LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 5 HLS 243ES 7
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: November 25, 2024 11:30 AM Author: BACALA
Dept./Agy.: Education
Subject: Salary increases for teachers and other school employees Analyst: Julie Silva
TEACHERS/SALARY EN GF EX See Note Page 1 of 2
Requires school systems to provide a salary increase for teachers and other school employees using savings attributable to
the state's payment of certain unfunded accrued liability of the Teachers' Retirement System of Louisiana (Item #2)
Proposed legislation codifies provisions in proposed constitutional amendment (currently under consideration by the
legislature as HB 7) and directs public school systems to provide permanent pay increases, and related benefits, for
certificiated and noncertificated employees using any savings realized as a result of the transfer of certain fund balances to
the Teacher’s Retirement System of Louisiana (TRSL) for payment of the system’s total unfunded accrued liability
(IUAL/UAL).
EXPENDITURES 2024-25 2025-26 2026-27 2027-28 2028-29 5 -YEAR TOTAL
State Gen. Fd. $0 INCREASE INCREASE INCREASE INCREASE $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 SEE BELOW SEE BELOW SEE BELOW SEE BELOW $0
Annual Total $0 $0
REVENUES 2024-25 2025-26 2026-27 2027-28 2028-29 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 SEE BELOW SEE BELOW SEE BELOW SEE BELOW $0
Annual Total $0 $0
EXPENDITURE EXPLANATION
The proposed law is anticipated to impact SGF and local fund expenditures, though impacts to local funds will vary by school
system. The proposed statutory changes in this instrument codify provisions in the companion proposed constitutional
amendment directing public school systems to use any savings realized as a result of payments made toward TRSL’s UAL to
provide salary increases for certificated and noncertificated school personnel, beginning in the 2025-2026 school year. As
provided in proposed legislation, “public school systems” means any city, parish, or other local public school board, charter
school, or other elementary or secondary school governing authority that participates in TRSL. Eligibility for the increase
will be limited to certificated and noncertificated personnel in positions included in annual staffing data
submitted to the Louisiana Department of Education (LDOE) personnel data reporting system by October 1st
each year. Proposed legislation includes the function and object codes for such positions.
The proposed constitutional amendment eliminates the Louisiana Quality Education Trust Fund (Permanent Fund), the
Louisiana Education Quality Support Fund (Support Fund), and the Education Excellence Fund (EEF) and directs the Treasury
to transfer the remaining balances in these funds to TRSL for payment of the system’s unfunded accrued liability (UAL). The
FY 25 beginning balances of the Permanent Fund ($1.45 B), the Support Fund ($36 M), and the EEF ($482 M) will result in a
pay down of an estimated $1.96 B of the total UAL. Local education agencies are expected to see a decrease in local fund
expenditures resulting from the transfer of these fund balances to TRSL.
The current UAL balance is $8.1 B, with an expected FY 25 employer contribution payment of $1.1 B. Transfer of the fund
balances will decrease the UAL balance to $6.1 B ($8.1 B - $1.96 B), lowering the FY 25 expected employer contribution
payment to $817 M, a total decrease of $1.96 B in the UAL balance and a $283 M ($1.1 B - $817 M) reduction in employer
contribution payments. Approximately 73% of TRSL’s membership is in the K-12 plan. The impact of the $283 M reduction is
assumed to be distributed proportionately; therefore, the employer contribution for the K-12 plan is projected to decrease by
$207 M ($283 M x 73%), assumed to be a combination of Local Funds and distributions from the MFP.
Continued on Page 2
REVENUE EXPLANATION
Proposed legislation, in conjunction with proposed constitutional amendment, is anticipated to result in a net zero impact to
local fund revenues as any dollars saved due to the reduction of TRSL IUAL payments will instead be expended on
certificated and noncertificated employee pay raises.
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} x 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
13.5.2 >= $500,000 Annual Tax or Fee Patrice Thomas
6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Deputy Fiscal Officer
 LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 5 HLS 243ES 7
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: November 25, 2024 11:30 AM Author: BACALA
Dept./Agy.: Education
Subject: Salary increases for teachers and other school employees Analyst: Julie Silva
CONTINUED EXPLANATION from page one: Page 2 of 2
Proposed law stipulates that the net savings of each school system be used to provide pay raises of at least $2,000 for
certificated personnel and at least $1,000 for noncertificated personnel, plus any associated retirement costs, beginning with
the 2025-2026 school year. If the amount of net savings realized by a school system is in excess of the amount needed to
fully fund the salary increases in the amounts specified, plus any related benefits, the school system is permitted to spend
such savings on only the following: 1) employing personnel that qualify for differentiated compensation allocations in critical
shortage areas; 2) employing personnel for Summer enrichment programs pursuant to R.S. 17:401.11; 3) early childhood
education as authorized by the Cecil J. Picard LA 4 Early Childhood Program, pursuant to R.S. 17:407.26; and 4) school
security enhancements.
If the net savings realized by a school system is insufficient to fully fund the salary increases in the amounts
specified, plus any related benefits, the remaining amount necessary to fully fund the increases shall be
provided for in the MFP formula.
La. Const. Art. 8, Sec. 13 mandates that BESE annually develop and adopt a formula used to determine the cost of, and
equitably allocate the funding for, education in all public elementary and secondary schools. The legislature, prior to its
approval of the formula, may return it to BESE and recommend changes for consideration by the board; however, it may not
amend or alter the formula approved by BESE in any way.
In order for the funding to be included in future MFP formulas, BESE is required to adopt a formula including such a provision
and that formula must subsequently be approved by the legislature. Based on this, the LFO is unable to definitively state
whether this amendment will impact future fiscal year SGF expenditures. Additionally, the amount of excess or deficiency
realized by each school system depends on several variables and actual impacts will not be known until the time the funds
named in HB 7 are fully liquidated, their balances transferred to TRSL, and the retirement contribution rate of TRSL is re-
amortized.
For informational purposes, the Louisiana Department of Education (LDOE), in conjunction with TRSL,
developed a series of simulations to reflect potential shifts in the valuation of the TRSL UAL at the time of
payoff. Based on these, a range of between 4 to 43 participant systems may not realize savings sufficient to
fund pay raises at the mandated amounts, with the total statewide cost for such shortage ranging from $70,000
to $6.2 M. If this funding were to be included in future MFP formulas, it would need to be added in Level 4 and
would result in an increase in SGF expenditures.
Note: LDOE reports there may also be impacts to MFP expenditures due to the change in TRSL contribution
rates effectuated by the proposed constitutional amendment (HB 7). A series of prior year pay raises, provided
by the legislature, are included within the formula. These raises also include payments for applicable retirement
costs, which should also realize an actuarial rate reduction. This would result in an estimated $10 M reduction
in MFP Level 4 costs.
LDOE anticipates the FY 26 rate for K-12 retirement contributions, under current circumstances, will be 20.95%, a reduction
of 0.56% from FY 25. Assuming the proposed constitutional amendment is adopted, LDOE and TRSL expect an additional
reduction of 4.79%, bringing 2025-2026 contribution rates to 16.16%. Based on the simulations provided by LDOE, the
following information summarizes anticipated costs to provide the pay raises and related benefits outlined in proposed
legislation.
Original Pay Stipend Cost (FY 25) with TRSL Employer Contribution of 21.51% $198,954,714
Revised Pay Increase Cost with TRSL Employer Contribution of 16.16% $192,343,146
TRSL Participants (Local Responsibility) $177,763,188
Non-TRSL Participants $14,579,958
Proposed law requires that by December 31, 2025, each school system certify and report, in a manner determined by LDOE,
that it has implemented the permanent salary increase and has expended or has contracted to expend any excess savings
realized. No later than March 1, 2026, LDOE must provide a report detailing this compliance to the Senate Committee on
Education or the House Committee on Education. The LFO assumes any increase in workload due to these requirements can
be absorbed using existing local school system and LDOE resources.
Senate Dual Referral Rules House
x 13.5.1 >= $100,000 Annual Fiscal Cost {S & H} x 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
13.5.2 >= $500,000 Annual Tax or Fee Patrice Thomas
6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} or a Net Fee Decrease {S} Deputy Fiscal Officer