The original instrument and the following digest, which constitutes no part of the
legislative instrument, were prepared by Laura Gail Sullivan.
DIGEST
SB 20 Original 2016 Regular Session Peacock
Proposed law generally rearranges the content of present law to provide for ease of administration
and clarification of certain actuarial concepts.
Proposed law contains a few substantive changes, as further detailed in this digest.
Unless otherwise indicated, the provisions of present law and proposed law apply to all four state
retirement systems:
(1)La. State Employees' Retirement System (LASERS)
(2)Teachers' Retirement System of La. (Teachers' or TRSL)
(3)La. School Employees' Retirement System (LSERS)
(4)State Police Retirement System (Troopers)
OVERVIEW
Present law, relative to state retirement systems, generally provides for determination of actuarial
liabilities and calculations of payments to liquidate those liabilities. Provides for application of
certain actuarial gains to help reduce the payments necessary to liquidate a system's liabilities, to
reduce specific amortization bases of system debt, and for allocation to a side account (the
experience account) designed to accumulate monies to fund benefit increases for retirees.
Proposed law retains present law.
Present law provides for determination of the amount and timing of permanent benefit increases
(PBIs) for retirees, sometimes called cost-of-living adjustments or COLAs.
Proposed law retains present law.
SUBSTANTIVE CHANGES
Present law, subject to certain caveats, provides for a schedule of maximum PBI amounts based on
a system's funded level. The schedule ranges from a minimum of 1.5% for a system that is at least
55% funded but less than 65% funded to a maximum of 3.0% for a system that is at least 80%
funded. Proposed law retains present law.
Proposed law, for purposes of determining the maximum PBI within the schedule in present law,
specifies that the funding level shall be determined before any allocation to the experience account.
Further provides that effective for the June 30th system valuation following the fiscal year in which
the system first attains a funded level of 80% pursuant to proposed law, the amortization period for
most actuarial changes, gains, and losses shall be reduced from 30 years to 20 years and the
reduction of certain debt payments through reamortization after application of gains allocated to
funding that debt shall begin.
Present law provides for multiple employer contribution rates at LASERS and Teachers' for the
various specialty plans within each system.
Proposed law retains present law and consolidates all K-12 employee groups at Teachers' into a
single plan for rate purposes.
Present law, relative to LASERS and Teachers', provides for special amortization bases called the
original amortization base (OAB) and the experience account amortization base (EAAB). Provides
for increasing payment schedules for these debts. Provides for application of annual "hurdle"
payments, from investment earnings above a certain target, to extinguish these debts.
Proposed law retains present law and provides for reamortization of the debt payments when moving
to level-dollar payments results in annual payments that are not more than the next annual payment
otherwise required under present law without extending the payment period.
NONSUBSTANTIVE CHANGES
Present law provides for the following for each system:
(A)A 30-year amortization period for certain changes, gains, and losses with level dollar
amounts.
(B)A switch to a 20-year amortization period after a system attains a designated funding level.
(C)Application of annual "hurdle" payments, from investment earnings above a certain target,
to extinguish certain debts.
(D)Indexing of hurdle payments by increasing them as the system's assets increase.
(E) Reamortization of debts subject to the hurdle payments under certain circumstances after a
system attains a designated funding level.
(F)Ten-year amortization of losses due to experience account allocations beginning with the
2019 system valuation. (G)Five-year amortization of certain gains recognized in the 2014 valuation.
Proposed law retains present law.
Present law, relative to LSERS, provides for:
(H)The application of residual experience account funds on June 30, 2014, as a part of:
(I)The consolidation of existing amortization bases.
Proposed law retains present law.
Present law, relative to LASERS and Teachers', provides that:
(J)After the OAB is liquidated, the payments that had been applied to the OAB shall be added
to the hurdle payments to the EAAB.
(K)After the EAAB is liquidated, the payments that had been applied to the EAAB shall be
applied to the next oldest outstanding amortization base of debt.
Proposed law retains present law.
Present law provides for (L) a volatility review of future payment schedules for each system.
Proposed law retains present law.
Proposed law relative to the experience account at each system provides for:
(M)Credits and debits to the account.
(N)A schedule of maximum PBIs based on funded status.
(O)Payment of "partial" PBIs in certain circumstances when funds are not available for a "full"
PBI.
(P)PBIs only every other year until a threshold of funding is attained.
Proposed law retains present law.
A table of the major present law provisions that were relocated is below.
PROVISION SYSTEM PRESENT LAW PROPOSED LAW
A LASERS R.S. 11:102(B)(3)(d)(v)(aa)(I) R.S. 11:102(C)(2)(a)
TRSL R.S. 11:102(B)(3)(d)(vii)(aa)(I) R.S. 11:102(D)(2)(a) PROVISION SYSTEM PRESENT LAW PROPOSED LAW
LSERS R.S. 11:102(B)(3)(d)(vi)(aa)(I) R.S. 11:102(E)(1)
TroopersR.S. 11:102(B)(3)(d)(viii)(aa)(I) R.S. 11:102(F)(1)
B LASERS R.S. 11:102(B)(3)(d)(v)(aa)(II) R.S. 11:102(C)(2)(b)
TRSL R.S. 11:102(B)(3)(d)(vii)(aa)(II) R.S. 11:102(D)(2)(b)
LSERS R.S. 11:102(B)(3)(d)(vi)(aa)(II) R.S. 11:102(E)(3)
TroopersR.S. 11:102(B)(3)(d)(viii)(aa)(II) R.S. 11:102(F)(2)
C LASERS R.S. 11:102(B)(3)(d)(v)(bb)(I)&(II) R.S. 11:102.1
TRSL R.S. 11:102(B)(3)(d)(vii)(bb)(I) R.S. 11:102.2
LSERS R.S. 11:102(B)(3)(d)(vi)(bb)(I)&(II) R.S. 11:102.3
TroopersR.S. 11:102(B)(3)(d)(viii)(bb)(I)&(II)R.S. 11:102.4
D LASERS R.S. 11:102(B)(3)(d)(v)(bb)(I)&(II) R.S. 11:102.1(A)(4)
TRSL R.S. 11:102(B)(3)(d)(vii)(bb)(I)&(II) R.S. 11:102.2(A)(4)
LSERS R.S. 11:102(B)(3)(d)(vi)(bb)(II) R.S. 11:102.3(A)(1)(b)
TroopersR.S. 11:102(B)(3)(d)(viii)(bb)(II) R.S. 11:102.4(A)(1)(b)
E LASERS R.S. 11:102(B)(3)(d)(v)(bb)(I)&(II) R.S. 11:102.1(A)(4)(h)
TRSL R.S. 11:102(B)(3)(d)(vii)(bb)(I)&(II) R.S. 11:102.2(A)(4)(h)
LSERS R.S. 11:102(B)(3)(d)(vi)(bb)(II) R.S. 11:102.3(A)(5)
TroopersR.S. 11:102(B)(3)(d)(viii)(bb)(II) R.S. 11:102.4(A)(5)
F LASERS R.S. 11:102(B)(3)(d)(v)(cc) R.S. 11:102(C)(2)(c)
TRSL R.S. 11:102(B)(3)(d)(vii)(cc) R.S. 11:102(D)(2)(c)
LSERS R.S. 11:102(B)(3)(d)(vi)(cc) R.S. 11:102(E)(4)
TroopersR.S. 11:102(B)(3)(d)(viii)(cc) R.S. 11:103(F)(3)
G LASERS R.S. 11:102(B)(3)(d)(v)(dd) R.S. 11:102.5
TRSL R.S. 11:102(B)(3)(d)(vii)(dd) R.S. 11:102.5
LSERS R.S. 11:102(B)(3)(d)(vi)(dd) R.S. 11:102.5
TroopersR.S. 11:102(B)(3)(d)(viii)(dd) R.S. 11:102.5
H LSERS R.S. 11:102(B)(3)(d)(vi)(ee)(I) R.S. 11:102(E)(2)(b)
I LSERS R.S. 11:102(B)(3)(d)(vi)(ee)(II) R.S. 11:102(E)(2)(a) PROVISION SYSTEM PRESENT LAW PROPOSED LAW
J LASERS R.S. 11:102(B)(3)(d)(v)(bb)(I) R.S. 11:102.1(A)(4)(c)(iii),(iv)&(v)
TRSL R.S. 11:102(B)(3)(d)(vii)(bb)(II) R.S. 11:102.2(A)(4)(c)(iii),(iv)&(v)
K LASERS R.S. 11:102(B)(3)(d)(v)(bb)(II) R.S. 11:102.1(D)
TRSL R.S. 11:102(B)(3)(d)(vii)(bb)(II) R.S. 11:102.2(A)(4)(e)&(D)
L all R.S. 11:102.3 R.S. 11:102.6
M LASERS R.S. 11:542(A)(2)&(B) R.S. 11:542(B)(2)&(3)
TRSL R.S. 11:883.1(A)(2)&(B) R.S. 11:883.1(B)(2)&(3)
LSERS R.S. 11:1145.1(A)(1) R.S. 11:1145.1(A)(1)&(2)
TroopersR.S. 11:1332(A)(1) R.S. 11:1332(A)(1)&(2)
N LASERS R.S. 11:542(C)(2) R.S. 11:542(D)
TRSL R.S. 11:883.1(C)(2) R.S. 11:883.1(D)
LSERS R.S. 11:1145.1(C)(2) R.S. 11:1145.1(C)
TroopersR.S. 11:1332(C)(2) R.S. 11:1332(C)
O LASERS R.S. 11:542(G) R.S. 11:542(D)(4)
TRSL R.S. 11:883.1(H) R.S. 11:883.1(D)(4)
LSERS R.S. 11:1145.1(F) R.S. 11:1145.1(C)(4)
TroopersR.S. 11:1332(G) R.S. 11:1332(C)(4)
P LASERS R.S. 11:542(C)(2)(e) R.S. 11:542(D)(1)(b)
TRSL R.S. 11:883.1(C)(2)(e) R.S. 11:883.1(D)(1)(b)
LSERS R.S. 11:1145.1(C)(2)(e) R.S. 11:1145.1(C)(1)(b)
TroopersR.S. 11:1332(C)(2)(e) R.S. 11:1332(C)(1)(b)
Proposed law specifies that if the provisions of proposed law conflict with the provisions of any
other Act of the 2016 Regular Session, the provisions of proposed law shall supersede and control
regardless of the order of passage.
Effective June 30, 2016.
(Amends R.S. 11:102(B)(1), (2), (3)(intro para), (a), and (d)(intro para), (i), (ii), (iii), and (iv), (4),
and (5)(a) and (b), (C), and (D), 102.1(B)(4), (5), and (6) and (C)(2), (4), (5), and (6), 102.2(B)(4)
and (5) and (C)(2), (4), (5), and (6), 102.3, 542(A), (B), (C), (E), and (F), 883.1(A), (B), (C), (E), and
(F), 927(B)(2)(a)(intro para) and (i) and (b)(i) and (3)(a), 1145.1(A),(B),(C),(D), and (E), and
1332(A), (B), (C), (D), (E), and (F); adds R.S. 11:102(E) and (F), 102.1(A)(4), (B)(3)(a)(iv), (C)(3)(d), and (D), 102.2(A)(4), (B)(3)(a)(iv), (C)(3)(d), and (D), 102.4, 102.5, 102.6, 542(D), and
883.1(D); repeals R.S. 11:102(B)(3)(d)(v), (vi), (vii), and (viii), 542(G), 883.1(G) and (H),
1145.1(F), and 1332(G))