HLS 16RS-126 ORIGINAL
2016 Regular Session
HOUSE BILL NO. 62
BY REPRESENTATIVE IVEY
RETIREMENT/STATE SYSTEMS: Sets minimum employer contributions and provides
for funding deposit accounts for each state retirement system
1 AN ACT
2To enact R.S. 11:102.4, relative to employer contributions to state public retirement
3 systems; to establish minimum contributions applicable under certain circumstances;
4 to provide for use of funds when such minimum exceeds otherwise required
5 contributions; to provide for funding deposit accounts; and to provide for related
6 matters.
7 Notice of intention to introduce this Act has been published
8 as provided by Article X, Section 29(C) of the Constitution
9 of Louisiana.
10Be it enacted by the Legislature of Louisiana:
11 Section 1. R.S. 11:102.4 is hereby enacted to read as follows:
12 ยง102.4. Minimum employer contribution; funding deposit accounts
13 A.(1) The provisions of this Section are applicable to the state public
14 retirement systems whose benefits are guaranteed by Article X, Section 29(A) and
15 (B) of the Louisiana Constitution.
16 (2) The provisions of this Section shall be applied in conjunction with R.S.
17 11:102(B)(5) if both are applicable.
18 B. For purposes of this Section:
19 (1) "Excess employer contributions" refers to the contributions required by
20 this Section in excess of the contributions required by R.S. 11:102.
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1 (2) "Funded ratio" means, as of any fiscal year end, the ratio of the actuarial
2 value of assets to the actuarial accrued liability under the funding method prescribed
3 by R.S. 11:22. The actuarial value of assets and actuarial accrued liability for a
4 system shall be those amounts established in the system valuation adopted by the
5 Public Retirement Systems' Actuarial Committee.
6 C. The employer contribution rate shall not be set below twenty percent of
7 the total projected payroll for all active members if either of the following conditions
8 applies to a retirement system in a given year as determined in the system's most
9 recent valuation:
10 (1) The funded ratio of the system is not and has never been one hundred
11 percent.
12 (2) The funded ratio of the system, after July 1, 2016, has been one hundred
13 percent but has fallen below ninety percent.
14 D.(1) If the funded ratio of a system is equal to or less than eighty percent,
15 excess employer contributions shall be applied to the oldest outstanding liability of
16 the system in accordance with this Subpart.
17 (2) If the funded ratio of a system is above eighty percent, fifty percent of
18 excess employer contributions shall be applied to the oldest outstanding liability of
19 the system in accordance with this Subpart and the remainder shall be deposited into
20 the system's funding deposit account.
21 (3)(a) For the purposes of this Subsection, the phrase "oldest outstanding
22 liability" shall mean the system's oldest outstanding positive amortization base,
23 excluding any liability established pursuant to R.S. 11:102(B)(3)(c) or any
24 particularized liabilities of a subplan.
25 (b) If there are multiple positive bases of the same age and the same
26 duration, all such bases shall be collapsed into a single base for purposes of this
27 Subsection.
28 (c) If there are multiple positive bases of the same age but of different
29 durations, the oldest outstanding positive amortization base with the shortest
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HB NO. 62
1 remaining amortization period shall be treated as the "oldest" for purposes of this
2 Subsection.
3 E. There is hereby established a funding deposit account for each system to
4 which this Section applies which shall be maintained as follows:
5 (1) The funds in the funding deposit account shall earn interest annually at
6 the board-approved actuarial valuation interest rate, and such interest shall be
7 credited to the account at least once a year.
8 (2) In any fiscal year, the board of trustees of the respective system may
9 direct that funds from the account be charged for the following purposes:
10 (a) To reduce the unfunded accrued liability as prescribed in this Subpart.
11 (b) To pay all or a portion of future net direct employer contributions.
12 (3) The funds charged from the account shall not exceed the outstanding
13 account balance.
14 (4) If the board of trustees of a system elects to charge funds from the
15 funding deposit account pursuant to Subparagraph (2)(b) of this Subsection, the
16 percent reduction in the minimum recommended employer contribution rate
17 otherwise applicable shall be determined by dividing the interest-adjusted value of
18 the charges from the funding deposit account by the projected payroll for the fiscal
19 year for which the contribution rate is to be reduced.
20 (5) For funding purposes, any asset value utilized in the calculation of the
21 actuarial value of assets of a system shall exclude the funding deposit account
22 balance as of the asset determination date for such calculation.
23 (6) For all purposes other than funding, the funds in the account shall be
24 considered assets of the system.
25 Section 2. This Act shall become effective on July 1, 2016; if vetoed by the governor
26and subsequently approved by the legislature, this Act shall become effective on July 1,
272016, or on the day following such approval by the legislature, whichever is later.
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HB NO. 62
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 62 Original 2016 Regular Session Ivey
Abstract: For state retirement systems meeting certain funded ratio criteria, sets a minimum
employer contribution rate of 20% and provides for use of funds from such
additional contributions.
Proposed law provides that the minimum employer contribution for a state retirement system
is 20% if the system is not and has never been 100% funded or if the system has been 100%
funded but the funded ratio has fallen below 90%.
Proposed law requires use of excess contributions, those required by proposed law in excess
of those required by present law, as follows:
(1)If the funded ratio of a system is equal to or less than 80%, excess contributions are
applied to the oldest outstanding liabilities of the system, as defined in proposed law.
(2)Otherwise, 50% of excess employer contributions shall be applied as provided in (1)
above and the remainder shall be deposited into the system's funding deposit
account.
Proposed law creates a funding deposit account for each state retirement system and
provides with respect to such accounts as follows:
(1)Funds shall earn interest annually at the board-approved actuarial valuation interest
rate, and such interest shall be credited to the account at least once a year.
(2)Authorizes charging the account for the following purposes:
(a)To reduce the unfunded accrued liability.
(b)To pay all or a portion of future net direct employer contributions. Provides
for determining the amount of the reduction.
(3)Prohibits charging the account in excess of outstanding account balance.
(4)For funding purposes, asset value utilized in the calculation of the actuarial value of
assets of a system shall exclude the funding deposit account balance as of the asset
determination date for such calculation. For other purposes, the funds in the account
shall be considered assets of the system.
Effective July 1, 2016.
(Adds R.S. 11:102.4)
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