2016 REGULAR SESSION
ACTUARIAL NOTE H B 34
Page 1 of 3
House Bill 34 HLS 16RS-309
Engrossed
Author: Representative Gene
Reynolds
Date: April 1, 2016
LLA Note H B 34.02
Organizations Affected:
Municipal Employees’ Retirement
System
EG INCREASE APV
This Note has been prepared by the Actuarial Services Department of the Office of
the Legislative Auditor. The attachment of this Note to H B 34 provides
compliance with the requirements of R.S. 24:52 1
Bill Header: RETIREMENT/MUNICIPAL EMP: Provides that all mayors are members of the Municipal Employees’ Retirement
System.
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 Increase
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.
Change in the
Actuarial Cost to: Actuarial Present Value
All Louisiana Public Retirement Systems Increase
Other Post Retirement Benefits Increase
Total Increase
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 2016-17 2017-18 2018-19 2019-2020 2020-2021 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated Increase 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 Increase Increase Increase Increase Increase
Annual Total Increase Increase Increase Increase Increase Increase
REVENUES 2016-17 2017-18 2018-19 2019-2020 2020-2021 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
2016 REGULAR SESSION
ACTUARIAL NOTE H B 34
Page 2 of 3
Bill Information:
Current Law
Under current law, the definition of “employee” for the Municipal Employees’ Retirement System (MERS) includes mayors (who
are elected officials) as long as they are employed on a permanent regularly scheduled basis of at least 35 hours per week.
Proposed Law
Under HB 34, the definition of “employee” includes mayors of municipalities regardless of their work schedule.
Implications of the Proposed Changes
Mayors of municipalities will be able to participate in MERS even though they may not have a permanent regularly scheduled
work schedule.
Cost Analysis:
Analysis of Actuarial Costs
HB 34 contains benefit provisions having an actuarial cost. Some mayors who now are prohibited from participating in MERS
will be able to become members.
Retirement Systems
The present value of future benefits will increase because more individuals will be allowed to participate in MERS.
Other Post-Employment Benefits
HB 34 will increase actuarial costs associated with post-employment benefits other than pensions to the extent that payments
of such benefits are linked to the receipt of retirement benefits from MERS.
Analysis of Fiscal Costs
HB 34 will have the following effects on fiscal costs during the five year measurement period.
Expenditures:
1. Expenditures from the Local Funds will increase only to the extent that a participating employer will include additional
employees (mayors) that were not eligible to participate in the system under the current law.
2. Expenditures from MERS (Agy Self- Generated) will increase only if one of the new employees, who joined MERS as a
result of HB 34, terminates employment during the five year fiscal measurement period and i s entitled to a refund of
employee contributions.
Revenues:
• MERS revenues (Agy Self-Generated) will increase because it will receive employee and employer contributions due to
additional mayors participating in the system as a result of HB 34.
According to MERS, the increase to expenditures from local funds, if HB 34 is enacted, would be minimal.
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. These assumptions and methods are in compliance with actuarial standards of practice. This data,
methods, and assumptions are being used to provide consistency with the actuary for the retirement system who may also be
providing testimony to the Senate and House retirement committees.
Actuarial Caveat
There is nothing in H B 34 that will compromise the signing actuary’s ability to present an unbiased statement of actuarial opinion.
Actuarial Credentials:
Paul T. Richmond is the Manager of Actuarial Services 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 rende r the actuarial opinion contained herein.
2016 REGULAR SESSION
ACTUARIAL NOTE H B 34
Page 3 of 3
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