§102.2. Amortization payment schedules; priority excess return allocations; Teachers' Retirement System of Louisiana

A.(1) For the Teachers' Retirement System of Louisiana, effective for the June 30, 2009, system valuation and with annual payments beginning July 1, 2010, all amortization bases existing on July 1, 2008, shall be consolidated as provided in this Section.

(2) There shall be two consolidated amortization bases calculated and amortized as provided in this Section.

(3) Beginning with Fiscal Year 2008-2009 and for each fiscal year thereafter, that year's changes, gains, and losses shall be calculated and payments therefor determined as provided in R.S. 11:102, except as otherwise specified in this Section.

(4) For purposes of this Section, the following shall apply:

(a) "Primary priority amount" shall mean the maximum amount of system returns in excess of the system's actuarially assumed rate of return that may be applied to the original amortization base, regardless of whether actual returns that equal or exceed the maximum are available, and shall equal:

(i) For the June 30, 2015 valuation, one hundred million dollars.

(ii) For each valuation thereafter, the prior year's primary priority amount increased by the percentage increase in the system's actuarial value of assets for the prior year, if any.

(b) "Primary allocation" shall mean the actual returns available for application to the original amortization base.

(c) "Secondary priority amount" shall mean the maximum amount of system returns in excess of the system's actuarially assumed rate of return that may be applied to the experience account amortization base, regardless of whether actual returns that equal or exceed the maximum are available, and shall equal:

(i) For the June 30, 2015 valuation, one hundred million dollars.

(ii) For each valuation thereafter, before the original amortization base is liquidated, the prior year's secondary priority amount increased by the percentage increase in the system's actuarial value of assets for the prior year, if any.

(iii) For the valuation in which the original amortization base is liquidated, that year's secondary priority amount calculated pursuant to Item (ii) of this Subparagraph plus any money from that year's primary priority amount remaining after liquidation of the original amortization base.

(iv) For the first valuation after the original amortization base is liquidated, the portion of the prior year's primary priority amount that was necessary to liquidate the original amortization base plus the prior year's secondary priority amount, both increased by the percentage increase in the system's actuarial value of assets for the prior year, if any.

(v) For the second valuation after the original amortization base is liquidated and for each valuation thereafter, the prior year's secondary priority amount increased by the percentage increase in the system's actuarial value of assets for the prior year, if any.

(d) "Secondary allocation" shall mean the actual returns available for application to the experience account amortization base.

(e) "Residual priority amount" shall mean the maximum amount of system returns in excess of the system's actuarially assumed rate of return that may be applied to the oldest outstanding positive amortization base after liquidation of the experience account amortization base, regardless of whether actual returns that equal or exceed the maximum are available, and shall equal:

(i) For the valuation in which the experience account amortization base is liquidated, the money from that year's secondary allocation remaining after liquidation of the experience account amortization base, if any.

(ii) For the first valuation after the experience account amortization base is liquidated, the prior year's secondary priority amount, increased by the percentage increase in the system's actuarial value of assets for the prior year, if any.

(iii) For the second valuation after the experience account amortization base is liquidated and for each valuation thereafter, the prior year's residual priority amount increased by the percentage increase in the system's actuarial value of assets for the prior year, if any.

(f) "Residual allocation" shall mean the actual returns available for application to the oldest outstanding positive amortization base after liquidation of the experience account amortization base.

(g) In no event shall the total of one year's priority amounts be less than the total of the previous year's priority amounts.

(h) Notwithstanding the provisions of Subparagraph (i) of this Paragraph, effective for the June thirtieth valuation following the fiscal year in which the system first attains a funded percentage of eighty or more pursuant to R.S. 11:883.1 and for each valuation thereafter, the net remaining liability of the amortization base to which the funds are applied shall be reamortized with annual level-dollar payments calculated as provided in R.S. 11:102 over the remainder of the amortization period originally established for that amortization base.

(i) Beginning with the 2019-2020 Fiscal Year and every fifth fiscal year thereafter, the remaining liability net of all payments made since the last reamortization shall be reamortized over the remainder of the amortization period originally established for that amortization base with annual payments calculated as provided for in this Section.

(j) Except as provided in Subparagraphs (h) and (i) of this Paragraph and in Item (B)(3)(a)(iv) of this Section, the net remaining liability of the amortization base to which the funds are applied shall not be reamortized after such application.

B. Original amortization base.

(1) The remaining balances of outstanding amortization bases for the years 1993 through 1996, 1998 through 2000, and 2005 through 2008, as specified in the June 30, 2008 system valuation adopted by the Public Retirement Systems' Actuarial Committee on February 5, 2009 shall be consolidated into a single amortization base effective for the June 30, 2009 system valuation with payments beginning on July 1, 2010.

(2)(a) To this base shall be applied any monies in the separate fund known alternatively as the "Texaco Account" or the "Initial Unfunded Accrued Liability Account"on June 30, 2010, and any appropriation provided in the 2009 Regular Session of the Legislature. The balance in this account as of June 30, 2008, exclusive of any subaccount balance, shall be credited with interest at the system's actuarially assumed interest rate until the funds in the account are applied as provided in this Subsection.

(b) To this base shall also be applied any monies in the employer credit account on June 30, 2010.

(3)(a) This consolidated amortization base shall be known as the "original amortization base" and shall be amortized with annual payments calculated as follows:

(i) For Fiscal Year 2010-2011, the projected payment shall be the amount specified in the June 30, 2009 system valuation adopted by the Public Retirement Systems' Actuarial Committee pursuant to R.S. 11:127. The actuarially required contribution shall be determined in accordance with the provisions of R.S. 11:102 in the June 30, 2010 system valuation adopted by the committee.

(ii) Payments thereafter shall form an annuity increasing at seven percent annually for three years and at six and one-half percent annually for the following four years.

(iii) Beginning in Fiscal Year 2018-2019, the payments shall be amortized over the remaining period with payments forming an annuity increasing at two percent annually.

(iv) Notwithstanding any provision of this Section to the contrary, the net remaining liability shall be reamortized over the remainder of the amortization period ending in 2029 in the first valuation after Fiscal Year 2019-2020 for which this reamortization results in annual level-dollar payments that do not exceed the payment otherwise required for that valuation.

(b) The first payment shall be made in Fiscal Year 2010-2011 and the final payment shall be made no later than Fiscal Year 2028-2029.

(4) Except as provided in Paragraph (5) of this Subsection, in any year in which the system exceeds its actuarially assumed rate of return, the primary allocation shall be applied to the remaining balance of the original amortization base established in this Subsection.

(5) For the June 30, 2014 valuation, if the system exceeds its actuarially assumed rate of return, the excess returns, up to the first fifty million dollars, shall be applied to the remaining balance of the original amortization base established in this Subsection, without reamortization of such base.

C. Experience account amortization base.

(1) The remaining balances of outstanding amortization bases for the years 1997, 2001 through 2004, and 2008, as specified in the system valuation adopted by the Public Retirement Systems' Actuarial Committee on February 5, 2009, shall be consolidated into a single amortization base, effective for the June 30, 2009 system valuation with payments beginning on July 1, 2010.

(2) To this shall be applied the balance in the experience account or the balance in the subaccount of the Texaco Account created pursuant to R.S. 11:883.1.

(3) This consolidated amortization base shall be known as the "experience account amortization base" and shall be amortized with annual payments over a thirty-year period beginning in Fiscal Year 2010-2011 as follows:

(a) For Fiscal Year 2010-2011, the projected payment shall be the amount specified in the June 30, 2009 system valuation adopted by the Public Retirement Systems' Actuarial Committee pursuant to R.S. 11:127. The actuarially required contribution shall be determined in accordance with the provisions of R.S. 11:102 in the June 30, 2010 system valuation adopted by the committee.

(b) Payments thereafter shall form an annuity increasing at seven percent annually for three years and at six and one-half percent annually for the following four years.

(c) Beginning in Fiscal Year 2018-2019, the outstanding balance shall be amortized over the remaining period with annual level-dollar payments.

(4) Except as provided in Paragraph (6) of this Subsection, in any year before the liquidation of the original amortization base in which the excess returns of the system exceed the primary priority amount, the secondary allocation shall be applied to the experience account amortization base established in this Subsection. In the year in which the original amortization base is liquidated and for each year thereafter until the experience account amortization base is liquidated, the secondary allocation shall be applied to the experience account amortization base.

(5) Notwithstanding the provisions of R.S. 11:102(B)(3)(c) and (5) or any other provision of law to the contrary, in any year from Fiscal Year 2009-2010 through Fiscal Year 2039-2040 in which the system receives an overpayment of employer contributions as determined pursuant to R.S. 11:102(B)(2) and in any year from Fiscal Year 2009-2010 through Fiscal Year 2039-2040 in which the system receives additional contributions pursuant to R.S. 11:102(B)(5), the amount of such overpayment or additional contribution shall be applied to the remaining balance of the experience account amortization base established pursuant to this Subsection.

(6) For the June 30, 2014 valuation, if the excess returns of the system exceed the amount applied to the original amortization base pursuant to Paragraph (B)(5) of this Section, the remaining excess returns, up to the next fifty million dollars, shall be applied to the remaining balance of the experience account amortization base established in this Subsection, without reamortization of such base.

D.(1) If both the original amortization base and the experience account amortization base have been liquidated, the residual allocation shall be applied to the system's oldest outstanding positive amortization base, excluding any liability established pursuant to R.S. 11:102(B)(2)(a) or (3)(c) or (D)(6)(c), until all such bases are completely liquidated. After the final base is completely liquidated, the assets shall be treated as provided in R.S. 11:102(B)(4).

(2) If there are multiple positive bases of the same age and the same duration, all such bases shall be collapsed into a single base for purposes of this Subsection.

(3) If there are multiple positive bases of the same age but of different durations, the oldest outstanding positive amortization base with the shortest remaining amortization period shall be treated as the "oldest" for purposes of this Subsection.

Acts 2009, No. 497, §1, eff. June 30, 2009; Acts 2014, No. 399, §1, eff. June 30, 2014; Acts 2016, No. 95, §1, eff. June 30, 2016.

NOTE: See Acts 2009, No. 497, §2, eff. June 30, 2009, relative to conflicts with previous Acts and §4 relative to affect on contribution rates.