2018 REGULAR SESSION
ACTUARIAL NOTE HB 8
Page 1 of 5
House Bill 8 HLS 18RS-154
Original
Author: Representative Ivey
Date: March 2, 2018
LLA Note H B 8.01
Organizations Affected:
Clerks' of Court Retirement and
Relief Fund
OR 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/CLERKS COURT: Provides relative to the reemployment of retirees of the Clerks' of Court Retirement
and Relief Fund.
Cost Summary:
The estimated actuarial and fiscal impact of HB 8 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
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 is subject to the Louisiana Constitution which requires unfunded liabilities created by an improvement in retirement benefits
to be amortized over a period not to exceed ten years.
Bill Information
Current Law
Current law allows for a retired member of the Clerks’ of Court Retirement and Relief Fund (CCRS) to be temporarily
reemployed without becoming an active member. If a retiree is reemployed for more than 60 days during a calendar year, the
retirement benefits will be reduced by the amounts earned after the first 60 days of reemployment. Since the reemployed retiree is
not considered an active member, no employer contributions are required during the reemployment period.
Current law also contains special provisions for retirees temporarily reemployed following hurricane Katrina or Rita, which
expired in 2012, 2013, and 2014.
Proposed Law
HB 8 will increase the time period that a retiree can be reemployed without a reduction in the retirement benefits from 60 days to
90 days.
HB 8 will require the employer to make contributions to the system during the period of reemployment after June 30, 2018,
whether the retiree is reemployed in a full -time or part-time position. However, the retiree will not receive additional service
credits or additional retirement benefits in the system. Upon termination of reemployment, the employer contributions and
interest on such contributions will remain with the retirement system.
In addition, HB 8 will repeal the provisions rela ted to hurricane Katrina or Rita which expired in 2012, 2013, and 2014.
2018 REGULAR SESSION
ACTUARIAL NOTE HB 8
Page 2 of 5
Implications of the Proposed Changes
HB 8 extends the period a reemployed retiree of CCRS can return to work and earn an income from employment without a
reduction in his original pension benefit from 60 days to 90 days.
It also requires employers to make contributions during the reemployment period, which will remain in the fund.
Benefits for the reemployed retiree will not be increased to reflect the additional service. The additional employer contributions
are expected to more than offset the costs of paying the additional month of benefits to the reemployed retirees.
I. ACTUARIAL ANALYSIS SECTION
A. Analysis of Actuarial Costs
(Prepared by the LLA)
This section of the actuarial note pertains to actuarial costs or savings associated with the retirement systems , with OPEB, and
with other government entities.
1. Retirement Systems
The actuarial cost of HB 8 associated with CCRS is expected to de crease. The actuary’s analysis is summarized below.
Increasing the period that a retiree can work without a reduction in retirement benefits from 60 to 90 days will increase
the cost of retirement benefits for future rehired retirees. A cost increase occurs because reemployed retirees will cause
CCRS to pay an additional month of retirement benefits.
On the other hand, mandating that employers contribute to CCRS on salaries paid to reemployed retirees will cause
CCRS revenues to increase. Currently, employers do not contribute on salaries paid to reemployed retirees. Under HB 8,
such employers will have to contribute. Employer contributions will more than offset the additional benefits paid.
Based on the June 30, 2017 actuarial valuation:
a. Employer contributions requirements are expected to be 19.00% of pay.
b. There are currently 100 reemployed retirees with a total salary of $982,988. The average pay received is about
$9,800.
c. Employers of reemployed retirees will be required to contribute about $1,900 per reemployed retiree.
d. The average pension benefit is about $ 2,200 per month.
Using this rough data, it is clear that additional revenues are about equal to additional costs for CCRS. Over time, it is
likely that HB 8 will make it less attractive for employers to hire retirees. Currently, retirees can be reemploy ed without
any employer contribution requirement. Under HB 8, employer contributions will be required. As a result, the employer
should become less willing to hire a retiree and more willing to hire a new employee. As the number of reemployed
retirees decreases, actuarial savings will begin to occur. The net effect will be a decrease in actuarial costs.
2. Other Post-Employment Benefits (OPEB)
The actuarial cost or savings of HB 8 associated with OPEB, including retiree health insurance premiums, is estimated to be
$0. The actuary’s analysis is summarized below.
The liability for post- retirement medical insurance protection provided to retirees is not affected by extending the period
for unreduced pension benefits and requiring employer contribution s during a reemployment period.
3. Other Government Entities
The actuarial cost or savings of HB 8 associated with government entities other than those identified in HB 8 , is estimated to
be $0.
B. Actuarial Data, Methods and Assumptions
(Prepared by the LLA)
Unless indicated otherwise, the actuarial note for HB 8 was prepared using actuarial data, methods, and assumptions as disclosed
in the most recent actuarial valuation report 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 H B 8 that will compromise the signing actuary’s ability to present an unbiased statement of actuarial opinion. 2018 REGULAR SESSION
ACTUARIAL NOTE HB 8
Page 3 of 5
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 associated with government entities not associated with either the retirement systems
or OPEB (Table C). Fiscal costs or savings in Table A include administrative costs associated with the retirement systems and the
sponsoring government entities. The total effect of HB 8 on fiscal costs, fiscal savings, or cash flows is presented in Table D.
A. Estimated Fiscal Impact – Retirement Systems
(Prepared by the LLA)
1. Narrative
Table A shows the estimated fiscal impact of the proposed legislation on the retirement systems and the government entities
that sponsor them. Fiscal costs and savings include both administrative and actuarial costs and savings. 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.
Retirement System Fiscal Cost: Table A
EXPENDITURES 2018-19 2019-2020 2020-2021 2021-2022 2022-23 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated Negligible 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 Negligible Decrease Decrease Decrease Decrease Decrease
REVENUES 2018-19 2019-2020 2020-2021 2021-2022 2022-23 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
HB 8 will have the following effects on retirement related fiscal costs and revenues during the five year measurement period.
2. Expenditures:
a. Expenditures from CCRS (Agy Self-Generated) will initially increase due to paying retirement benefits for an additional
month during reemployment.
b. CCRS expenditures (Agy Self-Generated) may increase because HB 8 may require additional
administrative/implementation costs associated with hiring, retaining, and tracking the status of re-employed retirees
under the new provisions. Such costs are considered to be negligible.
c. Local Fund expenditures will decrease because the dollar amount of required employer c ontributions will decrease as
fewer retirees are reemployed.
3. Revenues:
a. CCRS revenues (Agy Self-Generated) will decrease as the number of reemployed retirees decreases and the dollar
amount of employer contributions decreases.
B. Estimated Fiscal Impact – OPEB
(Prepared by the LLA)
1. Narrative
Table B shows the estimated fiscal impact of HB 8 on actuarial 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 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.
2018 REGULAR SESSION
ACTUARIAL NOTE HB 8
Page 4 of 5
OPEB Fiscal Cost: Table B EXPENDITURES 2018-19 2019-2020 2020-2021 2021-2022 2022-23 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 2018-19 2019-2020 2020-2021 2021-2022 2022-23 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
HB 8 will have no effects 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 Bradley Cryer, Assistant Legislative Auditor)
1. Narrative
From time to time, legislation is proposed that has an indirect effect on cash flows associated with other government entities,
unrelated to the retirement systems or OPEB. Table C shows the estimated fiscal impact (administrative and actuarial)
of HB 8 on such government entities. A fiscal cost is denoted by “Increase” or a positive number. Fiscal savings are denoted
by “Decrease” or a negative number.
Fiscal Costs for Other Government Entities: Table C
EXPENDITURES 2018-19 2019-2020 2020-2021 2021-2022 2022-23 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 2018-19 2019-2020 2020-2021 2021-2022 2022-23 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
HB 8 will have the following effects on fiscal costs and revenues related to other government entities during the five year
measurement period.
2. Expenditures:
a. There is no anticipated direct material effect on expenditures associated with governmental e ntities other than CCRS.
3. Revenues:
a. This bill is not expected to have a fiscal impact.
2018 REGULAR SESSION
ACTUARIAL NOTE HB 8
Page 5 of 5
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 8 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. F iscal 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.
Total Fiscal Cost: Table D (Cumulative Costs from Tables A, B, & C)
EXPENDITURES 2018-19 2019-2020 2020-2021 2021-2022 2022-23 5 Year Total
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Agy Self Generated Negligible 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 Negligible Decrease Decrease Decrease Decrease Decrease
REVENUES 2018-19 2019-2020 2020-2021 2021-2022 2022-23 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.
Bradley Cryer, Assistant Legislative Auditor has supervised the preparation of the fiscal analyses contained herein.
Information Pertaining to Article (10)(29(F) of the Louisiana Constitution
X
HB 8 contains a retirement system benefit provision having an actuarial cost.
Some CCRS employees will receive a larger benefit with the enactment of HB 8 than they would receive without HB 8.
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 2018 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