2016 REGULAR SESSION
ACTUARIAL NOTE H B 910
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House Bill 910 HLS 16RS-1321
Original
Author: Representative M. Talbot
Date: April 12, 2016
LLA Note H B 910.01
Organizations Affected:
Teachers' Retirement System of
Louisiana
Louisiana State Employees’
Retirement System
OR 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 HB 910 provides
compliance with the requirements of R.S. 24:52 1
Bill Header: RETIREMENT/STATE SYSTEMS: Provides relative to membership in the Louisiana State Employees' Retirement
System and the Teachers' Retirement System of Louisiana.
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 See Analysis
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 Increase Increase Increase Increase Increase
Agy Self Generated Decrease Decrease Decrease Decrease Decrease Decrease
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 Decrease 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 910
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Bill Information:
Current Law
Under R.S. 11:411(8) of current law, employees of any primary health center established under the Public Service Act are
eligible to participate in Louisiana State Employees’ Retirement System (LASERS).
Under R.S. 11:701(33)(a) of current law, a “teacher” eligible to become a member of the Teachers’ Retirement System of
Louisiana (TRSL) includes the following persons:
1. The president and staff of the Louisiana Federation of Teachers who were members of TRSL prior to such employment.
2. The president or secretary and staff of the Louisiana Association of Educators.
3. The director and staff of the Associated Professional Educators of Louisiana.
4. The director and staff of the Louisiana Resource Center for Educators.
Proposed Law
Under HB 910, an employee of any primary health center established under the Public Service Act is eligible to participate in
LASERS only if he was hired prior to September 1, 2016.
Under HB 910, a “teacher” eligible to become a member of TRSL shall include the following persons:
1. The president and staff of the Louisiana Federation of Teachers hired by the federation before September 1, 2016 , who
were members of TRSL prior to such employment.
2. The president or secretary and staff of the Louisiana Association of Educators, hired by the association before September
1, 2016 .
3. The director and staff of the Associated Professional Educators of Louisiana, hired by the association before September
1, 2016 .
4. The director and staff of the Louisiana Resource Center for Educators hired by the center before September 1, 2016.
Employees of these organizations hired on or after September 1, 2016 , will not be allowed to become members of TRSL.
Implications of the Proposed Changes
HB 910 provides that employees of the above named organizations hired on or after September 1, 2016 , shall not be members of
LASERS or TRSL.
Cost Analysis:
Analysis of Actuarial Costs
HB 910 does not contain any benefit provision having an actuarial cost.
Retirement Systems
The actuarial present value of future benefit payments under HB 910 will decrease because employees of the named
organizations hired on or after September 1, 2016 , will not be able to participate and earn benefit credits under LASERS and
TRSL.
HB 910 will not change the current value of the accrued liability or the current value of the unfunded accrued liability. All
existing employees of these private employers will continue to participate in LASERS and TRSL. However, the accrued
liability in the future will be less under HB 910 than what it would have been under curre nt law because no new employees
of these entities will be able to join the retirement systems.
Future normal costs as a dollar amount will decrease because fewer persons will be participating in LASERS and TRSL.
Future normal costs as a percentage of pay may increase or decrease depending on the extent to which the exclusion of future
employees changes the demographic profile of the membership of the systems. Given the small number of persons
potentially affected, the increase or decrease will be negligible.
As a result of HB 910, amortization payments that would have been allocated to the private employers will now become the
responsibility of the governmental entities participating in LASERS and TRSL. Therefore, the dollar responsibility of the
government employer will increase.
Other Post Retirement Benefits
It is expected that actuarial costs associated with post-employment benefits other than pensions will decrease if employees of
the named employers participate in group life and health insurance programs that provide benefits subsequent to retirement. 2016 REGULAR SESSION
ACTUARIAL NOTE H B 910
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However, if these employers are providing such benefits, they are doing so as private employers and not through any
government programs of the state or its political subdivisions.
Analysis of Fiscal Costs
HB 910 will have the following effects on fiscal costs during the five-year measurement period.
Expenditures:
1. Expenditures from General Funds to pay normal costs will remain the same. The private employers and their new
employees will not be contributing anything toward the normal cost. On the other hand, these future employees will not
be earning any benefits from LASERS and TRSL.
2. Expenditures from General Funds to pay current amortization costs will increase because current amortization costs are
being shifted from private employers to public entities . If HB 910 is enacted, the private organizations, will not be
contributing toward amortization costs relative to the pay of new employees. The savings realized by the private
employers will become the responsibility of the public entities participating in LASERS and TRSL. As a result,
amortization costs in dollars for public employers participating in LASERS and TRSL will increase.
3. Expenditures from LASERS and TRSL (Agy Self -Generated) will decrease to the extent that there are one or more new
hires at one or more of the named organizations and one or more of these new employees should terminate employment
within the five year fiscal measurement period. Under current law, LASERS and TRSL would refund employee
contributions to the terminating employee. Under HB 910, no such contributions w ill be made and as a result no refund
will be given. This decrease in expenditures is assumed to be negligible.
4. Expenditures from Local Funds to pay normal costs will remain the same. The private employers and their new
employees will not be contributing anything toward the normal cost. On the other hand, these future employees will not
be earning any benefits from LASERS and TRSL.
5. Expenditures from Local Funds to pay current amortization costs will increase because current amortization costs are
being shifted from private employers to public entities . If HB 910 is enacted, the private organizations, will not be
contributing toward amortization costs relative to the pay of new employees. The savings realized by the private
employers will become the responsibility of the public entities participating in LASERS and TRSL. As a result,
amortization costs in dollars for public employers participating in LASERS and TRSL will increase.
6. Note: Expenditures from the named private organizations and their new employees will decrease because they will not
be contributing to LASERS and TRSL.
Revenues:
1. LASERS and TRSL revenues (Agy Self-Generated) will increase because expenditures from the General Fund and Local
Funds will increase to pay the larger cost associated with the amortization of exiting unfunded accrued liabilities.
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. 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 910 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