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 4
Bill Header: RETIREMENT BENEFITS: Establishes an exception to suspension of retirement benefits for court reporters who are
reemployed by judicial districts or parishes where a critical shortage exists.
Purpose of Bill: Proposed law permits certain retirees of the Parochial Employees’ Retirement System (PERS) to be reemployed in a
position otherwise covered by PERS without the suspension of benefits required under current law.
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 a material impact on the net actuarial present value of expected future benefits and administrative
expenses 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 Increase Increase
Local Government Entities Increase 0
State Government Entities 0 0
Total Increase Increase
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 0 0
Total $ 0 $ 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)”).
Senate Bill 6 SLS 25RS-172 Date: April 7, 2025
Original Organizations Affected: PERS
Author: Abraham
LLA Note SB 6.01 OR SEE ACTUARIAL NOTE FC 2025 REGULAR SESSION
ACTUARIAL NOTE SB 6
Page 2 of 4
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.
Under present law, PERS’ retirees who are re-employed are subject to a reduction of their retirement benefit equivalent to the amount
earned for hours worked in excess of a specified amount.
1. For retirees under age 65 or have been retired less than three years, the hours threshold is 480 hours.
2. For retirees over age 65 and have been retired at least three years, the hours threshold is 1,040 hours.
Proposed law removes the benefit reduction requirement for group 2 above if such a retiree is a) reemployed as a full-time court reporter
and b) a critical shortage of court reporters exist in the employing parish.
Generally speaking, when retirees are permitted to return-to-work without a suspension of retiree benefit payments, participants are
incentivized to retire earlier than they otherwise might knowing they can immediately (or shortly thereafter) return to work and receive
both their retirement benefits and active employment pay. Although a member’s benefit may be slightly smaller when they retire earlier
than otherwise assumed, that benefit is paid over a longer period of time and must be funded over a shorter period of time, which
typically increases both total liability and employer contributions. In addition, if employer contributions to the retirement system are not
required for such reemployed retirees, regardless of whether they accrue additional benefits, employers are incentivized to utilize such
retirees over someone who has not retired and is actively accruing a benefit which shifts costs onto employers who are unable to take
advantage of this arrangement.
In this particular case, the requirement to be retired for at least three years limits the likelihood participant behavior will be impacted
and the limitations making this applicable only to court reporters in parishes where a critical shortage of court reports exists serves to
limit the pool of available retirees and the positions likely to be eligible for this exemption. Proposed law also requires employers who
participate in the reemployment of any retired court reporters pursuant to the proposed statute to pay the actuarial cost in aggregate
attributable to the reemployment of the court reporter in excess of the cost that would have been incurred if the employer had reemployed
the court reporter under current law, as determined by the system’s actuary. Thus, any retired court reporters that are reemployed
pursuant to the proposed statute would likely produce an added expense to their local government entity and an equal increase in revenue
to the retirement system.
All of which significantly limits any impact proposed law could potentially have. Therefore, the expected actuarial impact of proposed
law is minimal. To the extent any of these limitations are loosened in the future, the expected costs and risk to the retirement system
could increase significantly.
II. FISCAL IMPACT ON RETIREMENT SYSTEMS
This section of the actuarial note pertains to annual fiscal costs (savings) associated with the retirement systems.
Some existing retirees who otherwise may receive a reduction in benefits due to their working hours will be eligible to receive their full
benefit payments, increasing PERS annual expenditures. Offsetting the increase in benefit expenditures, the retirement system can expect
to receive annual payments from employers who reemploy court reporters pursuant to the proposed law. However, the pool of available
retirees and the positions likely to be eligible for this exemption appear to be sufficiently small that the proposed legislation is not
expected to be material in a particular year.
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.
N/A - This bill only impacts local government, and therefore, has no state impact. The LFO does not review local government bills.
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.
2025 REGULAR SESSION
ACTUARIAL NOTE SB 6
Page 3 of 4
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
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).
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.
2025 REGULAR SESSION
ACTUARIAL NOTE SB 6
Page 4 of 4
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