HLS 21RS-306 REENGROSSED
2021 Regular Session
HOUSE BILL NO. 29
BY REPRESENTATIVE JEFFERSON
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
RETIREMENT/FIREFIGHTERS: Provides relative to Firefighters' Retirement System's
Deferred Retirement Option Plan and unfunded accrued liability
1 AN ACT
2To amend and reenact R.S. 11:2252(5), 2257(C) and (K), 2262(D)(2)(b), and 2265(A)(2)
3 and to enact R.S. 11:2262(D)(2)(c) and 2262.1, relative to the Firefighters'
4 Retirement System; to provide for the period of participation within the Deferred
5 Retirement Option Plan; to provide with respect to unfunded accrued liability
6 payments when a fire department is fully or partially dissolved; to provide relative
7 to the assignment of employee contributions to loan repayment; to provide for
8 calculation of benefits; 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. 11:2252(5), 2257(C) and (K), 2262(D)(2)(b), and 2265(A)(2) are
14hereby amended and reenacted and R.S. 11:2262(D)(2)(c) and 2262.1 are hereby enacted to
15read as follows:
16 §2252. Definitions
17 The following words and phrases, as used in this Chapter, unless a different meaning
18is plainly required by context, shall have the following meaning:
19 * * *
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1 (5)(a) "Average Except as provided in Subparagraph (b) of this Paragraph,
2 "average final compensation" shall mean the average annual earned compensation
3 of an employee for any period of thirty-six successive or joined months of service
4 as an employee during which the said earned compensation was the highest. In case
5 of interruption of employment, the thirty-six month period shall be computed by
6 joining employment periods immediately preceding and succeeding the interruption.
7 The earnings to be considered for the thirteenth through the twenty-fourth months
8 shall not exceed one hundred fifteen percent of the earnings for the first through the
9 twelfth months. The earnings to be considered for the final twelve months shall not
10 exceed one hundred fifteen percent of the earnings of the thirteenth through the
11 twenty-fourth months.
12 (b) For any member who elects to participate in the Deferred Retirement
13 Option Plan for longer than thirty-six months pursuant to R.S. 11:2257(C)(2),
14 "average final compensation" shall mean the average annual earned compensation
15 of an employee for any period of sixty successive or joined months of service as an
16 employee during which the earned compensation was the highest. In case of
17 interruption of employment, the sixty-month period shall be computed by joining
18 employment periods immediately preceding and succeeding the interruption. The
19 earning to be considered for the thirteenth through the twenty-fourth months shall
20 not exceed one hundred fifteen percent of the earnings for the first through the
21 twelfth months. The earnings to be considered for the twenty-fifth through the
22 thirty-sixth months shall not exceed one hundred fifteen percent of the earnings for
23 the thirteenth through the twenty-fourth months. The earnings to be considered for
24 the thirty-seventh through the forty-eighth months shall not exceed one hundred
25 fifteen percent of the earnings for the twenty-fifth through the thirty-sixth months.
26 The earnings to be considered for the final twelve months shall not exceed one
27 hundred fifteen percent of the earnings of the thirty-seventh through the forty-eighth
28 months.
29 * * *
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1 §2257. Deferred Retirement Option Plan
2 * * *
3 C.(1) The duration of participation in the plan shall be specified and shall not
4 exceed three years. the following:
5 (a) Three years for any member who has less than thirty years of creditable
6 service.
7 (b) Five years for any member who has at least thirty years of creditable
8 service. A member who chooses to participate in the plan for a period longer than
9 three years shall have all benefits calculated using average final compensation as
10 defined in R.S. 11:2252(5)(b).
11 (2) The decision made by the member regarding the duration of participation
12 plan is irrevocable.
13 * * *
14 K.(1) If employment is not terminated at the end of the period specified for
15 participation, the plan participant shall resume active contributing membership in the
16 system, and upon termination of employment, he shall receive an additional
17 retirement benefit based on his additional service rendered since termination of
18 participation in the fund, using the normal method of computation of benefit,.
19 (2) If the plan participant selects a period of participation that is less than or
20 equal to thirty-six months, the additional benefit is subject to the following:
21 (a) If his period of additional service is less than thirty-six months, the
22 average compensation figure used to calculate the additional benefit shall be that
23 used to calculate his original benefit.
24 (b) If his period of additional service is thirty-six or more months, the
25 average compensation figure used to calculate the additional benefit shall be based
26 on his compensation during the period of additional service.
27 (3) If the plan participant selects a period of participation that is longer than
28 thirty-six months, the additional benefit shall be calculated using a figure for average
29 final compensation as defined by R.S. 11:2252(5)(b).
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1 (c)(4) The optional allowance applied to the additional retirement benefit
2 shall be the same optional allowance selected in accordance with R.S. 11:2259 for
3 the original benefit.
4 (d)(5) In no event shall the additional benefit exceed an amount which, when
5 combined with the original benefit, equals one hundred percent of the average
6 compensation figure used to compute the additional benefit.
7 (2)(6) If the plan participant dies or acquires a disability during the period
8 of additional service, he shall be considered as having retired on the date of death or
9 commencement of disability.
10 * * *
11 §2262. Method of financing
12 * * *
13 D. Pension accumulation fund
14 The pension accumulation fund shall be the fund in which shall be
15 accumulated all reserves for the payment of all pensions and benefits payable from
16 contributions made by employers. Contributions to and payments from the pension
17 accumulation fund shall be made as follows:
18 * * *
19 (2)
20 * * *
21 (b) Reasonable attorney fees and court costs shall be recoverable by the
22 Firefighters' Retirement System:
23 (i) If any amount of delinquent payments under Paragraph (B)(1) of this
24 Section and Paragraph (1) of this Subsection are recovered by action in a court of
25 competent jurisdiction against a political subdivision or instrumentality liable.
26 (ii) In any concursus proceeding instituted pursuant to C.C.P. Art. 4651 et
27 seq., wherein the Firefighters' Retirement System is named as a party.
28 (c) Alternatively, at the request of the Firefighters' Retirement System, and
29 upon due certification of delinquency to the state treasurer, such amounts shall be
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1 deducted from any other monies payable to such subdivision or instrumentality by
2 any department or agency of the state and shall be remitted directly to the
3 Firefighters' Retirement System.
4 * * *
5 §2262.1. Dissolution of fire department; unfunded accrued liability; payment by
6 employer
7 A.(1) If an employer fully dissolves its fire department, the employer shall
8 remit to the system, beginning the first July immediately following the date of
9 dissolution, that portion of the unfunded accrued liability existing on the thirtieth of
10 June immediately prior to the date of dissolution of the fire department that is
11 attributable to such employer and calculated using the allocation percentage included
12 in the prior fiscal year's employer pension report produced according to requirements
13 established by the Governmental Accounting Standards Board. The amount due
14 pursuant to the provisions of this Paragraph shall include interest at the system's
15 valuation interest rate.
16 (2)(a) If an employer partially dissolves its fire department, the employer
17 shall be liable for a pro rata portion of the system's unfunded accrued liability. The
18 portion shall be calculated by applying the percentage decrease in the salaries paid
19 to participating employees by the employer on the thirtieth of June and salaries paid
20 to participating employees by the employer as of the thirtieth of June of the prior
21 year to the total payment that would have been required pursuant to the provisions
22 of Paragraph (1) of this Subsection if the employer had fully dissolved its fire
23 department. Payments required pursuant to the provisions of this Paragraph shall
24 include interest at the system's valuation interest rate.
25 (b) An employer shall be deemed to have partially dissolved its fire
26 department if either of the following occurs:
27 (i) The number of participating employees of the employer as of the thirtieth
28 of June is less than seventy percent of the number of participating employees of the
29 employer on the thirtieth of June of the prior year and either the number of
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1 participating employees decreases by at least three or the number of participating
2 employees is zero.
3 (ii) The number of participating employees of the employer as of the thirtieth
4 of June is at least fifty fewer than the number of participating employees of the
5 employer as of the thirtieth of June of the prior year.
6 B.(1) Any amount due pursuant to Subsection A of this Section shall be
7 determined by the actuary employed by the system and shall be amortized over
8 fifteen years in equal payments with interest at the system's valuation rate. Payments
9 for withdrawals that occur on or after July 1, 2021, shall be payable beginning the
10 first of July of the second fiscal year following the determination by the actuary and
11 in the same manner as regular payroll payments to the system. Beginning on the first
12 of July of the fiscal year following withdrawal, interest shall accrue at the system's
13 actuarial valuation rate, compounded annually.
14 (2) If the number of participating employees of an employer subject to
15 Paragraph (A)(2) of this Section returns to at least the number of participating
16 employees as of the thirtieth of June immediately preceding the withdrawal, the
17 payments required by this Section shall cease on the first of July following the
18 determination by the actuary that a sufficient increase in participating employees has
19 occurred, and no further payments shall be due with respect to the withdrawal. Any
20 payments made pursuant to this Section shall be credited as an offset of any amounts
21 due by the employer attributable to any subsequent withdrawal that occurs within
22 fifteen years of the payments.
23 C. If an employer fails to make a payment timely, the amount due shall be
24 collected in any of the following manners:
25 (1) By action in a court of competent jurisdiction against the delinquent
26 employer. The amount due shall include interest calculated by the system's actuarial
27 valuation rate, compounded annually. The employer shall also be liable for any legal
28 and actuarial fees incurred by the system in the collection of amounts pursuant to this
29 Section.
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1 (2) The board may certify to the state treasurer all amounts attributable to the
2 delinquent employer. In support of such certification, the board shall submit to the
3 treasurer a resolution certifying the name of the delinquent employer, its failure to
4 pay, and the amount owed and shall name a designee or designees to act on the
5 board's behalf. Upon receipt of such certification, the treasurer shall deduct from
6 monies payable to the certified delinquent party the certified amount due and shall
7 remit such deducted amounts directly to the Firefighters' Retirement System.
8 D. For the purposes of this Section, the following terms shall mean:
9 (1) "Participating employee" shall mean an active member or participant in
10 the Deferred Retirement Option Plan.
11 (2) "Withdrawal" shall mean the dissolution or partial dissolution of a fire
12 department as described in Subsection A of this Section.
13 * * *
14 §2265. Assignment of employee contributions; credit union loans
15 A.
16 * * *
17 (2)(a) The member shall authorize the system to deliver or pay the total
18 amount of his accumulated employee contributions to the designated credit union,
19 upon termination or resignation of employment but only if he has less than twelve
20 years of creditable service. If a member who accumulates twelve or more years of
21 creditable service and who, having previously executed a valid assignment of
22 employee contribution, elects to withdraw his accumulated employee contributions,
23 then those contributions may be delivered to the credit union as provided in this
24 Section.
25 (b) Notwithstanding the provisions of Subparagraph (a) of this Paragraph,
26 if a member who has twelve or more years of creditable service and who has
27 executed a valid assignment of employee contributions dies with no person entitled
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1 to survivors' benefits as provided in R.S. 11:2256, his contributions shall be
2 delivered to the credit union as provided in this Section.
3 * * *
4 Section 2. Any person who has at least thirty years of creditable service and who is
5participating in the Deferred Retirement Option Plan on the effective date of this Act may
6extend his participation in the plan up to the five-year period provided for in this Act subject
7to the other provisions of this Act including the average final compensation provisions. His
8benefits shall be recalculated using average final compensation as defined in R.S.
911:2252(5)(b).
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 29 Reengrossed 2021 Regular Session Jefferson
Abstract: Provides for participation within the Firefighters' Retirement System (FRS)
Deferred Retirement Option Plan (DROP) for up to five years and with respect to
payments of the unfunded accrued liability (UAL) should a fire department fully or
partially dissolve.
DROP Participation
Present law provides for participation within DROP for up to three years.
Proposed law provides for DROP participation to not exceed:
(1)Three years for members with less than 30 years of creditable service.
(2)Five years for members with at least 30 years of creditable service.
Proposed law allows a current DROP participant to select a longer participation period as
authorized by proposed law.
Present law provides that FRS benefits are based on a 36-month period when compensation
was highest.
Proposed law retains present law except that the benefits of a person who selects a DROP
period longer than 36 months shall be based on a 60-month period when compensation was
the highest.
Proposed law provides that the selection of a DROP participation period is irrevocable.
Dissolution of Fire Department and UAL Payment
Proposed law provides that if an employer dissolves or partially dissolves its fire department,
then beginning on the first July following the dissolution, the employer shall pay the
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department's portion of the UAL to the system according to the percent included in the prior
fiscal year's employer pension report. Provides the amount due to the system shall include
interest at the system's valuation interest rate.
Proposed law provides that if an employer partially dissolves its fire department, it shall pay
a pro rata portion of the system's UAL.
Proposed law provides that a partially dissolved fire department meet one of the following
criteria:
(1)The number of participating employees of the employer as of June 30 is 70% less
than June 30 of the previous year and either the number of participating employees
decreases by at least three or participating employees is zero.
(2)The number of participating employees of the employer, as of June 30 is at least 50
fewer than the previous year.
Proposed law provides that payments due to the system be determined by the system's
actuary and amortized over 15 years in equal payments.
Proposed law provides that if the number of employees of a partially dissolved employer
returns to the number participating prior to withdrawal, payments will cease and payments
made will be credited as an offset of any amount due by the employer attributable to any
subsequent withdrawal that occurs within 15 years of payment.
Collection of Unpaid Amounts
Present law provides for collection of funds if an employer fails to make payments by either:
(1)Action in a court of competent jurisdiction against the employer. The employer is
responsible for legal fees incurred by the system.
(2)The board of trustees may submit a resolution and certification to the state treasurer
of the name of the delinquent employer and amount owed. The state treasurer shall
deduct monies payable to the employer and remit said monies directly to the system.
Proposed law provides that attorney fees and court costs are recoverable by FRS if
delinquent payments are recovered in court or through a concursus proceeding.
Employee Contributions and Credit Loans
Present law authorizes a member of FRS to assign the accumulated contributions he has
made to the system to a firefighters' credit union in consideration of a loan. If a member
with less than 12 years of creditable service leaves employment, present law requires that
his contributions be paid to the credit union.
Proposed law requires payment of such contributions to the credit union if the member has
12 or more years of creditable service and dies without a survivor who is entitled to benefits.
(Amends R.S. 11:2252(5), 2257(C) and (K), 2262(D)(2)(b), and 2265(A)(2); Adds R.S.
11:2262(D)(2)(c) and 2262.1)
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Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Retirement to the
original bill:
1. Provide that if a member chooses to participate in DROP for more than three
years, his benefits are calculated using a five year final average compensation.
2. Provide that the decision of how long a member participates in DROP is
irrevocable.
3. Provide for recovery of attorney fees and court costs through a concursus
proceeding.
4. Relative to partial department dissolutions where the number of participating
employees is less than 70% of what it was, change the number of employee
positions that must be lost from two to three.
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