2017 REGULAR SESSION
ACTUARIAL NOTE S B 7
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Senate Bill 7 SLS 17RS-39
Reengrossed with Senate Floor
Amendment #925
Author: Representatives Barrow
Peacock and Dan Morrish
Date: April 27, 2017
LLA Note S B 7.03
Organizations Affected:
Louisiana State Police Retirement
System
RE INCREASE 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 modified by
Act 353 of the 2016 Regular Session.
Bill Header: State Police Ret Fund.: Provides for benefits for survivors of members killed in the line of duty by an intentional act of
violence.
Cost Summary:
The estimated actuarial and fiscal impact of SB 7 on the retirement systems and their plan sponsors is summarized below. Actuarial
costs or savings 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 Increase
Other Post-Employment Benefits (OPEB) 0
Other Government Entities 0
Total Increase
Fiscal Costs
Five Year Fiscal Cost Pertaining to: Expenses Revenues
The Retirement Systems Increase Increase
Other Post-Employment Benefits 0 0
Other Government Entities 0 0
Total Increase Increase
This bill complies with the Louisiana Constitution which requires unfunded liabilities created by an improvement in benefits to be
amortized over a period not to exceed ten years.
Bill Information
Current Law
Current law provides survivor benefit s for law enforcement officers of the office of state police who are members of the
Louisiana State Police Retirement System (LSPRS) and who die in the line of duty (or from immediate effects of an injury
received while in the line of duty).
For members hired on or before December 31, 2010, the benefit payable to the surviving spouse is equal to 75% of the member’s
salary at the time of death. If there is no surviving spouse, the surviving minor children will receive the benefit.
For members hired on or after January 1, 2011, the benefit is equal to 80% of the member’s average compensation at the time of
death. The benefit is shared equally by the surviving spouse and children.
Proposed Law
SB 7 will provide s urvivor benefits for law enforcement officers of the office of state police who are members of LSPRS and who
were killed by an intentional act of violence in the line of duty (or from immediate effects of an injury received by an
intentional act of violence in the line of duty ).
2017 REGULAR SESSION
ACTUARIAL NOTE S B 7
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For members hired on or before December 31, 2010, the benefit payable to the surviving spouse is equal to 100% of the
member’s salary at the time of death. If there is no surviving spouse, the surviving minor children will receive the benefit.
For members hired on or after January 1, 2011, the benefit is equal to 100% of the member’s salary at the time of death. The
benefit is shared equally by the surviving spouse and children.
In addition, SB 7 will increase the benefit of a surviving spouse of a member who was killed on or before June 29, 2017 by an
intentional act of violence in the line of duty (or from immediate effects of an injury received by an intentional act of violence
in the line of duty). The benefit, payable on or after June 30, 2017, will be increased to 100% of the member’s salary at the time
of death.
The LSPRS board of trustees shall electronically notify all members of the legislature when a survivor benefit is granted as
provided for in SB 7.
Implications of the Proposed Changes
SB 7 will provide for a greater survivor benefit in the case of a death by an intentional act of violence in the line of duty (or from
immediate effects of an injury received by an intentional act of violence in the line of duty ).
I. ACTUARIAL ANALYSIS SECTION
A. Analysis of Actuarial Costs
(Prepared by the 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.
1. Retirement Systems
The actuarial present value cost of SB 7 associated with the retirement systems will increase. Our analysis is summarized
below.
SB 7 will increase the death benefit payable when an officer dies by an intentional act of violence in the line of duty
(or from immediate effects of an injury received by an intentional act of violence in the line of duty). While an
intentional act of violence is not explicitly defined, it is reasonable to assume that a few deaths in the line of duty
will fall in that category and the system will pay a greater death benefit in those instances. It is also reasonable to
assume that benefits payable to a few survivors will be increased going forward as deaths prior to June 30, 2017 are
classified as being due to an intentional act of violence.
The ultimate cost of the line of duty death benefit depends on the number of officers killed in the line of duty. The
cost increase associated with the proposed higher benefit payable due to an intentional act of violence will depend
on how “intentional act of violence” is interpreted. A broad interpretation would encompass a larger number of line
of duty deaths than would a narrower interpretation.
2. Other Post-Employment Benefits (OPEB)
The actuarial present value cost of SB 7 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 is not affected by an increase in the death benefit .
3. Other Government Entities
The actuarial cost of SB 7 associated with government entities other than those identified in SB 7 , is estimated to be $0.
B. Actuarial Data, Methods and Assumptions
(Prepared by the LLA)
Unless indicated otherwise, the actuarial note for SB 7 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 the LLA)
There is nothing in SB 7 that will compromise the signing actuary’s ability to present an unbiased statement of actuarial opinion.
2017 REGULAR SESSION
ACTUARIAL NOTE S B 7
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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 SB 7 on fiscal costs, fiscal savings, or cash flows is
presented in Table D.
A. Estimated Fiscal Impact – Retirement Systems
1. Narrative
Table A shows the estimated fiscal impact of the proposed legislation on the retirement systems and the government 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.
Fiscal Cost for the Retirement System s and Their Sponsors: Table A
EXPENDITURES 2017-18 2018-19 2019-2020 2020-2021 2021-2022 5 Year Total
State General Fund $ 0 Increase Increase Increase Increase Increase
Agy Self Generated Increase 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 Increase Increase Increase Increase Increase Increase
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 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
The effect that SB 7 will have on retirement related fiscal costs and revenues during the five year measurement period is
shown in Table A and in Items 2 and 3 below.
2. Expenditures:
a. Expenditures from the General Fund will increase to the extent that employer contribution requirements increase to
accommodate the additional benefits paid to surviving spouses. These expenditures are expected to be small to
negligible.
b. Expenditures from LSPRS (Agy Self-Generated) will increase to the extent that larger benefits will be paid to surviving
spouses.
3. Revenues:
a. LSPRS revenues (Agy Self -Generated) will increase to the extent that employer contributions increase to accommodate
additional benefit payable to surviving spouses.
B. Estimated Fiscal Impact – OPEB:
(Prepared by the LLA)
1. Narrative
Table B shows the estimated fiscal impact of SB 7 on costs associated with OPEB and the government entities that sponsor
these benefits. Fiscal costs in Table B include administrative costs 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.
2017 REGULAR SESSION
ACTUARIAL NOTE S B 7
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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
SB 7 will have no effect on OPEB related fiscal costs and revenues during the five year measurement period.
C. Estimated Fiscal Impact − Other Government Entities (unrelated to the retirement systems or OPEB)
(Prepared by Tanesha Morgan, Legislative Fiscal Office)
1. Narrative
Proposed law provides for the survivor benefit for the spouse and children of any sworn commissioned law enforcement
officer of the office of state police who was killed in the line of duty by an intentional act of violence shall be equal to 100%
of the salary received by the officer at the time of death.
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. The cost of
survivor’s benefits paid under this measure would be paid from the State Police Retirement System ’s trust
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 the LLA)
1. Narrative
Table D shows the estimated fiscal impact of SB 7 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.
2017 REGULAR SESSION
ACTUARIAL NOTE S B 7
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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 Increase Increase Increase Increase Increase
Agy Self Generated Increase 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 Increase Increase Increase Increase Increase Increase
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 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
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, Legislative Fiscal Officer, has supervised the preparation of the fiscal analys es contained in Section II;
Subsection C.
Information Pertaining to Article (10)(29(F) of the Louisiana Constitution
X SB 7 contains a retirement system benefit provision having an actuarial cost.
Survivor benefits under some circumstances will be larger with the enactment of SB 7 than they would be without its
enactment.
Dual Referral Relative to Total Fiscal Costs or Total Cash Flows:
The information presented below is based on information contained in Table D.
Senate House
13.5.1 Applies to Senate or House Instruments. 6.8F Applies to Senate Instruments only.
An expenditure cell or sum of cells in first 3
years following session ≥ $100,000.
A General Fund expenditure cell or sum of cells
in first 3 years following session ≥ $100,000.
Dual Referral: Senate Finance Dual Referral to Appropriations
13.5.2 Applies to Senate or House Instruments 6.8G Applies to Senate Instruments only.
A revenue cell or sum of cells in first 3 years
following session ≥ $500,000.
Dual Referral: Revenue and Fiscal Affairs
A net decrease in fees or an increase in annual
fees and taxes leading to a change in a revenue
cell in the first 3 years following session ≥
$500,000.
Dual Referral: Ways and Means