|
|
A special legislative session is underway to possibly make changes to Louisiana’s tax structure. The proposals include paying off a significant amount of retirement debt and directing savings to K-12 teacher pay raises.
In this issue of the Key, we’re breaking down the proposals as they stand now. We’ll also let you know how to get updates on the legislation’s movement. This is a short special session that must end by 6 p.m. on Monday, Nov. 25.
Two bills together would pay off a significant amount of retirement debt and fund teacher and other school personnel pay raises. They are:
- House Bill 7 (Rep. Emerson), which proposes to amend the state constitution to require an additional, one-time payment to the unfunded accrued liability (UAL), which is designed to reduce the employer contribution rate for TRSL-participating employers, and further require that all TRSL-participating employers provide permanent pay raises for teacher/school personnel using the savings. HB 7 also makes a variety of other constitutional changes related to state finances.
- House Bill 5 (Rep. Bacala), which would set the amount of the pay raises provided by HB 7, establish eligibility rules, and provide state funding if the cost of the pay raises exceeds the savings an employer receives from HB 7.
Here are the answers to what are likely your biggest questions:
- What is the unfunded accrued liability (UAL)? The UAL is the debt owed by the state of Louisiana to TRSL. It is made up of multiple debt payment schedules—similar to having multiple payment schedules for multiple mortgages. The state has chosen to pay the UAL through the annual employer contribution rate paid by all TRSL-participating employers as a percentage of total payroll. HB 7 proposes to pay off or nearly pay off the UAL’s two oldest debt payment schedules.
- Where will the funds come from to make the additional, one-time UAL payment? HB 7 would authorize the state treasurer to transfer to TRSL the balance in three educational trust funds created by the constitution: Louisiana Education Quality Trust Fund [8(g)], Louisiana Quality Education Support Fund [8(g)], and Education Excellence Fund (EEF).
- What is the impact of the additional, one-time UAL payment? A large payment toward the UAL, as proposed in HB 7, would result in a reduction in the employer contribution rate beginning with FY 2025-26 (next school year). In other words, TRSL-participating employers would realize recurring savings because of this additional payment.
- What must employers do with the savings (employer contribution rate reduction)? As proposed by HB 5, each public school system would be required to permanently fund pay raises (and related benefits) for their employees using the net savings realized from the reduction in the employer contribution rate, beginning with the 2025-26 school year. The bill mandates permanent pay raises of at least $2,000 for certificated personnel and at least $1,000 for noncertificated personnel to be funded by the net savings realized in the FY 2025-26 employer contribution rate. HB 5 further stipulates that if the net savings do not fully fund the pay raises, the remaining amount necessary to fully fund the salary increase and related benefits must be provided for in the minimum foundation program (MFP) formula.
- What is necessary for the additional UAL payment and permanent pay raises to happen? Aside from passage of both HB 7 and HB 5 during the special session, the pay raise proposed in HB 5 would only become effective if voters approve the constitutional amendment requiring the additional, one-time UAL payment (as proposed in HB 7) in a statewide election to be held March 29, 2025. Essentially, the proposal must be approved by lawmakers and voters.
- Will the additional, one-time payment in this proposal pay off all UAL? UAL will remain and continue to be paid based on the amortization period for each debt schedule. However, the payment as proposed in HB 7, accelerates the payoff of a portion of this debt.
| |
For the seventh consecutive year, employers will see a reduction in the recommended employer contribution rate.
The employer rate continues to decrease even with the addition, last year, of a new component to fund retiree permanent benefit increases (PBIs). Fiscal Year 2025-26 will be the second time the total employer contribution rate has included the account funding rate (AFC) for PBIs.
The recommended contribution rate for K-12 Regular Plan employers (as well as Lunch Plans A & B) is 20.95%, down from 21.51%. For higher education Regular Plan employers, the projected rate is 20.33%, a decrease from 20.88%.
| |
The FY 2025-26 contribution rate will become official upon adoption of TRSL’s FY 2024 actuarial valuation report by the Public Retirement Systems’ Actuarial Committee (PRSAC), which usually meets in December. TRSL will notify employers once the FY 2025-26 contribution rate becomes official.
| |
|
We have a few new resources available to help you address questions from ORP participants about the option to move to the TRSL defined benefit plan. The resources include on-demand webinars and a new FAQs webpage.
| |
|
Finally, ORP participants can reach out to us at www.AskTRSL.org with any additional questions they have.
| |
| | Don't forget these new procedures for ORP participants!
| |
As of July 1, 2024, there are a few new tasks involving monthly salary and contribution files for ORP participants.
| |
Defined Benefit (DB) Files — Regular Plan, Plan A, and/or Plan B
Summary of the changes: Defined benefit monthly salary/contribution files can no longer contain any ORP participants.
What you need to do: Remove ORP participant earnings and contributions from Regular Plan, Plan B, and/or Plan A Monthly Contribution files.
- If you attempt to upload a file to EMIS containing ORP participants, you’ll receive an error report listing the problematic records.
- Please remove each ORP participant from your monthly salary/contribution file and re-upload the corrected file to EMIS.
- Add the removed ORP participants to your ORP monthly salary/contribution file.
Questions? Let us know!
Anthony Zeringue - Active Membership/Reporting Specialist
Sharon Lachney - Employer Audit/Special Projects Supervisor
| |
Defined Contribution (DC) Files — Optional Retirement Plan (ORP)
Summary of the changes: ORP monthly/salary contribution files can no longer contain any TRSL defined benefit plan members.
- If you submit ORP monthly files in EMIS that contain unenrolled participants, you will receive an error report listing the problematic records.
- Please remove each non-enrolled ORP participant from your ORP monthly salary/contribution file and re-upload the corrected file to EMIS.
Questions? Let us know!
Sandra Grisby - ORP/Accountant
| |
Many TRSL employers report summer paychecks (June - August) in the month of June. This can sometimes result in an “Enrolled Not Reported” error on your agency’s monthly Salary Contribution Exception Report. To clear that error, TRSL can do a mass zero posting with your authorization.
Here’s what you need to know:
- For enrolled members with no earnings in the months of June through August, zeroes can be posted (for actual earnings, contributions, and full-time earnings) at any time during the current fiscal year.
- Zeroes can also be posted (for actual earnings and contributions) in the months of September through May.
- Full-time earnings will equal the full-time earnings that were reported by the reporting agency from the previous month.
- For September, if the member was employed by the same reporting agency, the system will look for the full-time earnings that were reported in May of the previous fiscal year.
| |
Mark your calendars for March 2025! Every year, we hold employer training to give you valuable guidance and tips. Here are the dates:
- Tuesday, March 18
- Wednesday, March 19
- Thursday, March 20
More details on next year’s training format and registration information will be provided in January.
| |
Happy birthday to us!!! The Employer Services Department recently celebrated its 10th year anniversary! That means we’re as old as the Apple Watch.
Created in September 2014, the Employer Services Department serves as a one-stop shop for all your TRSL business needs. The department’s mission is to support, educate, and partner with TRSL’s reporting agencies, striving to enhance both the member and employer experience through high quality service, continuous improvement, and innovation.
As always, thank you for your continued partnership. We appreciate all you do for our members – your employees – and enjoy the working relationships we’ve formed over the years.
| |
As part of our ongoing series introducing you to our talented Employer Services Department (ESD) staff, we’re shining the spotlight on one of the bubbliest members of the team!
Meet Quincia Ezejiofo, a Retirement Benefits Analyst at TRSL.
Quincia started working at TRSL in October 2023. She is quick with a cheery hello for her coworkers and enjoys giving back to the education community. Fun fact: With Quincia, TRSL now has three identical twins on staff.
- Job duties: I help employers (school boards, universities, and state agencies) navigate all things TRSL. I assist them in clearing their exceptions, ensure corrections they process are reasonable and assess their prior year/full-time correction costs.
- What drew her to TRSL: Teachers and educational professionals/support staff will always hold a special place in my heart because they are the foremost foundational cornerstone in every society. Everyone has had a teacher at some time in their life. Teachers dedicate their lives to the future. Who wouldn’t want a profession that supports these individuals after they’ve given so much?
- Her favorite part of the job: I love the fact that I learn something new every. single. day. It’s such a blessing to be in a department with so many experienced TRSL veterans. They are all so patient and kind when explaining all the intricate concepts we deal with on a daily basis. I couldn’t be more grateful.
- Another fun fact about Quincia: I feel like everyone already knows that I’m an identical twin, so I’ll choose another fun fact. I can actually juggle! (But only when I’m in a room by myself and no one’s watching. No, but seriously!)
| |
|
|
|
