2017 REGULAR SESSION
ACTUARIAL NOTE HB 31
Page 1 of 6
House Bill 31 HLS 17RS-473
Enrolled
Author: Representative Frank
Hoffmann
Date: June 6, 2017
LLA Note H B 31.04
Organizations Affected:
Teachers’ Retirement System of
Louisiana
EN DECREASE APV
This Note has been prepared by the Actuarial Services Department of the
Legislative Auditor with assistance from either the Fiscal Notes staff of the
Legislative Auditor or staff of the Legislative Fiscal Office. The attachment of this
Note provides compliance with the requirements of R.S. 24:521 as amended by
Act 353 of the 2016 Regular Session.
Bill Header: RETIREMENT/TEACHERS: Provides relative to the reemployment of retired school psychologists in positions
covered by the Teachers’ Retirement System of Louisiana.
Cost Summary:
The estimated actuarial and fiscal impact of HB 31 on the retirement systems and their plan sponsors is summarized below. Actuarial
costs pertain to estimated changes in the actuarial present value of future benefit payments . Fiscal costs or savings pertain to
changes to all cash flows over the next five year period including retirement system cash flows, OPEB cash flows, or cash flows
related to other government entities.
An increase in actuarial costs is denoted throughout the actuarial note by “Increase” or a positive number. Actuarial savings are
denoted by “Decrease” or a negative number. An increase in expenditures or revenues (fiscal impact) is denoted by “Increase” or a
positive number. A decrease in expenditures or revenues is denoted by “decrease” or a negative number.
Estimated Actuarial Impact:
The top part of the following chart shows the estimated change in the actuarial present value of future benefit payments and
expenses, if any, attributable to the proposed legislation. The bottom part shows the effect on cash flows.
Actuarial Costs Pertaining to: Actuarial Cost
The Retirement Systems Decrease
Other Post-Employment Benefits (OPEB 0
Other Government Entities 0
Total Decrease
Fiscal Cost
Five Year Fiscal Cost Pertaining to: Expenses Revenues
The Retirement Systems Decrease Decrease
Other Post-Employment Benefits 0 0
Other Government Entities 0 0
Total Decrease Decrease
This bill complies with the Louisiana Constitution which requires unfunded liabilities created by an improvement in r etirement
benefits to be amortized over a period not to exceed ten years.
Bill Information
Current Law and Proposed Law
Current law suspends the benefits of a reemployed retired member of the Teachers’ Retirement System of Louisiana (TRSL).
Two exceptions to this general rule under current law and under HB 31 are summarized below:
Current Law HB 31
General Rule
1. Benefits payable to a reemployed retiree will be
suspended for the duration of his employment.
2. Benefits for a reemployed retiree who retired for
disability will be suspended.
Same as current law.
2017 REGULAR SESSION
ACTUARIAL NOTE HB 31
Page 2 of 6
Current Law HB 31
Rules for School
Psychologists.
Pension benefits of a retired school psychologist who is reemployed are determined according to the General Rule.
Limitation on Total Income for Reemployed
School Psychologists
1. There are no limitations on the amount the
retiree may earn from reemployment.
2. The retiree may not collect any pension
benefits from TRSL as long as he is
reemployed.
Pension benefits of a retired school psychologist who is reemployed are determined according to the following rules.
Limitation on Total Income for R eemployed
School Psychologists
1. There are no limitations on the amount the
retiree may earn from reemployment.
2. The pension benefit payable to the retiree from
TRSL will be $0 from the date he is
reemployed until the earlier of the date he
terminates employment and the first
anniversary of his original date of retirement.
3. Thereafter, the benefit payable to the retiree
from TRSL will be the retiree’s full pension
benefit.
4. Items 2 and 3 above apply to a school
psychologist only if he is reemployed in a
critical shortage position and his benefit accrual
rate is at least equal to 2.5% or he did not retire
early with an actuarially reduced benefit.
Special Retirees
Any retired teacher who returns to active service
within the 12-month period immediately following
the effective date of such retirement shall have his
pension benefits suspended for the duration of such
active service or the lapse of 12 months from the
effective date of his retirement, whichever first
occurs. In other words:
1. The first day of the suspension of benefits
occurs on the retiree’s reemployment date.
2. The last date of the suspension of benefits
occurs on the earlier of the first anniversary of
his original retirement and the last day of
reemployment.
Limitation on Total Income for Special Retirees
1. There are no limitations on the amount the
retiree may earn from reemployment.
2. Pension benefit payable to the retiree will be
suspended until he has been retired for one
year.
Any retired teacher whose retirement benefit is
based on an accrual rate of less than 2.5% or who
retired early with an actuarial reduction shall have
his pension benefits suspended unless he has been
retired for at least 36 months. The retired teacher
will be able to earn a salary from his employer and
collect a full pension from TRSL.
1. The first day of the suspension of benefits
occurs on the retiree’s reemployment date.
2. The last date of the suspension of benefits
occurs on the earlier of the third anniversary of
his original retirement and the last day of
reemployment.
Limitation on Total Income for Special Retirees
1. There are no limitations on the amount the
retiree may earn from reemployment.
2. Pension benefit payable to the retiree will be
suspended until he has been retired for 3 years.
3. These provisions do not apply to a retiree who
retired on or before June 30, 2010, or to a
retiree who holds an advance degree in speech
therapy, speech pathology, or audiology.
Implications of the Proposed Changes
HB 31 permits a qualified retired member of TRSL to return to work as a school psychologist and continue to receive his
retirement benefit under certain circumstances. Under current law, pension benefits of a school psychologist are suspended if he is
reemployed in a position covered by TRSL.
In general, HB 31 requires certain retirees to be retired at for least three years before they can earn income from reemployment
while at the same time collect a pension benefit from TRSL
I. ACTUARIAL ANALYSIS SECTION
A. Analysis of Actuarial Costs
(Prepared by LLA)
This section of the actuarial note pertains to the actuarial present value cost or savings associated with the retirement systems ,
with OPEB, and with other government entities. 2017 REGULAR SESSION
ACTUARIAL NOTE HB 31
Page 3 of 6
1. Retirement Systems
The actuarial present value of future benefits payable from TRSL is estimated to i ncrease as a result of the school
psychologist provisions of HB 31. The cost increase is expected to be small.
The actuarial present value of future benefit payments payable from TRSL is estimated to decrease as a result of the
suspension of benefit provisions HB 31. We estimate a decrease will occur because the three year delay in the receipt of
benefit payments for certain retirees is expected to mitigate against anti-selection that would otherwise lead to members
retiring early.
We estimate that the net effect will be a decrease in the actuarial present value of future benefit costs.
2. Other Post-Employment Benefits (OPEB)
The actuarial cost of HB 31 associated with OPEB, including retiree health insurance premiums, is estimated to be $0. Our
analysis is summarized below.
The liability for post- retirement medical insurance protection provided to retirees by the Office of Group Benefits or other
insurers remains the same regardless of the employment status of a retiree. The liability is based on the present value of
estimated claims and estimated claims will not change just because the member’s status has changed from retiree to
employee. However, depending on OGB rules or rules of other insurers providing health insurance coverage to TRSL
members, the allocation of premiums between the employee and the employer may change as an employee moves from a
retired status to an active reemployed status. Therefore:
1. OGB revenues may increase or decrease as a result of HB 31.
2. Employer premium expenditures may increase or decrease as a result of HB 31.
3. Other Government Entities
The actuarial cost of associated with government entities other than those identified in HB 31 is estimated to be $0. Our
analysis is summarized below in Section II; Subsection C.
B. Actuarial Data, Methods and Assumptions
(Prepared by LLA)
Unless indicated otherwise, the actuarial note for HB 31 was prepared using actuarial data, methods and assumptions as disclosed
in the most recent actuarial valuation reports adopted by PRSAC. The 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.
C. Actuarial Caveat
(Prepared by LLA)
There is nothing in H B 31 that will compromise the signing actuary’s ability to present an unbiased statement of actuarial opinion.
II. FISCAL ANALYSIS SECTION
This section of the actuarial note pertains to fiscal costs or savings associated with the retirement systems (Table A), with OPEB
(Table B), and with other fiscal costs or savings attributable to government entities not associated with either the retirement systems or
OPEB (Table C). Fiscal costs or savings reflect all forms of cash flow including benefit costs or savings, administrative costs or
savings, or any other identifiable type of fiscal cost or savings. The total effect of HB 31 on fiscal costs, fiscal savings, or cash flows
is presented in Table D.
A. Estimated Fiscal Impact – Retirement Systems
(Prepared by LLA)
1. Narrative
Table A shows the estimated fiscal impact of the proposed legislation on the retirement systems and the governme nt entities
that sponsor them. A fiscal cost is denoted by “Increase” or a positive number. Fiscal savings are denoted by “Decrease” or
a negative number. A revenue increase is denoted by “Increase” or a positive number. A revenue decrease is denoted by
“Decrease” or a negative number.
Table A shows the estimated fiscal impact of the proposed legislation on the retirement systems and the government entities
that sponsor them. The impact on fiscal information in Table A includes administrative costs or savings associated with the
retirement system and the sponsoring government entities.
2017 REGULAR SESSION
ACTUARIAL NOTE HB 31
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Fiscal Cost for the Retirement Systems and Their Sponsors: Table A EXPENDITURES 2017-18 2018-19 2019-2020 2020-2021 2021-2022 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
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 Decrease Decrease Decrease Decrease Decrease
Annual Total Decrease Decrease Decrease Decrease Decrease Decrease
REVENUES 2017-18 2018-19 2019-2020 2020-2021 2021-2022 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated 0 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 0 0 0 0 0
Annual Total $ 0 Decrease Decrease Decrease Decrease Decrease
The effects on retirement related fiscal costs or savings during the five year measurement period are shown in Table A and in
Items 2 and 3 below. A precise cost or savings cannot be determined because the actual cost or savings depends upon the
age, service, and salary characteristics of retired school psychologists who return to work and upon the ratio of school
psychologists that continue reemployment to those who are induced to retire. The best information that can be given relative
to retirement related fiscal costs or savings, based on the information available to us, is that costs will increase and that the
increase in cost will be small; probably less than $100,000 a year.
Nor can the fiscal effect of the remaining provisions of HB 31 be determined with any precision. The best estimate we can
make is that fiscal costs will decrease and the decrease associated with provisions related to the three year delay is likely to
be larger than the increase in fiscal costs associated with school psychologists.
2. Expenditures:
a. Agy Self-Generated Expenditures will decrease because TRSL will distribute fewer benefits each year under HB 31 than
it will under current law.
b. Expenditures from Local Funds will decrease because school districts will contribute less per year, on average, to TRSL
with the enactment of HB 31 than they would have contributed under current law.
3. Revenues:
a. TRSL revenues (Agy Self-Generated) will decrease each year because school districts will contribute less per year to
TRSL under HB 31 than they would have contributed under current law.
B. Estimated Fiscal Impact – OPEB
(Prepared by LLA)
1. Narrative
Table B shows the estimated fiscal impact of HB 31 on costs or savings associated with OPEB and the government entities
that sponsor these benefit programs. Fiscal costs or savings in Table B include administrative costs or savings associated
with the government entity sponsoring the OPEB program. A fiscal cost is denoted by “Increase” or a positive number.
Fiscal savings are denoted by “Decrease” or a negative number. A revenue increase is denoted by “Increase” or a positive
number. A revenue decrease is denoted by “Decrease” or a negative number.
The effects on OPEB related fiscal costs and revenues during the five year measurement period are shown below in Table B
and Items 2 and 3.
2017 REGULAR SESSION
ACTUARIAL NOTE HB 31
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OPEB Fiscal Cost: Table B EXPENDITURES 2017-18 2018-19 2019-2020 2020-2021 2021-2022 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 0 0 0 0 0
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
REVENUES 2017-18 2018-19 2019-2020 2020-2021 2021-2022 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 0 0 0 0 0
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
2. Expenditures:
Expenditures by local school districts for medical benefits may increase or decrease depending on the employment status of
employees and/or retirees and whether retirees pay a larger or smaller percentage of the medical premium. Eventually,
however, the reemployed retiree will re-retire and the retirees share of the insurance premium will be the same it would have
been had the retiree not returned to work. The state does not maintain sufficient records to enable us to determine how
employer costs will be affected in individual school districts. In our opinion, the cost difference between HB 31 and current
law will be negligible.
3. Revenues:
School district revenues (Local Funds) will not change materially with the enactment of HB 31 for the same reasons as cited
above under Expenditures.
C. Estimated Fiscal Impact − Other Government Entities (unrelated to the retirement systems or OPEB)
(Prepared by Tanesha Morgan , Legislative Fiscal Office)
1. Narrative
Present law provides that in certain circumstances a retiree may return to work in a "critical shortage area" (defined in present
law) without reduction of benefits. Such circumstances include returning as a certified classroom teacher, as a certified
speech therapist, speech pathologist, audiologist, educational diagnostician, school social worker, or school counselor.
Proposed law adds school psychologist to the list of certified professionals who may return to work in a critical shortage area
without reduction of benefits.
Fiscal Costs for Other Government Entities: Table C
EXPENDITURES 2017-18 2018-19 2019-2020 2020-2021 2021-2022 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 0 0 0 0 0
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
REVENUES 2017-18 2018-19 2019-2020 2020-2021 2021-2022 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 0 0 0 0 0
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
2. Expenditures:
There is no anticipated direct material effect on governmental expenditures as a result of this measure. However, t here may
be implementation costs to make minor software modifications to existing computer programs to identify members that are
rehired under this measure. These costs are negligible and are anticipated to be absorbed through the agency’s existing
budget.
2017 REGULAR SESSION
ACTUARIAL NOTE HB 31
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3. Revenues:
There is no anticipated direct material effect on governmental revenues as a result of this measure.
D. Estimated Fiscal Impact − All Retirement Systems, OPEB, and All Government Entities
(Prepared by LLA)
1. Narrative
Table D shows the estimated fiscal impact of HB 31 on all government entities within the state of Louisiana. Cell values in
Table D are the sum of the respective cell values in Table A, Table B, and Table C. A fiscal cost is denoted by “Increase” or
a positive number. Fiscal savings are denoted by “Decrease” or a negative number. A revenue increase is denoted by
“Increase” or a positive number. A revenue decrease is denoted by “Decrease” or a negative number.
The “decrease” in fiscal costs shown in Table D is small to negligible in value.
Total Fiscal Cost: Table D (Cumulative Costs from Tables A, B, & C)
EXPENDITURES 2017-18 2018-19 2019-2020 2020-2021 2021-2022 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
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 Decrease Decrease Decrease Decrease Decrease
Annual Total Decrease Decrease Decrease Decrease Decrease Decrease
REVENUES 2017-18 2018-19 2019-2020 2020-2021 2021-2022 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated 0 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 0 0 0 0 0
Annual Total $ 0 Decrease Decrease Decrease Decrease Decrease
Credentials of the Signatory Staff:
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.
John D. Carpenter, the Legislative Fiscal Officer, has supervised the preparation of the fiscal analyses contained in Section II;
Subsection C.
Information Pertaining to Article (10)(29(F) of the Louisiana Constitution
X HB 31 contains a retirement system benefit provision having an actuarial cost.
One or more school psychologists will receive a larger benefit from TRSL under HB 31 than he would have received without
HB 31.
Dual Referral Relative to Total Fiscal Costs or Total Cash Flows:
The information presented below is based on information contained in Table D for the first three years following the 2017 regular
session.
Senate House
13.5.1 Applies to Senate or House Instruments. 6.8F Applies to Senate or House Instruments.
If an annual fiscal cost ≥ $100,000, then bill is
dual referred to:
If an annual General Fund fiscal cost ≥
$100,000, then the bill is dual referred to:
Dual Referral: Senate Finance Dual Referral to Appropriations
13.5.2 Applies to Senate or House Instruments. 6.8G Applies to Senate Instruments only.
If an annual tax or fee change ≥ $500,000,
then the bill is dual referred to:
If a net fee decrease occurs or if an increase in
annual fees and taxes ≥ $500,000, then the bill is
dual referred to:
Dual Referral: Revenue and Fiscal Affairs
Dual Referral: Ways and Means