2019 REGULAR SESSION
ACTUARIAL NOTE S B 15
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Senate Bill 15 SLS 19RS-101
Original
Author: Senator Long
Date: March 8, 2019
LLA Note SB 15. 01
Organizations Affected:
Louisiana State Employees’
Retirement System
OR 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 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: STATE EMPLOYEE RET. Provides for firefighters at state agencies to be members of the hazardous duty plan.
(6/30/19)
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 Increase
Other Post-employment Benefits (OPEB) Increase
Total Increase
Five Year Net Fiscal Cost Pertaining to: Expenditures Revenues
The Retirement Systems Increase Increase
Other Post-employment Benefits Increase 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 r etirement
benefits to be amortized over a period not to exceed ten years.
Bill Information
Current Law
The Louisiana State Employees’ Retirement System (LASERS) includes a sub-plan for members whose first employment in a
position making them eligible for membership in a state system occurred on or after January 1, 2011, and who are employed in
hazardous duty positions. The benefit multiplier for the Hazardous Duty sub plan is 3 1/3% per year of service, and they can
retire at age 55 with twelve years of service, or with 25 years of service regardless of age.
LASERS also covers Rank and File employees of the state. The benefit multiplier for the Rank and File is 2.5% per year of
service, and members can retire at age 60 with five years of service (age 62 with five years if first employed on or after July 1,
2015).
The employees of the Department of Agriculture and Forestry who respond to wildfires and who qualify as Firefighter Type 2 or
higher according to the National Wildfire Coordinating Group, and were first employed in a position making them eligible for
membership in a state system on or after January 1, 2011 are permitted to be covered by LASERS’ Hazardous Duty sub plan
instead of the Rank and File sub-plan.
Proposed Law
SB 15 relaxes eligibility conditions to qualify for membership in the Hazardous Duty sub-plan by remov ing the requirement that a
member qualify as a Firefighter Type 2 or higher according to the National Wildfire Coordinating Group, and replaces it with the
requirement that the member be trained as a wildland firefighter 2019 REGULAR SESSION
ACTUARIAL NOTE S B 15
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Implications of the Proposed Changes
Not all of the employees of the Department of Agriculture and Forestry who respond to wildfires qualify as Firefighter Type 2 or
higher according to the National Wildfire Coordinating Group. Consequently only some of employees responding to wildfires
meet the eligibility to participate in the Hazardous Duty sub-plan. By changing the requirement to complet ing general wildland
firefighter training, more employees are expected to cease being Rank and File members and become members of the Hazardous
Duty sub-plan. They would be eligible to retire earlier, and will qualify for a larger benefit payable at retirement, or upon
disability or death while in the line of duty.
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 of the proposed legislation associated with the retirement systems is expected to increase. The
actuary’s analysis is summarized below.
The following table compares the major benefit provisions for the Rank and File to the major benefit provisions of the
Hazardous Duty sub plan.
Benefit Provision Rank and File Members* Hazardous Duty Members
Benefit Multiplier 2.5% x service 3 1/3% x service
Normal Retirement Age Age 62 with 5 years of service
Age 55 with 12 years of service, or
Any age with 25 years of service
Line of Duty Disability Benefit
accrued retirement benefit
without actuarial reduction
75% x final average compensation
Employee Contribution Rate 8.0% 9.5%
*Rank and File Members first employed on or after July 1, 2015.
Actuarial costs will increase because benefits provided to firefighter members of LASERS would be larger under the
Hazardous Duty sub-plan than for the Rank and File members.
2. Other Post-employment Benefits (OPEB)
The net actuarial cost of the proposed legislation associated with OPEB, including retiree health insurance premiums, is
expected to increase. The actuary’s analysis is summarized below.
Members who will move from the Rank and File to the Hazardous Duty sub plan can be expected to retire earlier than they
would have otherwise. Therefore, they would collect OPEB benefits sooner and for a longer period of time.
B. Actuarial Data, Methods and Assumptions
(Prepared by LLA)
A detailed review of the actuarial data, methods or assumptions applicable to these retirement systems was not made or required
for the preparation of this Actuarial Note.
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 S B 15
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 2019 REGULAR SESSION
ACTUARIAL NOTE S B 15
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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: T able A EXPENDITURES 2019-20 2020-21 2021-22 2022-23 2023-24 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 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 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 proposed legislation would have the following effects on retirement related fiscal costs and revenues during the five year
measurement period.
2. Expenditures
a. Expenditures from the General Fund would increase because employer contribution requirements would increase, as
eligible Rank and File member transfer. The total contribution requirement will increase: employee contribution
requirements will increase and employer contribution requirements will increase.
b. LASERS’ expenditures will increase because the system would be paying larger benefits under SB 15.
c. LASERS’ expenditures for administration will increase in the first year of the benefit change as it incurs costs for
software modifications to existing computer programs to identify the members specified in the bill and transfer them to
the Hazardous Duty Plan. These costs are negligible and are anticipated to be absorbed through the agency’s existing
budget.
3. Revenues:
LASERS’ revenues (Agy Self-Generated) will increase because employer and employee contribution requirements would
increase.
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 S B 15
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OPEB Fiscal Cost: Table B 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 0 0 0 0 0 0
Annual Total Increase Increase Increase Increase Increase Increase
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 would have the following effects on OPEB related fiscal costs and revenues during the five year
measurement period.
2. Expenditures:
a. Expenditures from the General Fund would increase because some members employed by the Department of Agriculture
and Forestry may retire earlier under SB 15 than under current law and employer -provided insurance premiums for
retirees would increase.
3. Revenues:
a. SB 15 will have no fiscal impact on LASERS relative to OPEB.
C. Estimated Fiscal Impact: Other Government Entities (other than the retirement systems or OPEB)
(Prepared by Tanesha Morgan, Legislative Fiscal Office)
1. Narrative
Present law defines “members” of the Louisiana State Employees’ Retirement System’s (LASERS) Hazardous Duty Plan to
include: certain Department of Wildlife and Fisheries wildlife agents; Louisiana Department of Agriculture and Forestry
(LDAF) who respond to wildfires and who qualify as Firefigh ter Type 2 or higher according to the National Wildfire
Coordinating Group; certain Louisiana State University Health Sciences Center hospital security officers; certain Department
of Public Safety and Corrections employees; employees of the bridge police section of the Crescent City Connection Division
of the Department of Transportation and Development; certain Department of Revenue law enforcement personnel; certain
Department of Culture, Recreation, and Tourism park rangers; certain campus police officers employed by any institution of
postsecondary education; certain investigators employed by the Department of Justice, Office of the State Fire Marshall, and
Office of State Inspector General; and all personnel empl oyed in positions required to be Peace Officer Standards and
Training (POST) certified, who have the power to arrest, who hold a commission as required for employment in such
positions, who are otherwise members of the Louisiana State Employees' Retirement System, and who are not members of
any other retirement system. Proposed law expands this list to include wildlife firefighters trained in accordance with R.S.
3:4276(9).
The drafter of this subsection will present in Table C a five year forecast of cash flows pertaining only to fiscal costs for
other government entities (other than retirement systems or OPEB).
2019 REGULAR SESSION
ACTUARIAL NOTE S B 15
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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 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
Local Funds 0 0 0 0 0 0
Annual Total Increase Increase Increase Increase Increase Increase
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
SB 15 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 retirement expenditures for the Louisiana Department of Agriculture and Forestry
(LDAF). The exact cost is indeterminable at this time. The LFO is working with the LDAF to determine the additional
number of employees that will qualify for participation in the LASERS Hazardous Duty Plan. This note will be updated once
the information is received from the agency.
The projected FY 20 employer contribution rate for the LASERS Hazardous Duty Plan is 41.7%. The projected FY 20
employer contribution rate for the LASERS Rank and File Plan is 40.7%. This measure increases the LDAF’s retirement
expenses for these firefighters by the difference, which is 1.0% based on the firefighters’ salary and the firefighter’s election
to participate into the Hazardous Duty Plan. To the extent that these firefighters’ salaries increase in the fu ture, the
retirement expenses to LDAF will increase proportionally by an additional 1.0%.
Note: This cost is reflected as State General Fund in the table above, but may include other means of financing except local
funds.
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 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.
2019 REGULAR SESSION
ACTUARIAL NOTE S B 15
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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 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 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 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:
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
X
SB 15 contains a retirement system benefit provision having an actuarial cost.
Some members of LASERS will receive a larger benefit and be able to retire earlier with the enactment of SB 15 than without
SB 15.
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