2019 REGULAR SESSION
ACTUARIAL NOTE S B 9
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Senate Bill 9 SLS 19RS-92
Original
Author: Senator Peterson
Date: March 18, 2019
LLA Note S B 9. 01
Organizations Affected:
Louisiana State Employees’
Retirement System
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: STATE EMPLOYEE RET. Removes future employees of the Regional Transit Authority from the system and state
civil service. (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 $0
Other Post-employment Benefits (OPEB) 0
Total $0
Five Year Net Fiscal Cost Pertaining to: Expenditures Revenues
The Retirement Systems Increase Increase
Other Post-employment Benefits 0 0
Other Government Entities 0 0
Total Increase Increase
Bill Information
Current Law
Current law provides that all permanent employees of the Regional Transit Authority (RTA), other than the commissioners, the
secretary, the treasurer, the general counsel, the general manager and his assistant, are classified employees in the state civil
service system and are therefore eligible to participate in the Louisiana State Employees' Retirement System (LASERS).
In addition, full -time employees of the RTA are eligible to participate in LASERS.
Proposed Law
SB 9 p rovides that all employees of the RTA hired on or after July 1, 2019, will not be included in LASERS.
In addition, it provides that the portion of LASERS’ unfunded accrued liability (UAL) existing on June 30, 2019 attributable to
RTA will be determined by the actuary employed by LASERS and will be amortized and paid by RTA to LASERS over ten
years. The amount will be paid in equal monthly payments, in the same manner as regular payroll payments to the retirement
system.
Implications of the Proposed Changes
SB 9 prevents employees of RTA hired on or after July 1, 2019, from becoming members of LASERS, specifies that the actuary
employed by LASERS will determine the portion of the UAL existing on June 30, 2019 and attributable to RTA, and requires that
such amount be paid by RTA to LASERS in equal monthly payments over ten years.
2019 REGULAR SESSION
ACTUARIAL NOTE S B 9
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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 system is estimated to be $0. The
actuary’s analysis is summarized below.
Currently, there are only two employees qualifying as permanent employees of RTA in the state civil service system. These
two employees are members of LASERS, and there are no former RTA employees who have benefits rights: no retirees or
vested terminations. Almost all those who currently provide regional transit services to RTA are employees of a contractor,
not employees of RTA and are not members of LASERS.
The proposed legislation’s closure of LASERS to new RTA employees only affects new employees of RTA, hired on or after
July 1, 2019, not the two current employees whose benefits and rights would not change under this proposed legislation. The
two current RTA employees will continue active membership in LASERS until their ultimate termination or retirement from
RTA employment. Benefits and their payment timing are not being affected by the proposed legislation. With respect to the
current employees, the net actuarial present value of future benefit payments and expenses are unchanged by the proposed
legislation. Furthermore, to the extent that RTA would continue its past practice of employing only a few state civil servant
employees, the proposed legislation would be expected to have no net actuarial cost or savings.
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.
The current liability for post- retirement medical insurance protection provided to retirees is not affected by excluding future
employees of the RTA from membership in LASERS or by requiring RTA to pay a portion of the UAL.
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 SB 9 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 S B 9
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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 $ 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 Increase Increase Increase Increase Increase
Annual Total $ 0 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 will have the following effects on retirement related fiscal costs and revenues during the five year
measurement period.
2. Expenditures:
The State General Fund expenditures are not affected by the proposed legislation. LASERS’ (Agy Self Generated)
expenditures are not affected by the proposed legislation.
The proposed legislation does not change the regular actuarial funding of LASERS, consisting of (a) a normal cost rate paid
by RTA and calculated for the group in which the active RTA employees participate and (b) an amortization payment rate for
financing the unfunded actuarial liability (UAL) that is shared by all LASERS’ participating employers regardless of groups.
Under current law and procedures, the normal cost rate and the shared amortization payment rate are applied to the salary of
the RTA covered employees to determine the dollar amount of the RTA contribution obligation. The amortization payment
rate shared by all LASERS’ participating entities is affected every year by the degree to which the plan’s emerging
experience deviates from the actuarial assumptions. This procedure is not changed by the proposed legislation.
However, the proposed legislation provides for the initial determination (by LASERS’ actuary) of the portion of the total
UAL as of June 30, 2019 attributable to RTA’s employees participating in LASERS, and provides for the payoff by RTA of
that RTA-specific UAL as a flat dollar amount over 10 years.
The 10-year amortization of the RTA-specific UAL would not be equal to the amortization payment embedded in RTA’s
contribution rate under the current law. Whether RTA’s required employer contribution would increase or decrease as a
result of the proposed legislation would depend on the choice of methodologies available to LASERS’ actuary for:
(a) determining the RTA-specific UAL, (b) how the creation of a new RTA -specific UAL would affect the UAL financed by
all other agencies, and (c) whether RTA will continue to pay a share of future actuarial gains and losses. Therefore, with
respect to RTA alone, it will not be known until the next actuarial valuation is performed whether its expenditures would
increase or decrease under the proposed law as compared to the current law .
Regardless of the method employed by LASERS’ actuary, the contribution expenditures to LASERS for all Local Funds as a
whole would be expected to have a slight temporary increase (commencing in the second year and continuing for 10 years)
followed by a slight permanent decrease because a small portion of the total UAL would be amortized over a shorter period
(10 years) than under current law. The changes would have a longer -term balancing effect since the early contribution
increases would be actuarially equivalent to the latter decreases.
3. Revenues:
LASERS’ (Agy Self-Generated) revenues from all participating entities would be expected to increase during the 5 -year
period for the reason cited above.
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 9
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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 $ 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 Tanesha Morgan, Legislative Fiscal Office )
1. Narrative
Proposed law provides that full-time employees of the Regional Transit Authority (RTA) hired on or after July 1, 2019 shall
not be eligible to participate in LASERS and shall not be employed in accordance with the constitutional provisions and rules
and regulations pertaining to classified state service.
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 legislation will have the following effects on fiscal costs and revenues related to other government entities
during the five year measurement period.
2. Expenditures:
There is no anticipated direct material effect on governmental expenditures as a result of this measure. This measure prevents
future RTA employees from participating in LASERS and from being considered as classified state employees.
Note: Currently, no RTA employees are a part of the state classified service system. Two RTA employees are currently active
members of LASERS. They will be able to maintain their membership given the provisions in this bill. 2019 REGULAR SESSION
ACTUARIAL NOTE S B 9
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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.
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 $ 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 Increase Increase Increase Increase Increase
Annual Total $ 0 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.
2019 REGULAR SESSION
ACTUARIAL NOTE S B 9
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Information Pertaining to Article (10)(29(F) of the Louisiana Constitution
SB 9 contains a retirement system benefit provision having an actuarial cost.
No member of LASERS will receive a larger benefit with the enactment of SB 9 than what he would have received without
SB 9.
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