Opinion ID: 1803409
Heading Depth: 1
Heading Rank: 8

Heading: Constitutional Changes

Text: In the late 1980's, Louisiana faced a cash flow crisis brought on, in part, by the worldwide collapse of oil prices and an inability of the state to borrow funds. See Strickland v. State Through Off. Of Gov., 534 So.2d 956 (La.1988). In order to ensure the financial soundness of the state and statewide public retirement systems, the legislature proposed amending the state's constitution regarding retirement and retirement benefits. Pursuant to Acts 1987, No. 947, ง 2, the proposal to add paragraph (E) to La. Const. art. 10, ง 29 was submitted to the electors of the State of Louisiana and was ratified by them on November 21, 1987. See La. Const. art. 10, ง 29, Historical Notes. This section of the state constitution became effective on December 24, 1987. Id. La. Const. art. 10, ง 29(E)(1) requires that the state and statewide retirement systems [22] attain and maintain actuarial soundness and that the legislature establish the particular method of actuarial valuation to be employed by each state and statewide retirement system for doing so. Subsection (E)(2) provides constitutional requirements for public retirement systems whose benefits are guaranteed by the state. [23] Subsection (E)(3) requires that, for all statewide public retirement systems whose benefits are not guaranteed by the state, the legislature must determine all required contributions to be made by members, employers and dedicated taxes for the sound actuarial maintenance of the systems. In addition, this subpart requires the elimination of unfunded accrued liability in these retirement systems by the year 2029, commencing with Fiscal Year 1989-1990. Subsection (E)(4) prohibits the state and the governing authorities of the state and statewide public retirement systems from taking any action that would cause the actuarial present value of expected future expenditures of the retirement system to exceed or further exceed the sum of the current actuarial value of assets and the actuarial present value of expected future contributions to the retirement system, except with respect to normal business operating expenses, capital outlay expenditures, management of investments, and cost of living increases as provided by law. Subsection (E)(5) mandates that all funds of the state and statewide public retirement systems are used for the purposes of the retirement systems and cannot be encumbered or diverted to any other purpose. This subpart prohibits the diminishment or impairment of the accrued benefits of the members of the state and statewide public retirement systems and provides that future benefit provisions shall only be altered by legislative enactment. [24] At the time that Section (E) became effective, the FRS was a state guaranteed retirement system pursuant to La. R.S. 33:2165 (1980).