Louisiana House Bill HB16

Louisiana 2016 Regular Session

• Introduced: 1/14/16
• Refer: 1/14/16
• Refer: 3/14/16

Caption

Provides for the funding of administrative expenses of the La. School Employees' Retirement System (OR NO IMPACT APV)

Impact

If enacted, HB16 would fundamentally alter the way administrative expenses are treated within the LSERS. Currently, these expenses are included indirectly as part of the anticipated returns on investments, which can obscure actual costs. By implementing a direct charge for administrative expenses, the bill seeks to comply with more accepted actuarial practices, ensuring that employers have a clearer understanding of their financial obligations regarding the retirement system. The effectiveness of this measure hinges on the accurate assessment of future earnings and their implications on employer contributions.

Summary

House Bill 16 (HB16) focuses on the funding of administrative expenses for the Louisiana School Employees' Retirement System (LSERS). The bill proposes the direct recognition of administrative expenses in the calculation of employer contributions, replacing the current indirect method. This change aims to enhance transparency in how administrative costs are accounted for, aligning LSERS with other statewide retirement systems. The bill does not introduce any new benefit provisions, and as per actuarial assessments, it is anticipated to have no fiscal impact, with costs remaining consistent.

Sentiment

The sentiment toward HB16 appears to be generally positive among supporters, particularly those advocating for improved transparency in financial reporting. However, some concerns exist regarding the potential implications on employer contribution requirements as boards may opt to adjust their discount rates. This decision could lead to increased funding demands during periods of financial strain. Overall, the feedback from stakeholders suggests that while the bill is a step forward in accounting practices, its implementation must be carefully managed to avoid unforeseen fiscal pressures.

Contention

One of the notable points of contention surrounding HB16 is its interaction with the current financial practices of LSERS and the historical context of administrative expense treatment under the contemporaneous construction theory. Critics argue that changing the method of expense recognition might lead to complications in how benefits and funding are perceived in the long run. The bill emphasizes compliance with best practice standards, yet the transition from an established indirect method may face resistance from those accustomed to the status quo.