2007 Economic Impact of LASERS

 

 

 

 

-       LASERS Structure & Membership – What is LASERS?

-       Fund Additions – How is LASERS fund supported?

-       Fund Deductions – How does LASERS allocate these funds?

-       LASERS Funded Ratio – How do LASERS fund additions compare to the fund deductions? 

-       Benefit Comparisons – Where are LASERS benefits spent?

-       Cost of Living Adjustments (COLAs) – How/when are COLAs provided to retirees?

-       LASERS Investments – Is LASERS investing in Louisiana?

 

GIVING BACK TO LOUISIANA

 

LASERS

 

·         Pays $569 million in benefits to Louisiana residents

·         Invests $114 million in Louisiana companies

 

LASERS STRUCTURE AND MEMBERSHIP

 

History and Structure

 

·         Established by act of the Louisiana Legislature in 1946

·         Defined benefit plan under Section 401(a) of the Internal Revenue Code

·         Twelve member board comprised of six active members, three retired members, and three ex-officio members oversees the system

·         LASERS total investment assets as of 6/30/2007 is $9.1 billion

 

Mission Statement

 

LASERS will increase member financial security by providing exceptional customer service, increasing the financial soundness of the system, and developing a skilled and high performing team committed to achieving LASERS goals.

 

LASERS Staff

 

·         LASERS has over 130 employees

·         Seventy-five percent of LASERS employees received their education from a Louisiana high school, college, or university

·         LASERS employs 13 interns from Louisiana high schools and universities

·         In 2007, LASERS staff received over 74,550 phone calls and counseled over 5,650 members in person

 

 

 

 

 

 

 

 

 

LASERS Membership (1998-2007)

 

LASERS Membership (as of 6/30/2007) totals 145,587

 

·         38,722 Retirees

·         60,444 Actives

·           2,624 DROP

·         43,797 Inactive

 

LASERS Membership

 

·         Regular State Employees

·         Department of Corrections

·         Department of Wildlife & Fisheries

·         Bridge Police Employees for the Crescent City Connection (DOTD)

·         Members of the Legislature, Governor, and Lieutenant Governor

·         State Treasurer

·         Clerk of the House of Representatives, Secretary of State, and Sergeants-at-Arms of the House and Senate

·         Judges and Court Officers

·         Peace Officers

 

 

 

FUND ADDITIONS

 

LASERS receives funds from the following sources:

 

·   Investment gains

·   Member contributions

·   Optional Retirement Plan (ORP) contributions

·   Legislative appropriations and other[1]

·   Employer contributions

-   Normal Cost

-   Unfunded Accrued Liability (UAL)

 

 

 

LASERS Fund Additions (Four Year Average 2004-2007)

     

 

 

 

 

FUND DEDUCTIONS

 

LASERS utilizes funds for the following expenses:

 

·         Benefit payments

·         Refund of contributions

·         Administrative expenses

 

LASERS Fund Deductions (Four Year Average 2004-2007)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


LASERS FUNDED RATIO

 

The LASERS historical funded status is based on the ratio of assets (fund additions) to liabilities (fund deductions).  LASERS historical funded status is as follows:

 

FYE

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Funded Ratio

71.50%

72.10%

73.20%

72.80%

68.90%

66.00%

59.30%

61.30%

63.90%

66.80%

 

 

LASERS Funded Ratio (1998-2007)

*
 

 

* The Public Retirement Systems’ Actuarial Committee (PRSAC) agreed that the negative Experience Account Balance violated constitutional funding requirements.  This resulted in an increase in the contribution rate and a decrease in the Plan’s funded ratio for the 2004-2005 plan year. 

 

 

 

 

LASERS liabilities include the Unfunded Accrued Liability (UAL).  Each year the employer contribution rate includes payment to the UAL.   The UAL balance has decreased for the second consecutive year since 1998.

 

 

LASERS UAL Balance (1998-2007)

 


BENEFIT COMPARISONS

 

LASERS paid over $711 million in benefits for the 2006-2007 fiscal year.  The average LASERS benefit is as follows:

 

LASERS Benefits as compared to Social Security[2]  and the Poverty Level[3]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


·   2,442 LASERS retirees under age 65 fell under the poverty level as of 6/30/2007

·   5,169 LASERS retirees over age 65 fell under the poverty level as of 6/30/2007

 

Benefits in Louisiana

 

·   Over 80% of LASERS retirees live in Louisiana, resulting in a $569 million economic impact on our state and hometown economies

·   According to a study by the Center for Retirement Research, retirees spend 79% of their before tax income[4]

·   This could result in up to $17.9 million in sales tax for Louisiana (4% state tax rate) if all expenditures were in state

Average Benefit Expenditures in 2006[5]

 

 

COST OF LIVING ADJUSTMENT (COLA)

 

·               A COLA is funded through excess investment earnings which accumulate in the legislatively established Experience Account

·               Those eligible for a COLA are retirees who are at least 55 and have received a benefit for at least one year and certain non-retiree beneficiaries and disability retirees

·               Eligible retirees and beneficiaries received a 3% COLA effective 7/1/2007

·               LASERS Board of Trustees will recommend to the legislature that a 3% COLA be granted effective 7/1/2008

 

 

 

 

LASERS INVESTMENTS

 

LASERS invested over $114 million in Louisiana companies as of 6/30/2007:

 

Louisiana equities

$   26,018,854

Louisiana bonds

$   21,284,525

Louisiana private equity

$   67,291,869

Total

$ 114,595,248

 

 

LASERS invests in a Louisiana-focused Private Equity Fund that generates tax revenue and creates