Louisiana House Bill HB25

Louisiana 2020 Regular Session

• Introduced: 1/24/20
• Refer: 5/4/20

Caption

Provides relative to payment of initial unfunded accrued liabilities to the Teachers' Retirement System of Louisiana by the Legislature of Louisiana (OR NO IMPACT APV)

Impact

The impact of HB 25 revolves around how the financial responsibilities for TRSL contributions are allocated. By requiring direct appropriations from the legislature, this bill is designed to offset some funding from local entities that rely on MFP distributions. This may lead to individual cost-shifting among MFP-participating employers, where some may benefit from reduced TRSL contributions while others could face reduced MFP revenues. The proposed changes are unlikely to affect overall retirement benefits but will modify funding flows and could complicate financial reporting requirements for local government entities.

Summary

House Bill 25 mandates that the Louisiana Legislature must appropriate funds to the Teachers' Retirement System of Louisiana (TRSL) on behalf of all employers receiving funds via the minimum foundation program (MFP). The bill specifies that these appropriations should be considered when formulating the MFP formula, potentially shifting the way funds are distributed among participating employers. This measure aims to ensure that the TRSL receives necessary funds for mid-year amortization payments, thereby affecting the budgeting process for local education entities.

Sentiment

The sentiments surrounding HB 25 are mixed, with support from those who believe it will streamline funding processes and bolster the financial health of the state’s retirement system. However, there are concerns about the potential negative implications for local school districts, particularly regarding funding stability and operational budgets. Critics argue that the bill could exacerbate funding disparities between different types of educational institutions, particularly those that do not participate in TRSL but receive MFP funds.

Contention

One notable point of contention is the possible conflict between the need for steady funding to TRSL and the implications of a reduced MFP budget for local education providers. While proponents argue that ensuring funding to TRSL is essential, opponents worry that this approach might lead to funding shortfalls for schools and related entities. Additionally, the requirement for local entities to adjust their budgets and contributions in response to these changes raises concerns about the overall impact on educational resources and services.