2019 REGULAR SESSION
ACTUARIAL NOTE HB 19
Page 1 of 9
House Bill 19 HLS 19RS-35
Original
Author: Representative Pearson
Date: May 1, 2019
LLA Note H B 19.01
Organizations Affected:
Teachers' Retirement System of
Louisiana
OR NO IMPACT 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.
James J. Rizzo, ASA, MAAA
Senior Consultant & Actuary
Gabriel, Roeder, Smith & Company, Actuary for the Legislative Auditor
Bill Header: RETIREMENT/TEACHERS: Requires certain payments from minimum foundation program formula funds to the
Teachers’ Retirement System of Louisiana
Cost Summary:
The estimated net actuarial and fiscal impact of this proposed legislation on the retirement systems and their plan sponsors is
summarized below. Net actuarial costs pertain to estimated changes in the net actuarial present value of future benefit payments and
administrative expenses incurred by the retirement system. Net 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 net 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 (i.e., contributions, benefit
payments, and administrative expenses).
Net Actuarial Costs (Liabilities) Pertaining to: Net Actuarial Cost
The Retirement Systems $0
Other Post-employment Benefits (OPEB) 0
Total $0
Five Year Net Fiscal Cost Pertaining to: Expenditures Revenues
The Retirement Systems $0 $0
Other Post-employment Benefits 0 0
Other Government Entities 0 0
Total $0 $0
Bill Information
Current Law
Current law establishes the procedure for calculation of the annual employer contribution rate for all employers that participate in
the Teachers’ Retirement System of Louisiana (TRSL). A portion of the required annual contribution is used to pay off the
original amortization base (OAB).
The present constitution creates the m inimum foundation program (MFP), which is designed to provide minimum education
funding for public schools in the state. The MFP distributions are used by school districts to cover education -related expenses,
including salaries and retirement costs for the teachers and school employees in the district as well as all other types of expenses.
Under current law, K -12 school districts and charter schools receive MFP distributions each month. Out of those funds and other
sources of revenue, they pay all their expenses, including their own contributions to the retirement systems that cover their
employees.
Proposed Law
HB 19 removes an amount sufficient t o cover a portion of the total OAB payment owed by all employers in TRSL, from the MFP
distribution before such funds are distributed to school boards. TRSL will invoice the Department of Education (DOE) each year
for an amount sufficient to cover 90% of the total OAB payment for that year. T he DOE will transfer the required amount
directly to TRSL on behalf of all employers receiving funds through the MFP formula.
HB 19 also provides that employers receiving funds through the MFP formula , and that employ contributing members of TRSL ,
remain obligated for the remainder of their required contributions to TRSL.
2019 REGULAR SESSION
ACTUARIAL NOTE HB 19
Page 2 of 9
Implications of the Proposed Changes
Part of the required TRSL employer contribution will be paid by the State directly to TRSL from MFP funds on behalf of the
employers receiving such funds. The TRSL-participating employers will still be liable for the remaining contributions due to
TRSL.
There is no change in the net actuarial present value of future benefit payments and expenses due to HB 19 because there is no
effect on benefits payable from TRSL. Furthermore, there is no change in the total amount of employer contributions received by
TRSL.
There are, in addition , a few unanswered questions of interpretation and potential conflicts within the proposed bill.
I. ACTUARIAL ANALYSIS SECTION
A. Analysis of Net Actuarial Costs
(Prepared by LLA)
This section of the actuarial note pertains to net actuarial costs or savings associated with the retirement systems and with OPEB.
1. Retirement Systems
The net actuarial cost or savings of the proposed legislation associated with the retirement systems is estimated to be $ 0. The
actuary’s analysis is summarized below.
The ultimate cost of a plan is determined by the benefits which are paid out and the investment earnings. This bill does not
change the benefit terms for current or future members and therefore (a) no member is expected to receive a higher benefit
under the proposed law than under the current law and (b) the pro posed law does not have any effect on the net actuarial
present value of future benefit payments and administrative expenses incurred by the retirement system . Therefore, there is
no net actuarial cost in the aggregate. This proposed bill changes the process of collecting funds by the retirement systems.
The timing of receipt by the TRSL of the total contributions might be slightly different, but is negligible and, therefore,
considered as having no impact.
However, as described below, even though there is no net increase or decrease in total, there may be some employers whose
TRSL contribution requirements may increase or whose net MFP payments may decrease, while there may be other
employers whose TRSL contribution requirements decrease or whose net MFP payments may increase. In other words,
while the total may be a net sum zero, there may be individual cost-shifting between employers.
In addition, there are a few unanswered questions of interpretation and potential conflicts within the proposed bill relating to
how the TRSL-paying entities will be credited with contributions paid by DOE and how the DOE would reduce the
otherwise-payable MFP distributions to recognize its newly required retirement contributions directly to TRSL.
Above-the-Line or Below-the-Line
There are at least two interpretation of approaches to implementing the proposed bill with respect to when or where in the
MFP calculation process the offset could occur: As an offset b efore the total MFP amounts are designated for each employer
(above-the-line) or as an offset after the MFP amounts are designated for each employer (below the line) but before the net
MFP payments are actually distributed. Alternatively, some might refer to the above-the-line approach as taking the TRSL
payment “off-the-top”, and the below-the-line approach as taking the TRSL payment from the MFP payment “after-the-fact”.
a. Above-the-line (or off- the-top). Subsections 11:23(C) and (D) in the proposed bill state:
C. The department shall transfer the required amount to the retirement system on behalf of all employers receiving
formula funds. The amount to be paid shall be divided into twelve equal payments and paid monthly.
D. Remaining funds appropriated for the minimum foundation program after the payment required by this Section
shall be distributed and used as otherwise provided by law.
These two Sub sections, particularly Subsection (D), of the bill appear to point toward an above-the-line interpretation.
Under this above-the-line approach, Step 1 is to sum the total MFP payments designated to MFP-participating entities
for the year, as developed under the usual procedure . Step 2 is to subtract (above-the-line) the 90% amount specified by
the proposed bill, leaving the remaining total amount of funds appropriated for the minimum foundation program. For a
Step 3, the proposed bill does not specify any calculation or allocation methodology for how that remaining total amount
of funds appropriated for the minimum foundation program should be allocated or distributed to the employers
participating in the MFP. Step 4 would be for each TRSL-paying entity to pay its TRS-required contribution amount,
which would be lower than under the current law, because TRSL would calculate the contribution rate differently under
the proposed bill. After taking the 90% amount specified by the proposed bill off-the-top, since it would be paid directly
from DOE, TRSL would calculate the balance due and shared by all TRSL-paying entities. This above-the-line
approach would require TRSL to recalculate the net balance remaining of the total required contribution from all TRSL-
paying entities, and develop a lower (than current law) percent of pay contribution for each TRS-participating entity to
apply to their covered payroll.
There may even be other interpretive variations on this above- the-line approach.
2019 REGULAR SESSION
ACTUARIAL NOTE HB 19
Page 3 of 9
Depending on the allocation methodology chosen for that Step 3, some cost-shifting would occur. Some employers will
receive a lower or higher net amount from the DOE than they would have compared to: (a) the current law’s MFP
payment less (b) their own total TRSL payment. The proportionate allocation methodology employed in that Step 3 by
the DOE would not likely be the same set of proportionate methodology employed by TRSL for sharing the total
contribution under current law (allocated or divided by expected TRSL-covered pay). That difference in methodologies
would create cost-shifting between employers.
There are two types of cost-shifting inherent in this above-the-line approach. The universe of MFP-participating entities
is not the same as the universe of TRSL-paying entities, creating more cost-shifting.
• Under this above-the-line approach, MFP-participating entities that do not participate in TRSL share in the MFP
reduction even though they have no TRSL contribution requirement. The cost of TRSL is partially shifted from
MFP-participating entities who participate in TRSL to those that do not. The non-TRSL entities are helping pay for
the TRSL contribution otherwise borne by the TRSL-participating entities. This above-the-line approach obligates
the State to fund a portion of TRSL directly and distribute the balance of MFP payments to MFP-participating
entities accordingly.
• Another type of cost-shifting under this above-the-line approach occurs f or TRSL-paying entities that do not
participate in MFP. These entities would not have to pay as much to TRSL under the proposed bill, even though
they do not be participate in MFP payments. For example, h igher education institutions pay TRSL contributions for
their employees participating in the defined benefit pension program of TRSL as well as for their employees
participating in the ORP program of TRSL. Under the proposed bill, the above-the-line approach decreases their
TRSL contribution requirement because the OAB amortization payment currently is financed by all TRSL-paying
entities whether they participate in MFP or not. So the cost of TRSL is partially shifted from higher education to all
K-12 MFP-participating entities.
b. Below-the-line (or after-the-fact). Subsection (E) in the proposed bill states:
E. Each employer that receives formula funds and that employs contributing members of the retirement system shall be liable to the retirement system for the balance of amounts due pursuant to RS 11:102, including balance of original amortization base payments.
This Subsection appears to point toward a below-the-line interpretation.
Under this below-the-line approach, Step 1 is for TRSL to calculate a representative share of the 90% amount specified
by the proposed bill for each of the MFP -participating entities, add them up and send the DOE an invoice for the total
along with the itemized list showing each MF P-participating entity ’s representative dollar amount share. Step 2 is for
the DOE to let the MFP process flow as under current law, developing an MFP payment for each MFP-participating
entity. Step 3 is for DOE to subtract ( below-the-line) the TRSL -provided itemized amount from each MFP-participating
entity’s otherwise MFP payment, leaving the remaining funds appropriated for the minimum foundation program and
distribute that amount to each MFP-participating entity. Note the itemized listing amounts in Step 3 here adds up to the
same total as in Step 3 of the above-the-line approach discussed above. The effect on each individual employer is
different because of the different allocating methodologies. Step 4 is the same here as in the above-the-line approach
described previously. Each TRSL-paying entity would pay its TRS-required contribution amount, which would be lower
than under the current law, because TRSL would calculate the contribution rate differently under the proposed bill. After
taking the 90% amount specified by the proposed bill off-the-top, since it would be paid directly from DOE, TRSL
would calculate the balance due and shared by all TRSL-paying entities. This above-the-line approach would require
TRSL to recalculate the net balance remaining of the total required contribution from all TRSL-paying entities, and
develop a lower (than current law) percent of pay contribution for each TRS-participating entity to apply to their covered
payroll.
The effect of the below-the-line approach differs somewhat from the above-the-line approach.
• The below-the-line approach avoids one type of cost-shifting. The MFP-participating entities that are not
participating in TRSL will receive the same MFP payment as under current law. They would have no below-
the-line reduction in their otherwise MFP payment (as in Step 3) because they would not be on the TRSL-
provided itemized list of amounts.
• However, like the above-the-line approach, the below-the-line approach shifts costs from the higher education
institutions to the MFP -participating entities because the proposed bill calls for DOE to pay (out of the MFP
payments) the full 90% amount of the OAB, which under current law i s paid by all TRSL-paying entities,
including higher education. But higher education institutions are also not on the TRSL -provided itemized list of
amount because they are not MFP participating entities.
There may even be other reasonable interpretive variations on this below-the-line approach.
In summary, the proposed bill does not change TRSL benefits; nor does it change the total contributions paid by entities or
received by TRSL. Different interpretations of the proposed bill might be available to those at the DOE and TRSL who
would implement this proposed bill. These different interpretations and approaches would result in some cost -shifting among
MFP-participating entities and TRSL-paying entities.
GASB Accounting and Financial Report
The Governmental Accounting Standards Board (GASB) sets accounting and financial reporting standards for St ate and
Local Governments. Their respective Comprehensive Annual Financial Statements (CAFRs), Official Statements relating to
bond issues and other disclosures must comply with GASB standards in order to be in accordance with Generally Accepted
Accounting Principles (GAAP). 2019 REGULAR SESSION
ACTUARIAL NOTE HB 19
Page 4 of 9
The proposed bill would shift balance sheet liabilities and accounting expenses from the local MFP-participating entities and
all TRSL-paying entities to the State’s financial statement, even though the cash disbursement total is unchanged. Currently,
the State supplies the local MFP-participating entities with funds from which they pay all their expenditures including the
TRSL contribution. In the GASB’s view that makes the balance sheet liability appear on the local entities’ financial
statements. However, under the proposed bill: (a) The State is “legally responsible for making the contributions”, (b) The
State is legally responsible to “make the contributions directly to a pension plan” ( TRSL), and (c) The amount of the
contributions is dependent on circumstances related to the pension plan, i.e., the amount is a percentage (90%) of a portion of
the unfunded liability payment (the OAB amortization payment) required for funding the plan.
These are the markers that satisfy GASB Statement No. 68 (paragraph 15) and cause a portion of the TRSL net pension
liability (balance sheet liability) and pension expense to appear in the State’s financial statements, and cause that portion to
not appear on the school districts’ financial statements. Most of the TRSL balance sheet liability and expense will continue
to appear in the financial statements of the local school districts because they continue to have direct obligations to pay TRSL
the balance due under the proposed bill.
2. Other Post-employment Benefits (OPEB)
The net actuarial cost or savings of the proposed legislation associated with OPEB, including retiree health insurance
premiums, is estimated to be $ 0. The actuary’s analysis is summarized below.
This bill does not change the benefit terms including members’ eligibility for retirement and as such there is no impact on the
future Other Post-employment Benefits.
B. Actuarial Data, Methods and Assumptions
(Prepared by LLA)
Unless indicated otherwise, the actuarial note for the proposed legislation was prepared using actuarial data, methods, and
assumptions as disclosed in the most recent actuarial valuation report adopted by the Public Retirement Systems’ Actuarial Committee (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. With certain exceptions,
the actuary for the LLA finds the assumptions used by the retirement systems and PRSAC to be reasonable.
C. Actuarial Caveat
(Prepared by LLA)
There is nothing in the proposed legislation 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 (annual) costs or savings associated with the retirement systems (Table A) , with
OPEB (Table B), and with other fiscal costs or savings incurred by other government entities (Table C). Fiscal costs or savings in
Table A include benefit-related actuarial costs and administrative costs incurred by the retirement systems. The total effect of HB 19
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 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.
2019 REGULAR SESSION
ACTUARIAL NOTE HB 19
Page 5 of 9
Retirement System Fiscal Cost: T able A EXPENDITURES 2019-20 2020-21 2021-22 2022-23 2023-24 5 Year Total
State General Fund Increase Increase Increase Increase Increase Increase
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 Decrease Decrease Decrease Decrease Decrease Decrease
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
REVENUES 2019-20 2020-21 2021-22 2022-23 2023-24 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
The proposed legislation will have the following effects on retirement related fiscal costs and revenues during the five year
measurement period.
2. Expenditures: Table A presents the effects of the proposed bill on Fiscal Costs relating to the Retirement System.
a. Expenditures for the State General Fund are presented with an increase because, for the first time, it would be obligated
to fund a portion of the TRSL contribution requirement directly to TRSL. This Table A relates to Fiscal Costs for the
next five years that relate to the Retirement System only. So any decrease in the State Fund’s Fiscal Cost due to paying
MFP-participating entities less would be reflected in Tables C and D below.
b. Expenditures from TRSL (Agy Self Generated) are presented as zero because benefits will not change and the minor
expected increase in administrative expenses is negligible.
c. Retirement System expenditures from Local Funds will decrease under HB 19 because employers receiving MFP monies
will contribute less per year to TRSL since the DOE will pay a portion of the required contribution directly to TRSL. So
any increase in the Local Fund’s Fiscal Cost revenues due to the DOE paying some of what was their total TRSL
contribution would be reflected in Tables C and D below.
d. The Annual Total Expenditures is presented as zero because the State and Local Funds, together, will pay the same
amount to TRSL under the proposed law as under the current law.
e. There may be a slight increase in TRSL expenditures to allocate or re- allocate costs to be paid directly by TRSL-paying
entities. However, this increase is so minor that is presented as zero in Table A.
3. Revenues:
a. Revenues to TRSL (Agy Self Generated) are presented as zero because TRSL will collect the same amount in total (form
both State and Local Funds together) under the proposed bill as under the current bill.
b. Revenues to Local Funds are presented as zero because they receive no funds specifically designated or earmarked for
Retirement Systems. So any increase in the Local Fund’s Fiscal Cost revenues due to the DOE paying some of what was
their total TRSL contribution would be reflected in Tables C and D below.
B. Estimated Fiscal Impact – OPEB
(Prepared by LLA)
1. Narrative
Table B shows the estimated fiscal impact of the proposed legislation on actuarial benefit and administrative costs or savings
associated with OPEB and the government entities that sponsor these benefit programs. 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.
2019 REGULAR SESSION
ACTUARIAL NOTE HB 19
Page 6 of 9
OPEB Fiscal Cost: Table B EXPENDITURES 2019-20 2020-21 2021-22 2022-23 2023-24 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 2019-20 2020-21 2021-22 2022-23 2023-24 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
The proposed legislation will have the following effects on OPEB related fiscal costs and revenues during the five year
measurement period.
2. Expenditures:
No measurable effects.
3. Revenues:
No measurable effects.
C. Estimated Fiscal Impact: Other Government Entities (other than the retirement systems or OPEB)
(Prepared by Bradley Cryer, Director of Local Government Services, LLA )
1. Narrative
From time to time, legislation is proposed that has an indirect effect on cash flows associated with other government entities
(other than the retirement systems or OPEB). Table C shows the estimated fiscal impact of the proposed legislation 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 2019-20 2020-21 2021-22 2022-23 2023-24 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 2019-20 2020-21 2021-22 2022-23 2023-24 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
The proposed bill will have the following effects on fiscal costs and revenues related to other government entities during the
five year measurement period.
2. Expenditures:
This bill may result in additional staffing time for local government accountants to address changes in GASB reporting
requirements; however, such additional time would be expected to be absorbed by existing local government staff. The bill
may also slightly increase audit costs based on the potential changes in GASB reporting requirements; however, such
additional costs are not expected to have a direct material effect on local government expenditures.
2019 REGULAR SESSION
ACTUARIAL NOTE HB 19
Page 7 of 9
3. Revenues:
No measurable effects.
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 the proposed legislation 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 2019-20 2020-21 2021-22 2022-23 2023-24 5 Year Total
State General Fund Increase Increase Increase Increase Increase Increase
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 Decrease Decrease Decrease Decrease Decrease Decrease
Annual Total $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
REVENUES 2019-20 2020-21 2021-22 2022-23 2023-24 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
2019 REGULAR SESSION
ACTUARIAL NOTE HB 19
Page 8 of 9
The following tables, narrative and explanations, in Section E below, were prepared by Tanesha Morgan on behalf of the
Legislative Fiscal Office, and intend to present the cost-shifting effect upon the local school districts - not the total net effect of
the bill on all TRSL-paying entities and not the total net effect of the bill on all MFP-participating entities, which net to zero as
described in Section A above.
E. Estimated Fiscal Impact: Other Government Entities (other than the retirement systems or OPEB)
1. Narrative
The proposed legislation requires the Board of Elementary and Secondary Education to annually allocate an amount from the
Minimum Foundation Program (MFP) sufficient to make the annual payment to the Teacher’s Retirement System on behalf
of all employers receiving funds through the MFP formula. The retirement system is required to annually invoice the
Department of Education for an amount equal to 90% of the cost of the mid-year amortization payment on the Original
Amortization Base schedule reflected in the most recent system valuation adopted by the Public Retirement Systems
Actuarial Committee. The Department of Education will transfer the required amount to the retirement system on behalf of
all employers. Each employer that receives formula funds and employs contributing members of the retirement system is
liable for the balance pursuant to R.S. 11:102 to the retirement system. The provisions of this Act will become effective on
July 1, 2019 .
Fiscal Costs for Other Government Entities: Table E
EXPENDITURES 2019-20 2020-2021 2021-2022 2022-2023 2023-24 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 44,100,000 45,000,000 45,900,000 46,800,000 47,700,000 229,500,000
Annual Total $ 44,100,000 $ 45,000,000 $ 45,900,000 $ 46,800,000 $ 47,700,000 $ 229,500,000
REVENUES 2019-20 2020-2021 2021-2022 2022-2023 2023-24 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 19 will have the following effects on fiscal costs and revenues related to other government entities during the five year
measurement period.
2. Expenditures:
This measure is anticipated to increase local school district expenditures by approximately $44.1 M in FY 20 and in future
fiscal years as a result of the school districts paying in excess of their actual OAB liability. This bill provides that 90% of the
Original Amortization Base (OAB) be paid as a lump sum from the Minimum Foundation Program (MFP) prior to each
school district receiving their MFP allocation. The bill does not specify that the school districts would pay 90% of their
portion of OAB. Therefore, this note assumes that they would pay 90% of the total OAB. Historically, the local school
districts have been responsible for paying approximately 75% of the OAB.
Additionally, the bill specifies that Department of Education shall transfer to the retirement system the required amount on
behalf of all employers that receive formula funding, and does not distinguish between TRSL participating and non-
participating charter schools. This will result in 115 non-participating charter schools losing a portion of their MFP funding
to pay for OAB, an expense in which they do not currently incur since they do not participate in TRSL.
3. Revenues:
There is no anticipated direct material effect on governmental revenues as a result of this measure.
2019 REGULAR SESSION
ACTUARIAL NOTE HB 19
Page 9 of 9
Credentials of the Signatory Staff:
James J. Rizzo is a Senior Consultant and Actuary with Gabriel, Roeder, Smith & Company, which is currently serving as the actuary
for the Louisiana Legislative Auditor. He is an Enrolled Actuary, a member of the American Academy of Actuaries, an Associate 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.
Actuarial Disclosure: Risks Associated with Measuring Costs
This Actuarial Note is an actuarial communication, and is required to include certain disclosures in compliance with Actuarial
Standards of Practice (ASOP) No. 51. Risk disclosures otherwise required by ASOP No. 51 do not apply to this Actuarial Note
because the proposed bill does not significantly change the types or levels of risks of the retirement system.
Information Pertaining to Article (10)(29(F) of the Louisiana Constitution
HB 19 contains a retirement system benefit provision having an actuarial cost.
No member of TRSL will receive a larger benefit with the enactment of HB 19 than what he would have received without HB
19.
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 2019 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