of the Office of
the Legislative Auditor. The attachment of this Note to SB 20 provides compliance
with the requirements of R.S. 24:521
Bill Header: TEACHERS RETIREMENT. Allows certain retirees to collect benefits during reemployment. (2/3 – CA10s29(F))
(6/30/15)
Cost Summary:
The estimated actuarial and fiscal impact of the proposed legislation 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/(Savings) to Retirement Systems and OGB $322,581
Total Five Year Fiscal Cost
Expenditures Increase
Revenues Increase
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.
Increase (Decrease) in
Actuarial Cost (Savings) to: The Actuarial Present Value
All Louisiana Public Retirement Systems $322,581
Other Post Retirement Benefits See Actuarial Cost Analysis
Total See Actuarial Cost Analysis
This bill complies with the Louisiana Constitution which requires unfunded liabilities created by an improvement in benefits to be
amortized over a period not to exceed ten years.
Estimated Fiscal Impact:
The chart below shows the estimated fiscal impact of the proposed legislation. This represents the effect on cash flows for
government entities including the retirement systems and the Office of Group Benefits. Fiscal costs include estimated administrati ve
costs and costs associated with other fiscal concerns. A fiscal cost is denoted by “Increase” or a positive number. F iscal savings are
denoted by “Decrease” or a negative number.
EXPENDITURES 2015-16 2016-17 2017-18 2018-19 2019-2020 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated 38,822 25,000 25,000 25,000 25,000 138,822
Stat Deds/Other 0 0 0 0 0 0
Federal Funds 0 0 0 0 0 0
Local Funds 0 Increase Increase Increase Increase Increase
Annual Total $ 38,822 Increase Increase Increase Increase Increase
REVENUES 2015-16 2016-17 2017-18 2018-19 2019-2020 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated 0 Increase Increase Increase Increase Increase
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 Increase Increase Increase Increase Increase
2015 REGULAR SESSION
ACTUARIAL NOTE S B 20
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Bill Information:
Current Law
As a general rule under current law, the pension benefit of any retired member of the Teachers’ Retirement System of Louisiana
(TRSL) who is re-employed in a position covered by TRSL membership is suspended while the retiree is re-employed. Current
law provides exceptions to this rule. The following exceptions are made relevant to SB 20:
1. A retired member who returns to employment as a full-time certified speech therapist, speech pathologist, or audiologist
in a school district (K-12) that has a critical shortage of such professionals. There is no limit on re-employment earnings
for such a re-employed retiree.
2. A retired member (K -12 or Higher Education) who retired on or after May 1, 2009 and on or before June 30, 2010. No
critical shortage is necessary. Re-employment earnings are limited to 25% of the reemployed retirees annual pension
benefit.
3. A retired member who returns to employment as a classroom teacher whose position of employment requires a valid
Louisiana teaching certificate and who is assigned the professional activities of instructing pupils in courses in
classroom situations for which daily pupil attendance figures for the school system are kept. There is no limit on re-
employment earnings for such a re- employed retiree.
4. A retired member who returns to employment as a substitute classroom teacher employed in a temporary capacity to fill
the position of another classroom teacher who is unavailable to teach. There is no limit on re- employment earnings for
such a re-employed retiree.
Proposed Law
SB 20 makes the following changes:
1. A retired member who returns to employment as a full-time certified speech therapist, speech pathologist, school
counselors, school social workers, or audiologist in a school district (K-12) that has a critical shortage of such
professionals. There is no limit on re-employment earnings for such a re-employed retiree.
2. A retired member (K-12 or Higher Education) who retired on or before June 30, 2010. No critical shortage is necessary.
Re-employment earnings are limited to 25% of the reemployed retirees annual pension benefit.
3. A retired member who returns to employment as a classroom teacher whose position of employment requires a valid
Louisiana teaching certificate and who is assigned the professional activities of instructing pupils in courses in classroom
situations for which daily pupil attendance figures for the school system are kept or is assigned to proctor admission,
evaluation, or assessment testing. There is no limit on re-employment earnings for such a re-employed retiree.
4. A retired member who returns to employment as a substitute classroom teacher employed in a temporary capacity to fill
the position of another classroom teacher who is unavailable to teach or proctor tests for any reason . There is no limit
on re-employment earnings for such a re-employed retiree.
5. Such proctoring shall not be considered a subject area for the purposes of critical shortage.
Implications of the Proposed Changes
The number of retired members of TRSL eligible to be re-employed in specialized roles without a suspension of benefits will be
significantly expanded to about 34,000 individuals.
Cost Analysis:
Analysis of Actuarial Costs
Retirement Systems
The number of members who will be induced to retire earlier than they would have otherwise as a result of SB 20 cannot be
predicted with any degree of certainty. However, if one member retires each year a full year earlier than he would have
otherwise, the annual retiree payroll for TRSL will increase $25,000. This is based on the following information:
1. One teacher is induced to retire one year earlier than he would have otherwise.
2. The average annual pension for the teacher induced to retire early is $25,000.
Therefore, the estimated annual cost per teacher induced to retire one year earlier is $25,000.
Under SB 20, school counselors and school social workers in a school district with a critical shortage are the only two
categories that have been added to exception list with a potential for being induced to retire earlier than they would otherwise.
It is likely that only a very small number of school counselors and school social workers will be affected by this new
exception. Therefore, for each counselor or social worker induced to retire one year earlier than otherwise, the cost is
estimated to be $25,000 a year. The present value of the actuarial cost is estimated to be $322,581.
2015 REGULAR SESSION
ACTUARIAL NOTE S B 20
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There are a large number of retirees who retired before June 30, 2010. Schools will be able to re-employ these retirees, but
since they are already retired, they cannot be induced to retire. Therefore, there is no actuarial cost relevant to early
retirement associated with this provision of SB 20.
Other Post Retirement Benefits
The liability for post- retirement medical insurance protection provided to retirees by the Office of Group Benefits or other
insurers remains the same regardless of the employment status of a retiree. The liability is based on the present value of
estimated claims and estimated claims will not change just because the member’s status has changed from employee to
retiree. However, depending on OGB rules or rules of other insurers providing health insurance coverage to TRSL members,
the allocation of premiums between the employee and the employer may change as an employee moves from an active status
to a retired status. Therefore:
1. OGB revenues or other insurance carriers may increase or decrease as a result of SB 2 0.
2. Employer premium expenditures may increase or decrease as a result of SB 20.
Analysis of Fiscal Costs
SB 20 will have the following effect on fiscal costs over the next 5 years.
Expenditures:
1. Expenditures from TRSL (Agy Self-Generated) will increase $25,000 a year per teacher induced to retire in order to pay
benefits that would not have otherwise been paid.
2. Expenditures from Local Funds will increase to the extent that school counselors and school social workers are induced
to retire earlier than they would have otherwise. Unanticipated TRSL expenditures will lead to higher employer
contribution requirements.
Revenues:
• TRSL revenues (Agy Self-Generated) will increase to the extent that employer contributions must be larger to
accommodate the estimated increase in annual benefit costs.
TRSL reports that a one-time implementation cost of $13,882 will be incurred in 2015- 16 to inform employers and retirees about
adding school counselor to the list of critical shortage positions and the expansion of the grandfathered group. Additionally,
TRSL would need to update the communication material to include the changes proposed in SB 20 as well as make minor
modification to existing computer programs.
It is anticipated that the annual fiscal cost of SB 20 over the three fiscal years immediately following the enactment of SB 20 will
be less than $100,000.
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 approved by PRSAC.
Actuarial Caveat
There is nothing in S B 20 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 State Fiscal Cost ≥ $100,000
13.5.2: Annual Tax or Fee Change ≥ $500,000 6.8(F)(2): Annual State Revenue Reduction ≥ $500,000
6.8(G): Annual Tax or Fee Change ≥ $500,000