In this season of budget woes, there is some good news for state legislators. They wont have to spend as much taxpayer money over the next three decades as originally projected to fund the state’s retirement systems, thanks to better-than-expected progress in reducing the retirement systems unfunded actuarial accruedliability (UAAL).

The state’s retirement systems include Teachers Retirement System of Louisiana, Louisiana State Employees Retirement System, Louisiana State Police Retirement System, and Louisiana School Employees Retirement System. Three of the four state retirement systems have an UAAL. The Louisiana School Employees Retirement System does not have an unfunded liability; rather, it has an over-funded actuarial accrued liability of $202 million.

According to original projections, the three systems with unfunded liabilities were expected to have an $8.3 billion UAAL by June 30, 1998. However, the actual unfunded liability for these systems as of June 30,1998, is $6.1 billion, meaning the UAAL has been reduced by $2.2 billion, or 26 percent. These latest figures demonstrate that the state’s retirement systems are in much better fiscal shape than we expected at this point in our long-term effort to eliminate the UAAL, and thats good news for our employees, retirees and taxpayers.

The improved financial posture iscredited in large part to a whopping $1.903 billion in investment gains above projected returns. The systems also have benefitted from the Texaco litigation settlement by $0.343 billion.

A constitutional amendment passed in 1987 guarantees annual payments to the four state retirement systems sufficient to meet each systems normal costs, plus annual amortization payments to pay off those systems with unfunded liabilities by the year 2029. The original amortization schedule was based on projections from June 30, 1988.

The Public Retirement Systems Actuarial Committee, which is composed of myself, Commissioner of Administration Mark Drennan, Senate President John Hainkel, House Speaker Charles DeWitt, and four actuaries, will recommend to the State Legislature the amount needed to be paid to the retirement systems each year.

The future payment schedule will be revised to reflect the improved financial position of the systems, and the state will have to pay less than originally expected to amortize the UAAL because of the better-than-expected progress at this point.

I invite you to join me in applauding retirement systems directors Patrick Cosper of Louisiana School Employees Retirement System, Glenda Chambers of State Employees Retirement System, Walter Smith of Louisiana State Police Retirement System, and James P. Hadley,Jr., of Teachers Retirement System of Louisiana, for fiscally sound management of their respective systems.