OFFICE OF LEGISLATIVE AUDITOR
2025 REGULAR SESSION
ACTUARIAL NOTE
This Note has been prepared by the Actuary for the Louisiana
Legislative Auditor (LLA) with assistance from either the Fiscal Notes
staff of the Legislative Auditor or staff of the Legislative Fiscal Office
(LFO). 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.
Kenneth J. “Kenny” Herbold, ASA, EA, MAAA
Director of Actuarial Services
Louisiana Legislative Auditor
Page 1 of 5
Bill Header: RETIREMENT/TEACHERS: Provides relative to the optional retirement plan in the Teachers' Retirement System of
Louisiana
Purpose of Bill:
Proposed law:
1. Provides that an employee can opt-out of participation in the Teachers’ Retirement System of Louisiana (TRSL) at first
employment in a TRSL covered position if they are at least age 60, or at least age 55 and have earned at least forty quarters in
the Social Security system.
2. Expands eligibility for participation in the Optional Retirement Plan (ORP) from only certain employees in higher education
institutions to similar classes of employees in all postsecondary education institutions.
3. Increases the minimum required ORP employer contribution rate from 6.2% to 8.0%.
4. Extends the period during which an active contributing member of the ORP may make an irrevocable election to become a
member of the regular (defined benefit) plan (DBP) of TRSL from five years following the participant’s first employment to
seven years.
5. Establishes a nine-member ORP Advisory Committee which will provide information and feedback on ORP related topics to
the TRSL Board of Trustees as well as provide regular updates to ORP participants.
Summary of Impact
1
: The estimated net actuarial and fiscal impact of the proposed legislation is summarized below.
Proposed law is not expected to have an immediate impact on the net actuarial present value of expected future benefits and
administrative expenses incurred by the retirement system. Over the long term, proposed law is expected to increase the normal cost
rate, and therefore the employer contribution, incurred by the retirement system. A more detailed explanation can be found in Section
I: Actuarial Impact on Retirement Systems.
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.
Net Fiscal Costs pertain to changes to all cash flows over the next five-year period including retirement system cash flows or cash flows
related to local and state government entities.
In the following table, expenditures and revenues include cash flows to or from the affected retirement system (e.g. administrative
expenses incurred by, benefit payments from, or contributions to the retirement system) and do not include administrative expenditures
and revenues specifically incurred by the state or local government entities associated with implementing the legislation. A more detailed
explanation can be found in Section II: Fiscal Impact on Retirement Systems.
Five Year Net Fiscal Costs Pertaining to: Expenditures Revenues
The Retirement Systems $ 0 Increase
Local Government Entities Increase 0
State Government Entities Increase 0
Total Increase $ 0
In the following table, expenditures and revenues include administrative expenditures and revenues specifically incurred by the state or
local government entities associated with implementing the legislation and do not include cash flows to or from the affected retirement
system (i.e. contribution changes included in the above table). This information is provided by the LLA Local Government Services or
the Legislative Fiscal Office. A more detailed explanation can be found in Sections III: Fiscal Impact on Local Government Entities and
Section IV: Fiscal Impact on State Government Entities.
Five Year Net Fiscal Costs Pertaining to: Expenditures Revenues
Local Government Entities $ 0 $ 0
State Government Entities See Section IV 0
Total See Section IV $ 0
1
This is a different assessment from the actuarial cost requiring a 2/3
rd
vote (refer to the section near the end of this Actuarial Note “Information
Pertaining to La. Const. Art. X, §29(F)”).
House Bill 24 HLS 25RS-204 Date: April 8, 2025
Original Organizations Affected: TRSL
Author: Bacala
LLA Note HB 24.01 OR INCREASE FC SG RV 2025 REGULAR SESSION
ACTUARIAL NOTE HB 24
Page 2 of 5
I. ACTUARIAL IMPACT ON RETIREMENT SYSTEMS
This section of the actuarial note is intended to provide a brief outline of the changes in plan provisions and actuarial effect on key
aspects of the affected retirement systems.
Proposed law:
1. Provides that an employee can opt-out of participation in the Teachers’ Retirement System of Louisiana (TRSL) at first
employment in a TRSL covered position if they are at least age 60, or at least age 55 and have earned at least forty quarters in
the Social Security system.
2. Expands eligibility for participation in the Optional Retirement Plan (ORP) from only certain employees in higher education
institutions to similar classes of employees in all postsecondary education institutions.
3. Increases the minimum required ORP employer contribution rate from 6.2% to 8.0%.
4. Extends the period during which an active contributing member of the ORP may make an irrevocable election to become a
member of the regular (defined benefit) plan (DBP) of TRSL from five years following the participant’s first employment to
seven years.
5. Establishes a nine-member ORP Advisory Committee which will provide information and feedback on ORP related topics to
the TRSL Board of Trustees as well as provide regular updates to ORP participants.
Provisions 1 and 2 above are likely to result in a decrease in participation in the TRSL’s DBP in favor of participation in ORP. This may
have the impact of shifting younger, shorter service employees away from the DBP, which could potentially increase the normal cost
rate if the average age and service of a participating member increases. However, any potential impact to the normal cost rate is expected
to be minimal. Further, the total amortization payment, on both a dollar and percent-of-payroll basis, should not be impacted because
the amortization payment is made on the total payroll of participating employers regardless of whether employees are participating in
the DBP or ORP.
Over the long-term, Provision 4 is expected to slightly increase the normal cost rate, and therefore the total employer contribution rate,
for the higher education plan. Tenure for faculty at higher education institutions is most commonly granted approximately 6 years
following initial employment. Extending the period during which someone may elect to participate in the DBP instead of the ORP, from
5 to 7 years provides the opportunity for individuals who have received tenure but originally elected to participate in the ORP to opt
into the DBP on a prospective basis once the tenure decision is known. If this results in more people electing the ORP in the early part
of their career and changing to the DBP once this decision is made, cost would be expected to increase because shorter service employees
that either do not vest, or who vest but otherwise elect to withdraw employee contributions at termination, are generally a net gain to
the retirement system. Further, the older a person is when they first begin participation in the plan, the costlier it is to provide a given
benefit. This occurs, because there is generally a shorter period of time until they reach retirement eligibility and therefore a shorter
period of time over which to fund the benefit. It is expected that moving the option from 5 years (prior to when most people know if
they will receive tenure or not) to 7 years (after the tenure decision is known) will change participant behavior and therefore likely
increase costs, it is not possible to reasonably predict the long-term impact of this change.
Provisions 3 and 5 have no impact on the DBP and therefore no actuarial impact.
The expected net impact of all provisions of proposed law is a slight increase to the normal cost and therefore the employer contribution
rate.
II. FISCAL IMPACT ON RETIREMENT SYSTEMS
This section of the actuarial note pertains to annual fiscal costs (savings) associated with the retirement systems.
Fiscal costs or savings include only cash flows to or from the affected retirement system (e.g. administrative expenses incurred by,
benefit payments from, or contributions to the retirement system) and do not include administrative expenditures and revenues
specifically incurred by the state or local government entities associated with implementing the legislation. 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.
Table A: Retirement System Fiscal Cost
Expenditures 2025-26 2026-27 2027-28 2028-29 2029-30 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 Increase Increase Increase Increase Increase Increase
Annual Total Increase Increase Increase Increase Increase Increase
Revenues 2025-26 2025-26 2025-26 2025-26 2025-26 2025-26
State General Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
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
Changes in employer contributions are reflected in the State General Fund and/or Local Fund expenditure lines above. The actual
sources of funding (e.g., Federal Funds, State General Fund, etc.) may vary by employer and are not differentiated in the table.
2025 REGULAR SESSION
ACTUARIAL NOTE HB 24
Page 3 of 5
The proposed legislation is expected to have the following effects on retirement related fiscal costs and revenues during the five-
year measurement period.
1. Expenditures:
a. TRSL indicated that any administrative costs associated with implementing this change could be absorbed within the
existing budget.
b. For the purpose of employer contributions (State General Fund and Local Funds expenditures), ORP and DBP are
considered as a single entity under TRSL. Outlined below are the total contributions under present and proposed law for
the ORP and the Higher Education subplan of the DBP.
Contribution (as a % of payroll)
ORP
Present Law Proposed Law DBP
Employer ORP Contribution 6.20%
1
8.00% 0.00%
Employer DBP Normal Cost 0.00% 0.00% 3.05%
2,3
Admin Expense Rate 0.00%
4
0.00%
4
0.36%
2
Shared UAL Rate 15.17%
2
15.17%
2
15.17%
2
AFC Rate 0.00% 0.00% 1.75%
2
Total Employer Contribution 21.37% 23.17% 20.33%
Employee Contribution 8.00%
4
8.00%
4
8.00%
1
Statutory minimum required contribution. Higher education boards created by
Article VIII of the Louisiana Constitution can establish the employer
contribution rate above 6.2% by board resolution.
2
Applicable for the 2025-26 FY.
3
Does not account for any change in Employer Normal Cost rate due to changes
in the demographic make-up of the DBP associated with the bill.
4
Administrative expenses of the ORP are currently borne exclusively by
participating employees. Beginning July 1, 2026, the employee portion is limited
to no more than the lesser of 1/2 of the actual fee or 0.5% of pay for the employee,
with the remainder being paid by the employer.
i. For higher education boards where the current ORP contribution rate is less than 8.00%, total contributions will
increase beginning July 1, 2025. Based on an estimated FYE 2024 ORP payroll of $628,800,000, a 1.8% increase in
contribution rate equates to an annual increase of $11,320,000 in employer ORP contributions.
ii. To the extent employees at postsecondary institutions elect to participate in the ORP instead of the DBP, total
contributions would increase.
iii. To the extent some members of the ORP with more than 5 years of service, but less than 7, elect to participate in the
DBP, contributions compared to present law would decrease slightly. However, for individuals who switch to the
DBP, contributions to that individual member’s ORP fund, which are solely for the benefit of that individual, will end,
while contributions to the DBP, which become part of the DBP fund, will begin.
2. Revenues:
Employer contributions to TRSL are represented as Agy Self-Generated revenues in Table A above.
III. FISCAL IMPACT ON LOCAL GOVERNMENT ENTITIES
This section of the actuarial note pertains to annual fiscal costs (savings) related to administrative expenditures and revenue impacts
incurred by local government entities other than those included in Section II.
The proposed legislation is not expected to have any additional effects on fiscal administrative costs and revenues related to local
government entities during the five-year measurement period, other than those outlined above.
IV. FISCAL IMPACT ON STATE GOVERNMENT ENTITIES
(Prepared by Legislative Fiscal Office)
This section of the actuarial note pertains to annual fiscal costs (savings) related to administrative expenditures and revenue impacts
incurred by state government entities other than those included in Section II.
From time to time, legislation is proposed that has an indirect effect on administrative expenditures and revenues associated with state
government entities (other than the impact included in Section II). Table B shows the estimated fiscal administrative cost impact of the
proposed legislation on such state government entities. 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.
2025 REGULAR SESSION
ACTUARIAL NOTE HB 24
Page 4 of 5
Table B: Fiscal Costs for State Government Entities
Expenditures 2025-26 2026-27 2027-28 2028-29 2029-30 5-Year Total
State General Fund See Below See Below See Below See Below See Below See Below
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 2025-26 2026-27 2027-28 2028-29 2029-30 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 state government entities during
the five-year measurement period.
1. Expenditures:
Proposed legislation may result in minimal increase in SGF expenditures associated with travel and lodging reimbursements.
Proposed legislation creates an Optional Retirement Plan Advisory Committee to provide information and feedback to the
Board of Trustees for the Teachers' Retirement System of Louisiana (TRSL). The members of the board shall serve without
compensation; however, board members may receive travel and other reimbursements as permitted in the official state Policy
and Procedure Manual (PPM49) for attending board meetings.
2. Revenues:
There is no anticipated direct material effect on governmental revenues as a result of this measure.
V. ACTUARIAL DISCLOSURES
Intended Use
This actuarial note is based on our understanding of the bill as of the date shown above. It is intended to be used by the legislature during
the current legislative session only and assumes no other legislative changes affecting the funding or benefits of the affected systems,
other than those identified, will be adopted. Other readers of this actuarial note are advised to seek professional guidance as to its content
and interpretation, and not to rely upon this communication without such guidance. The actuarial note, and any referenced documents,
should be read as a whole. Distribution of, or reliance on, only parts of this actuarial note could result in its misuse and may mislead
others. The summary of the impact of the bill included in this actuarial note is for the purposes of an actuarial analysis only, as required
by La. R.S. 24:521, and is not a legal interpretation of the provisions of the bill.
Actuarial Data, Methods and Assumptions
Unless indicated otherwise, this actuarial note 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 assumptions and
methods are reasonable for the purpose of this analysis.
For certain calculations that may be presented herein, we have utilized commercially available valuation software and/or are relying on
proprietary valuation models and related software developed by our actuarial contractor. We made a reasonable attempt to understand the
intended purpose of, general operation of, major sensitivities and dependencies within, and key strengths and limitations of these models.
In our professional judgment, the models have the capability to provide results that are consistent with the purposes of the analysis and have
no material limitations or known weaknesses. Tests were performed to ensure that the model reasonably represents that which is intended
to be modeled.
To the extent that this actuarial note relies on calculations performed by the retirement systems’ actuaries, to the best of our knowledge, no
material biases exist with respect to the data, methods or assumptions used to develop the analysis other than those specifically identified.
We did not audit the information provided, but have reviewed the information for reasonableness and consistency with other information
provided by or for the affected retirement systems.
Conflict of Interest
Some employees of the LLA are members of TRSL, but there is nothing in the proposed legislation that will compromise the signing
actuary’s ability to present an unbiased statement of actuarial opinion.
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.
A full actuarial determination of the retirement system’s costs, actuarially determined contributions and accrued liability require the use
of assumptions regarding future economic and demographic events. The assumptions used to determine the retirement system’s
contribution requirement and accrued liability are summarized in the system’s most recent Actuarial Valuation Report accepted by the
respective retirement board and by the Public Retirement Systems’ Actuarial Committee (PRSAC).
2025 REGULAR SESSION
ACTUARIAL NOTE HB 24
Page 5 of 5
The actual emerging future experience, such as a retirement fund’s future investment returns, may differ from the assumptions. To the
extent that emerging future experience differs from the assumptions, the resulting shortfalls (or gains) must be recognized in future years
by future taxpayers. Future actuarial measurements may also differ significantly from the current measurements due to other factors:
changes in economic or demographic assumptions; increases or decreases expected as part of the natural operation of the methodology
used for these measurements (such as the end of an amortization period; or additional cost or contribution requirements based on the
system’s funded status); and changes in plan provisions or applicable law.
Examples of risk that may reasonably be anticipated to significantly affect the plan’s future financial condition include:
1. Investment risk – actual investment returns may differ from the expected returns (assumptions);
2. Contribution risk – actual contributions may differ from expected future contributions. For example, actual contributions may
not be made in accordance with the plan’s funding policy or material changes may occur in the anticipated number of covered
employees, covered payroll, or other relevant contribution base;
3. Salary and Payroll risk – actual salaries and total payroll may differ from expected, resulting in actual future accrued liability
and contributions differing from expected;
4. Longevity and life expectancy risk – members may live longer or shorter than expected and receive pensions for a period of
time other than assumed;
5. Other demographic risks – members may terminate, retire or become disabled at times or with benefits at rates that differ from
what was assumed, resulting in actual future accrued liability and contributions differing from expected.
The scope of an actuarial note prepared for the Louisiana Legislature does not include an analysis of the potential range of such future
measurements or a quantitative measurement of the future risks of not achieving the assumptions. In certain circumstances, detailed or
quantitative assessments of one or more of these risks as well as various plan maturity measures and historical actuarial measurements
may be requested from the actuary. Additional risk assessments are generally outside the scope of an actuarial note. Additional
assessments may include stress tests, scenario tests, sensitivity tests, stochastic modeling, and a comparison of the present value of
accrued benefits at low-risk discount rates with the actuarial accrued liability.
However, the general cost-effects of emerging experience deviating from assumptions can be known. For example, the investment return
since the most recent actuarial valuation may be less (or more) than the assumed rate, or a cost-of-living adjustment may be more (or
less) than the assumed rate, or life expectancy may be improving (or worsening) compared to what is assumed. In each of these situations,
the cost of the plan can be expected to increase (or decrease).
The use of reasonable assumptions and the timely receipt of the actuarially determined contributions are critical to support the financial
health of the plan. However, employer contributions made at the actuarially determined rate do not necessarily guarantee benefit security.
Certification
Kenneth J. Herbold is an Associate of the Society of Actuaries (ASA), a Member of the American Academy of Actuaries (MAAA), and
an Enrolled Actuary (EA) under the Employees Retirement Income Security Act of 1974. Mr. Herbold meets the US Qualification
Standards necessary to render the actuarial opinion contained herein.
VI. LEGISLATIVE PROCEDURAL ITEMS
Information Pertaining to La. Const. Art. X, §29(F)
☒ This bill contains a retirement system benefit provision having an actuarial cost.
Some members of a retirement system could receive a larger benefit with the enactment of this bill than what they would have
received without this bill.
Dual Referral Relative to Total Fiscal Costs or Total Cash Flows:
The information presented below is based on information contained in Sections II, III, and IV for the first three years following the 2025
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 If an annual General Fund fiscal cost ≥ $100,000, then
dual referred to: bill is dual referred to:
Dual Referral: Senate Finance Dual Referral: 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 If a net fee decrease occurs or is an increase in annual
bill is dual referred to: fees and taxes ≥ $500,000, then bill is dual referred to:
Dual Referral: Revenue and Fiscal Affairs Dual Referral: Ways and Means