2016 REGULAR SESSION
ACTUARIAL NOTE H B 54
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House Bill 54 HLS 16RS-322
Original
Author: Representative Franklin J.
Foil
Date: April 6, 2016
LLA Note H B 54.01
Organizations Affected:
Clerks of Court Retirement and
Relief Fund
OR INCREASE FC LF
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 54 provides
compliance with the requirements of R.S. 24:52 1
Bill Header: RETIREMENT/CLERKS COURT: Reamortizes the initial unfunded accrued liability (IUAL) of the Clerks of Court
Retirement and Relief Fund as a level- dollar payment over the remaining life of the original IUAL amortization schedule
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 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 $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 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 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 Increase Increase Increase Increase Increase
Annual Total $ 0 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 54
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Bill Information:
Current Law
Act 81 of the 1988 legislative session requires Clerks and Court Retirement and Relief Fund (CCRS) to amortize the initial
unfunded accrued liability (IUAL) over a forty year period beginning on July 1, 1989 with payments increasing at 4.75% per year.
The last payment to liquidate the IUAL will occur for the FYE 2029.
Proposed Law
HB 54 eliminates the increasing payment schedule for the IUAL of CCRS and re-amortizes the remaining balance of the original
IUAL schedule as a level-dollar payment over the remainder of the original 40-year payment period.
Implications of the Proposed Changes
HB 54 re-amortizes the remaining IUAL balance of CCRS.
Cost Analysis:
Analysis of Actuarial Costs
HB 54 does not contain any benefit provisions having an actuarial cost.
Retirement Systems
HB 54 will have the following effect on amortization payments associated with the IUAL.
Table 1
IUAL Amortization Payments
Increase/
FYE Current Law HB 54 (Decrease)
2016 $ 7,031,947 $ 7,031,947 $ -
2017 7,365,964 9,455,809 2,089,845
2018 7,715,847 9,455,809 1,739,962
2019 8,082,350 9,455,809 1,373,459
2020 8,466,262 9,455,809 989,547
2021 8,868,409 9,455,809 587,400
2022 9,289,658 9,455,809 166,151
2023 9,730,917 9,455,809 (275,108)
2024 10,193,136 9,455,809 (737,327)
2025 10,677,310 9,455,809 (1,221,501)
2026 11,184,482 9,455,809 (1,728,673)
2027 11,715,745 9,455,809 (2,259,936)
2028 12,272,243 9,455,809 (2,816,434)
2029 12,855,181 9,455,804 (3,399,377)
2030 - - -
Table 1 is shown graphically below:
$-
$2
$4
$6
$8
$10
$12
$14
2016 2018 2020 2022 2024 2026 2028 2030
Millions
IUAL Payments
Current Law HB 54
Fiscal Year Ending 2016 REGULAR SESSION
ACTUARIAL NOTE H B 54
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Other Post-Employment Benefits
There are no actuarial costs associated with HB 5 4 for post-employment benefits other than pensions.
Analysis of Fiscal Costs
HB 54 will have the following effect on fiscal costs.
Expenditures:
• Expenditures from Local Funds will increase because employer contribution requirements will increase.
Revenues:
• CCRS revenues (Agy Self-Generated) will increase because employer contribution requirements will increase.
The balance in the CCRS Funding Deposit Account on June 30, 2015 was $3,449,000. These funds are available to the CRS
board to offset the increase in employer contribution requirements that otherwise would be required under HB 54. If the board
uses the Funding deposit Account in this manner, the increase in fiscal costs during the 5-year measurement period would be
negligible.
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 54 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 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