2011 - Division of Administration - Louisiana

State of Louisianathe unfunded accrued liability as of June 30, 2009, forLASERS and TRSLA, “…shall be consolidated with otheramortization bases and credits as provided in LRS11:102.1, and that consolidated total shall be amortizedover the remaining constitutionally-mandated period withannual payments beginning in fiscal year 2010-2011. Thefinal payment shall be made in fiscal year 2028-2029.”LRS 11:42(B)(10) specifies that the unfunded accruedliability of the LSPRS as of June 30, 1988, be amortizedover a twenty year period, beginning in fiscal year 1989-1990, with level dollar payments annually.LRS 11:62 specifies employee contribution rates each yearfor each system, while LRS 11:102 details the calculationof the employer contribution rate each year for eachsystem.Act 588 of the 2004 Regular Session made significantchanges to prospective funding for LASERS, TRSLA, andLSERS. As a result of the Act, the outstanding balances ofchanges in liabilities prior to 1999 were re-amortized usingthe level dollar method until 2029. The remainingamortization periods for changes in liabilities, beginningwith 1999 through 2003, were extended to a thirty yearperiod from the date of occurrence and amortized as alevel percentage of projected payrolls. Bases establishedafter June 30, 2004, are amortized over a thirty year periodas level dollar payments. In addition, the Act authorizes theLegislature to set employer contribution rates based onspecific criteria but no less than fifteen and one-halfpercent for LASERS and TRSLA. The Employer CreditAccount is credited with contributions from the ActuariallyRequired Contribution rate that is in excess of theminimum rate set by the Legislature.Act 852 of the 2008 Regular session establishes LRS11:102(B)(3)(d)(viii) relative to the amortization periodsand methods of amortizing outstanding balances ofestablished amortization bases established before June30, 2009, for the LSPRS. Effective July 1, 2009, theoutstanding balances of existing increasing bases payablethrough June 30, 2029, are re-amortized as a level dollar.New bases established on and after the effective date willbe amortized over a 30 year period as a level dollar.Act 497 of the 2009 Regular Session provides thateffective July 1, 2010, all LASERS & TRSLA amortizationpayment schedules established on or before July 1, 2008,except those established due to an increase in benefits forPeace Officers, Alcohol Tobacco Control employees andregular employees per Act 262 of 2008, will beconsolidated into two amortization schedules, the OriginalAmortization Base (OAB) and the Experience AccountAmortization Base (EAAB). The OAB will consist of theoutstanding balance of the Initial Unfunded AccruedLiability and schedules with negative outstandingbalances. The outstanding balance of this schedule will becredited with funds from the Initial UAL account, excludingthe subaccount of this fund. For TRSLA, the outstandingbalance of this schedule will also be credited with thebalance of the Employer Credit Account. The Initial UALaccount will be credited interest at 8.25% in fiscal year2009 and 2010.For TRSLA, the OAB payment schedule will increase by7% for 3 years, 6.5% for 4 years, and 2% until paid off infiscal year 2029.For LASERS, the OAB payment schedule will increase by6.5% for 1 year, 5.5% for 4 years, 5% for 2 years, and 2%until paid off in fiscal year 2029.The EAAB will consist of the 2004 schedule and allremaining schedules. The outstanding balance of thisschedule will be credited with the balance of funds fromthe Initial UAL subaccount, which were transferred fromthe Employee Experience Account on June 30, 2009.For TRSLA, the EAAB payment schedule will increase by7% for 3 years, 6.5% for 4 years, then will be level untilpaid off in fiscal year 2040.For LASERS, the EAAB payment schedule will increase by6.5% for 1 year, 5.5% for 4 years, 5% for 2 years, then willbe level until paid off in fiscal year 2040.Act 497 also revises the amortization of contributionvariances. For TRSLA, any overpayment of contributionsreceived from fiscal years 2010 through 2040 will becredited to the EAAB and the EAAB will be re-amortizedaccording to the new payment schedule. For LASERS, anyoverpayment of contributions received through fiscal year2017 will be credited to the OAB and the OAB will be reamortizedaccording to the new payment schedule.Similarly, any overpayment resulting from the statutoryminimum contribution of 15.5% exceeding the actuariallycalculated contribution from fiscal year 2010 through 2040for TRSLA and through 2017 for LASERS, will be creditedto the EAAB and the EAAB will be re-amortized.Additionally, TRSLA’s first $100,000,000 and LASERS’first $50,000,000 of investment gain above the actuariallyassumed investment rate will be used to reduce and reamortizethe OAB. TRSLA’s next $100,000,000 andLASERS’ next $50,000,000 of excess investment returnwill be used to reduce and re-amortize the EAAB. Fiftypercent of any excess return above $200,000,000 forTRSLA and $100,000,000 for LASERS will be credited tothe Employee Experience Account.Act 357 of the 2011 Regular Session became effectivewith passage of an amendment to Constitutional ArticleVII, Section 10(D)(2)(b). It requires a minimum of 5% ofany money designated as nonrecurring revenue in the- 75 -