1. Home
  2. Legislation
  3. Archive
  4. 3rd Extraordinary Session News #2: Lawmakers propose to pay off a significant amount of retirement debt and direct savings to teacher pay raises
Change Text Size: A A A

3rd Extraordinary Session News #2: Lawmakers propose to pay off a significant amount of retirement debt and direct savings to teacher pay raises

Nov 6, 2024

The third special session called this year by Gov. Jeff Landry began today, focusing on multiple measures related to Louisiana’s tax structure. Two bills have been filed that together would pay off a significant amount of retirement debt and fund teacher and other school personnel pay raises. 

One component of House Bill 7 (Rep. Emerson) proposes to amend the state constitution to allow an additional, one-time payment to the unfunded accrued liability (UAL), which is designed to reduce the employer contribution rate for TRSL-participating employers. House Bill 5 (Rep. Bacala) directs the savings realized from the reduced rate to fund permanent teacher/school personnel pay raises.

Neither of these bills impacts the monthly benefits of TRSL retirees and beneficiaries. Here is information about the UAL and the pay raise proposal: 
  • ​​​​​​​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 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 its 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, a school system would not be required to pay anything in excess of the net savings unless the legislature appropriates funds for this purpose.
  • ​​​​​​​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 allowing 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.
HB 7 has been referred to the House Ways and Means committee chaired by Rep. Julie Emerson, and HB 5 is expected to be referred to the House Education committee chaired by Rep. Laurie Schlegel. TRSL will monitor this legislation and keep you updated when the committees meet to consider the bills. 
​​​​​​​TRSL will keep you informed about the status of retirement-related bills being monitored throughout the special session. You can view all meeting schedules and agendas on the Louisiana State Legislature website. Visit the “Legislation” page of this website, to see any special session legislation impacting the retirement system. Stay tuned for future updates.
Back to Top of Page