HLS 18RS-436 ORIGINAL
2018 Regular Session
HOUSE BILL NO. 771
BY REPRESENTATIVE BACALA
RETIREMENT/MUNICIPAL POL: Provides for payment of unfunded accrued liability by
an employer participating in the Municipal Police Employees' Retirement System
1 AN ACT
2To amend and reenact R.S. 11:2225.4, relative to the payment of unfunded accrued liability
3 by participating employers in the Municipal Police Employees' Retirement System;
4 to provide for payment of unfunded accrued liability upon dissolution of a
5 department or the reduction of the number of participating employees; to provide for
6 the reinstatement of the number of participating employees; to provide for the
7 amortization of payments; to provide for the collection of payments due; to provide
8 definitions; and to provide for related matters.
9 Notice of intention to introduce this Act has been published
10 as provided by Article X, Section 29(C) of the Constitution
11 of Louisiana.
12Be it enacted by the Legislature of Louisiana:
13 Section 1. R.S. 11:2225.4 is hereby amended and reenacted to read as follows:
14 ยง2225.4. Unfunded accrued liability; payment by employer
15 A.(1) If any employer participating in the system fully dissolves its police
16 department and contracts for police services with another entity, the employer shall
17 remit to the system, as further provided in this Subsection, beginning the July first
18 immediately following the date of dissolution, that portion of the unfunded accrued
19 liability existing on the June thirtieth immediately prior to the date of dissolution of
20 the police department, attributable to such employer and calculated using the
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1 allocation percentage included in the prior fiscal year's employer pension report
2 produced according to requirements established by the Governmental Accounting
3 Standards Board. The amount due pursuant to the provisions of this Paragraph shall
4 include interest at the system's valuation interest rate.
5 (2)(a) If a participating employer does not dissolve its police department
6 partially dissolves its police department, but the salaries upon which contributions
7 are made by an employer to the system for a fiscal year are less than seventy percent
8 of the salaries upon which contributions were made to the system for the employer's
9 immediately prior fiscal year then the employer shall be deemed to have partially
10 dissolved its police department and shall be liable for a pro rata portion of the
11 system's unfunded accrued liability. The portion shall be calculated by applying the
12 percentage decrease in the employer's fiscal year over fiscal year salaries upon which
13 contributions are made salaries paid to participating employees by the employer on
14 June thirtieth of both fiscal years to the total payment that would have been required
15 pursuant to the provisions of Paragraph (1) of this Subsection if the employer had
16 fully dissolved its police department. Payments required pursuant to the provisions
17 of this Paragraph shall include interest at the system's valuation interest rate.
18 (b) A participating employer shall be deemed to have partially dissolved its
19 police department if either of the following occurs:
20 (i) The number of participating employees of such employer as of June
21 thirtieth is less than seventy percent of the number of participating employees of
22 such employer as of June thirtieth of the prior year and either the number of
23 participating employees decreases by at least two or the number of participating
24 employees is zero.
25 (ii) The number of participating employees of such employer as of June
26 thirtieth is fifty fewer than the number of participating employees of such employer
27 as of June thirtieth of the prior year.
28 B.(1) Any amount due pursuant to Subsection A of this Section shall be
29 determined by the actuary employed by the system and shall be paid either in a lump
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HB NO. 771
1 sum or amortized over ten fifteen years in equal monthly payments with interest at
2 the system's valuation interest rate. Payments shall be payable beginning July first
3 of the fiscal year following the withdrawal and in the same manner as regular payroll
4 payments to the system, at the option of the employer.
5 (2) If the number of participating employees of an employer subject to
6 Paragraph (A)(2) of this Section returns to at least the number of participating
7 employees as of the June thirtieth immediately preceding the withdrawal, the
8 payments required by this Section shall cease on the July first following the increase
9 in participating employees and no further payments shall be due with respect to such
10 withdrawal. Any payments made pursuant to this Section will be credited as an
11 offset of any amounts due by the employer attributable to any subsequent withdrawal
12 that occurs within fifteen years of such payments.
13 C.(1) If an employer fails to make a payment timely, the amount due shall
14 be collected in any of the following manners:
15 (1)(a) By action in a court of competent jurisdiction against the delinquent
16 employer. The amount due shall include interest calculated at the system's actuarial
17 valuation rate, compounded annually.
18 (2)(b) The board may certify to the state treasurer all amounts attributable
19 to the delinquent employer. In support of such certification, the board shall submit
20 to the treasurer a resolution certifying the name of the delinquent employer, its
21 failure to pay, and the amount owed and shall name a designee or designees to act
22 on the board's behalf. Upon receipt of such certification, the treasurer shall deduct
23 from monies payable to the certified delinquent party the certified amount due and
24 shall remit such deducted amounts directly to the Municipal Police Employees'
25 Retirement System.
26 (2) Notwithstanding any other provision of law to the contrary, the board of
27 trustees shall not collect any payments due from an employer for any partial
28 dissolution that occurred prior to July 1, 2018.
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1 D. For the purposes of this Section, the term "employer" shall have the same
2 meaning as provided in R.S. 11:2213 and shall include any municipality that
3 terminates participation in the system by dissolving its police department pursuant
4 to Subsection A of this Section. following terms shall have the following meanings:
5 (1) "Participating employee" shall mean an active member or participant in
6 the Deferred Retirement Option Plan.
7 (2) "Withdrawal" shall mean the dissolution or partial dissolution of a police
8 department as described in Subsection A of this Section.
9 Section 2. This Act shall become effective on July 1, 2018; if vetoed by the governor
10and subsequently approved by the legislature, this Act shall become effective on July 1,
112018, or on the day following such approval by the legislature, whichever is later.
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 771 Original 2018 Regular Session Bacala
Abstract: Changes the method used to determine whether employers participating in the
Municipal Police Employees' Retirement System (the system) who reduce the
number of participating employees are required to pay the unfunded accrued liability
(UAL) attributable to those employees, and increases the amortization period for
such payments.
Present law provides that a participating employer in the system that dissolves its police
department shall pay the portion of the system's UAL attributable to that employer existing
on the June 30 prior to the dissolution, with interest. Proposed law requires that the
employer's UAL portion be calculated using the allocation percentage included in the prior
fiscal year's employer pension report produced according to requirements established by the
Governmental Accounting Standards Board.
Present law provides that if a participating employer does not dissolve its police department,
but salaries upon which contributions are made by the employer are less than 70% of salaries
from the prior fiscal year, the employer shall pay the portion of the UAL attributable to that
employer equal to the percentage decrease of salaries, with interest. Proposed law changes
the qualification for payment of UAL from a 30% or greater decrease in salaries to a 30%
or greater decrease in active members and DROP participants, with at least a reduction of
two participating employees, or a decrease to zero participating employees. Further requires
payment of UAL if the number of participating employees decreases by 50.
Present law provides that the employer shall choose to make payments either as a lump sum
or equal monthly payments amortized over 10 years. Proposed law provides that payments
shall instead be amortized over 15 years in equal payments and shall be payable beginning
July 1 of the fiscal year following the withdrawal.
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Proposed law provides that if the number of participating employees of an employer whose
department was partially dissolved returns to or exceeds the number of participating
employees prior to the partial dissolution, payments shall cease on the July 1 following the
increase. Any payments made will be credited as an offset of any amounts due for any
subsequent withdrawal that occurs within 15 years of such payment.
Proposed law prohibits the board from collecting any payments as a result of a partial
dissolution that occurred prior to July 1, 2018.
Effective July 1, 2018.
(Amends R.S. 11:2225.4)
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