Requires certain amortization periods for certain state retirement system debts and authorizes reamortization of certain debts in certain circumstances
Impact
If passed, HB 21 will have significant implications for the management of state retirement systems, which include the Louisiana State Employees' Retirement System (LASERS), the Teachers' Retirement System (TRSL), the Louisiana School Employees' Retirement System (LSERS), and the State Police Retirement System (STPOL). The changes are intended to ensure a more rigorous funding schedule that could alleviate long-term liabilities. Proponents argue that the adjustments will provide a clearer pathway to solvency for these systems, ultimately benefiting retirees by securing their benefits.
Summary
House Bill 21 addresses the liabilities associated with state retirement systems in Louisiana by modifying the amortization periods for these obligations. Specifically, it reduces the implementation timeline for the amortization periods from thirty years to twenty years, once the retirement systems achieve an 85% funding threshold. The bill also permits reamortization of these liabilities every five years, even if the retirement systems are funded at just 80%. Such changes are aimed at improving financial stability and ensuring adequate funding for retirement benefits.
Sentiment
The sentiment surrounding HB 21 has been somewhat favorable among legislators focused on fiscal responsibility and the long-term sustainability of state retirement systems. Supporters view the bill as a necessary step in reforming how retirement obligations are managed to prevent future financial crises within these systems. However, some concerns have been raised regarding the pressure it may place on employer contributions required to fund these changes, which could be contentious among those opposing increases in employer financial obligations.
Contention
A notable point of contention is the acceleration of amortization schedules and the shift in reamortization thresholds. Critics worry that these adjustments could lead to increased financial liabilities for employers, potentially impacting budgets and human resources in state agencies. Additionally, there are concerns that while aiming to strengthen retirement systems, the bill may create an unsustainable burden on current and future budgets if employer contributions are not carefully managed. This debate encapsulates larger discussions about state fiscal management and the need for balance between responsible funding strategies and the economic impacts on employers.
Provides for application of a portion of state retirement system investment returns to system debt and increases the threshold that must be met prior to funding state retirement system experience accounts (OR DECREASE APV)
Provides for use of entry age normal valuation method by Louisiana State Employees' Retirement System and Teachers' Retirement System of Louisiana. (See Act) (RE DECREASE APV)
Provides for benefit increases for retirees, beneficiaries, and survivors of state retirement systems and the funding therefor. (2/3-CA10s(29)(F)) (gov sig) (EN INCREASE FC SG RE)
Authorizes the La. Community and Technical Colleges System Board of Supervisors to increase tuition and mandatory fee amounts at institutions under its supervision and management and permits the uniform imposition of tuition and mandatory fee amounts on a per credit hour basis (RE +$5,300,000 SG RV See Note)
Provides for benefit increases for retirees, beneficiaries, and survivors of state retirement systems and the funding therefor. (2/3-CA10s(29)(F)) (gov sig) (EN INCREASE FC SG RE)