• Guide to Constitutional Amendment #3

    Statewide Election on October 14, 2023

In this year’s statewide election on October 14, voters are being asked to consider four amendments to the Louisiana Constitution. Constitutional Amendment #3 on the ballot directly impacts LASERS and the other state retirement systems. LASERS would like to provide information about Constitutional Amendment #3 to our members. 

A joint Letter to the Editor was also distributed to statewide newspapers, which you can view here.

BALLOT LANGUAGE: Do you support an amendment to require that a minimum of 25% of any money designated as nonrecurring state revenue be applied toward the balance of the unfunded accrued liability (UAL) of the state retirement systems?

WHAT’S THE CURRENT SITUATION?

LASERS and the Teachers’ Retirement System of Louisiana (TRSL) are the two largest state public retirement systems. In 2011, voters passed a constitutional amendment that requires 10% of the state’s nonrecurring revenue (surplus dollars) from the prior fiscal year to be appropriated to LASERS and TRSL as additional debt payments on each system’s initial unfunded accrued liability (IUAL). The IUAL is debt that existed for each system as of June 30, 1988, largely because past lawmakers granted benefits without sufficient funding.

The legislature created amortization schedules (annual debt payments) for each retirement system that recognize their IUALs must be paid off by 2029—which they are on track to do. While the state has made the payments necessary to pay off the IUAL for both systems by 2029, there remain other amortization schedules for each system, which are collectively called the UAL. These amortization schedules must be paid off over the next 20 to 30 years.

WHAT WOULD HAPPEN?

If Amendment #3 passes, it would require the legislature to:

  • Increase the amount of nonrecurring revenue to be appropriated from 10% to 25%;
  • Add the Louisiana School Employees’ Retirement System (LSERS) and the Louisiana State Police Retirement System (LSPRS) as recipients of the appropriation;
  • Expand the application of the surplus dollars from just the IUAL (which is set to be paid off in 2029) to include the UAL.

If Amendment #3 fails, the legislature would continue to appropriate 10% of nonrecurring revenue to LASERS and TRSL for application to their IUAL balances. Upon payoff of the IUAL in 2029, the supplemental appropriation under the 2011 constitutional amendment would end.

LASERS BOARD POSITION

The LASERS Board of Trustees supported Act 107 (HB 47) of the 2023 Session and has historically supported additional payments to the UAL. It is the Board’s position that additional funding to debt payments results in positive impacts on the retirement system that are reflected in an increased funded ratio, lower contribution rates for LASERS-participating employers, and savings on interest payments.