Opinion
2013 CA 1300
05-01-2014
THE EAST BATON ROUGE PARISH SCHOOL BOARD, WEST BATON ROUGE PARISH SCHOOL BOARD, ALLEN PARISH SCHOOL BOARD, ASCENSION PARISH SCHOOL BOARD, ASSUMPTION PARISH SCHOOL BOARD, AVOYELLES PARISH SCHOOL BOARD, BEAUREGARD PARISH SCHOOL BOARD, BIENVILLE PARISH SCHOOL BOARD, BOSSIER PARISH SCHOOL BOARD, CADDO PARISH SCHOOL BOARD, CALDWELL PARISH SCHOOL BOARD, CAMERON PARISH SCHOOL BOARD, CATAHOULA PARISH SCHOOL BOARD, DESOTO PARISH SCHOOL BOARD, EAST CARROLL PARISH SCHOOL BOARD, EAST FELICIANA PARISH SCHOOL BOARD, EVANGELINE PARISH SCHOOL BOARD, GRANT PARISH SCHOOL BOARD, JACKSON PARISH SCHOOL BOARD, JEFFERSON PARISH SCHOOL BOARD, JEFFERSON DAVIS PARISH SCHOOL BOARD, LAFOURCHE PARISH SCHOOL BOARD, LINCOLN PARISH SCHOOL BOARD, MADISON PARISH SCHOOL BOARD, MONROE CITY SCHOOL BOARD, NATCHITOCHES PARISH SCHOOL BOARD, OUACHITA PARISH SCHOOL BOARD, PLAQUEMINES PARISH SCHOOL BOARD, POINT COUPEE PARISH SCHOOL BOARD, RAPIDES PARISH SCHOOL BOARD, RED RIVER PARISH SCHOOL BOARD, RICHLAND PARISH SCHOOL BOARD, SABINE PARISH SCHOOL BOARD, ST. CHARLES PARISH SCHOOL BOARD, ST. HELENA PARISH SCHOOL BOARD, ST. JAMES PARISH SCHOOL BOARD, ST. JOHN PARISH SCHOOL BOARD, ST. LANDRY PARISH SCHOOL BOARD, ST. MARTIN PARISH SCHOOL BOARD, TANGIPAHOA PARISH SCHOOL BOARD, TERREBONNE PARISH SCHOOL BOARD, VERNON PARISH SCHOOL BOARD, WASHINGTON PARISH SCHOOL BOARD, WEBSTER PARISH SCHOOL BOARD, WEST CARROLL PARISH SCHOOL BOARD, WEST FELICIANA PARISH SCHOOL BOARD AND WINN PARISH SCHOOL BOARD v. LOUISIANA SCHOOL EMPLOYEES' RETIREMENT SYSTEM
Robert L. Hammonds Franklin V. Endom, Jr. Baton Rouge, Louisiana Counsel for Plaintiffs-Appellants East Baton Rouge Parish School Board, et al. M. Brent Hicks Richard A. Curry Warren D. Ponder Randy P. Zinna Baton Rouge, Louisiana Counsel for Defendant-Appellee Louisiana School Employees' Retirement System
NOT DESIGNATED FOR PUBLICATION
ON APPEAL FROM THE NINETEENTH JUDICIAL DISTRICT COURT
NUMBER 539015, SECTION 26, PARISH OF EAST BATON ROUGE
STATE OF LOUISIANA
HONORABLE KAY BATES, JUDGE
Robert L. Hammonds
Franklin V. Endom, Jr.
Baton Rouge, Louisiana
Counsel for Plaintiffs-Appellants
East Baton Rouge Parish School
Board, et al.
M. Brent Hicks
Richard A. Curry
Warren D. Ponder
Randy P. Zinna
Baton Rouge, Louisiana
Counsel for Defendant-Appellee
Louisiana School Employees'
Retirement System
BEFORE: KUHN, HIGGINBOTHAM, AND THERIOT, JJ.
Disposition: AFFIRMED. KUHN, J.,
The plaintiffs-appellants, The East Baton Rouge Parish School Board, West Baton Rouge Parish School Board, Allen Parish School Board, Ascension Parish School Board, Assumption Parish School Board, Avoyelles Parish School Board, Beauregard Parish School Board, Bienville Parish School Board, Bossier Parish School Board, Caddo Parish School Board, Caldwell Parish School Board, Cameron Parish School Board, Catahoula Parish School Board, Desoto Parish School Board, East Carroll Parish School Board, East Feliciana Parish School Board, Evangeline Parish School Board, Grant Parish School Board, Jackson Parish School Board, Jefferson Parish School Board, Jefferson Davis Parish School Board, Lafourche Parish School Board, Lincoln Parish School Board, Madison Parish School Board, Monroe City School Board, Natchitoches Parish School Board, Ouachita Parish School Board, Plaquemines Parish School Board, Pointe Coupee Parish School Board, Rapides Parish School Board, Red River Parish School Board, Richland Parish School Board, Sabine Parish School Board, St. Charles Parish School Board, St. Helena Parish School Board, St. James Parish School Board, St. John Parish School Board, St. Landry Parish School Board, St. Martin Parish School Board, Tangipahoa Parish School Board, Terrebonne Parish School Board, Vernon Parish School Board, Washington Parish School Board, Webster Parish School Board, West Carroll Parish School Board, West Feliciana Parish School Board and Winn Parish School Board (forty-seven school boards from around the State of Louisiana hereinafter referred to collectively as "the plaintiffs"), appeal the following judgments rendered by the trial court in favor of defendant-appellee, the Louisiana State Employees' Retirement System (hereinafter referred to as "LSERS"): 1) the June 20, 2011 judgment denying plaintiffs' Motion for Summary Judgment and; 2) the April 22, 2013 judgment granting LSERS' Motion for Summary Judgment and dismissing the plaintiffs' suit. For the following reasons, we affirm. The plaintiffs listed these rulings as their only assignments of error without further specificity.
FACTUAL AND PROCEDURAL BACKGROUND
The plaintiffs' claim against LSERS boils down to one complaint, which is that the plaintiffs object to being required to pay to LSERS the employers' portion of the retirement contributions made on behalf of plaintiffs' employees. Instead, plaintiffs contend that it is the obligation of the State to make the required contributions to LSERS.
The plaintiffs acknowledge that LSERS has operated for many years, including a number of years prior to the time the plaintiffs filed their original petition in 2005, by receiving contributions from employees at rates set by statute and contributions from the plaintiffs' to cover the "normal cost" of operating LSERS and the cost of the unfunded accrued liability ("UAL") to be amortized over a number of years. However, the employee share of the contribution to LSERS has never been an issue at any point in this litigation.
On December 19, 2005, the plaintiffs filed a "Petition for Declaratory and Injunctive Relief in which they prayed for the following relief:
(1) A declaratory judgment that it is a violation of La. Const. art. 10, §29(E) for LSERS to demand and to collect from the public school boards of the State, rather than the State of Louisiana itself, the employer's portion of retirement contributions to LSERS which is "beyond the level of funding (if any) provided by the State of Louisiana in that fiscal year for such costs," and for appropriate injunctive relief;
(2) A declaratory judgment that it is a violation of La. R.S. 11:1193, 1194, 1196, and/or 1203 for LSERS to demand and to collect from the public school boards of the State, including the plaintiffs, any funds to pay any portion of the employer's share of contributions to LSERS beyond the level of funding (if any) provided by the State of Louisiana in that fiscal year for such costs and for appropriate injunctive relief.
(3) A declaratory judgment that it is a violation of La. R.S. 11:102(B)(1) for LSERS to collect or to attempt to collect from the public school boards the actuarially required employer contribution until such time as the rate of that contribution has been set by the legislature and for appropriate injunctive relief.
On January 26, 2006, the plaintiffs filed a motion for summary judgment praying for all the relief requested in their original petition as set forth above. Following a hearing held on February 14, 2011, the trial court signed a judgment on June 20, 2011, denying the plaintiffs' Motion for Summary Judgment as well as the plaintiffs' Expedited Motion to Strike Affidavits. The trial court also issued written reasons for judgment in which it concluded that genuine issues of material fact existed "concerning whether the legislature has provided an amount necessary to fund the employers' contribution...."
On June 21, 2011, LSERS filed a Motion for Summary Judgment. The trial court subsequently permitted the plaintiffs to file a Supplemental Petition adding allegations concerning Minimum Foundation Program funding and the expenses to be borne by the plaintiffs. On April 8, 2013, the trial court held a hearing on LSERS' Motion for Summary Judgment pursuant to which it signed a final judgment on April 22, 2013, granting LSERS' Motion for Summary Judgment and dismissing the plaintiffs' suit at their cost. This timely appeal by the plaintiffs followed.
STANDARD OF REVIEW
Appellate courts review the grant or denial of a motion for summary judgment de novo. Independent Fire Insurance Company v. Sunbeam Corporation, 99-2181, 99-2257 (La. 2/29/00), 755 So.2d 226, 230. In conducting this review, appellate courts do so under the same criteria used by the district court which determined that summary judgment was appropriate. Smith v. Terrebonne Parish Consolidated Government, 02-1423 (La. App. 1st Cir. 7/2/03), 858 So.2d 671, 673. A motion for summary judgment will be granted if the pleadings, depositions, answers to interrogatories, and admissions, together with the affidavits, if any, show that there is no genuine issue as to material fact, and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966(B)(2); Independent Fire Insurance Company, 755 So.2d at 230-231. A fact is material if it potentially insures or precludes recovery, affects a litigant's ultimate success, or determines the outcome of the legal dispute. Hines v. Garrett, 04-0806 (La. 6/25/04), 876 So.2d 764, 765 (per curiam); Anglin v. Anglin, 05-1233 (La. App. 1st Cir. 6/9/06), 938 So.2d 766, 769.
The summary judgment procedure is designed to secure the just, speedy, and inexpensive determination of every action. The procedure is favored and shall be construed to accomplish these ends. La. C.C.P. art. 966(A)(2); Independent Fire Insurance Company, 755 So.2d at 231. Nevertheless, despite the legislative mandate that summary judgments are favored, factual inferences reasonably drawn from the evidence must be construed in favor of the party opposing the motion, and all doubt must be resolved in the opponent's favor. Willis v. Medders, 00-2507 (La. 12/8/00), 775 So.2d 1049, 1050 (per curiam).
Louisiana Code of Civil Procedure article 966(C)(2) provides that:
The burden of proof remains with the movant. However, if the movant will not bear the burden of proof at trial on the matter that is before the court on the motion for summary judgment, the movant's burden on the motion does not require him to negate all essential elements of the adverse party's claim, action, or defense, but rather to point out to the court that there is an absence of factual support for one or more elements essential to the adverse party's claim, action, or defense. Thereafter, if the adverse party fails to produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial, there is no genuine issue of material fact.
ANALYSIS
I. The plaintiffs have failed to show the existence of a genuine issue of material fact regarding whether the legislature appropriated the required pension funding through the Minimum Foundation Program block grants.
The main issue in this case is the plaintiffs' assertion that they should not be required to pay the employers' share of the pension contribution to LSERS that is needed to fund the "normal" cost and the unfunded accrued liability (UAL) of the plaintiffs' employee pensions. Instead, the plaintiffs argue that it is both the constitutionally and statutorily mandated obligation of the legislature to order the payment of both the normal cost and the UAL from the State treasury to LSERS. LSERS counters that the legislature does, in fact, fund the employers' share of the necessary contribution to LSERS as part of the in globo Minimum Foundation Program ("MFP") block grants made by the State to each of the plaintiffs annually.
In response to the plaintiffs' request for admissions of fact, LSERS admitted that the "normal" cost "is the annual cost to provide an additional year of benefit accrual" and that the UAL "is that portion of the actuarial accrued liability not funded by the LSERS' funding assets on the valuation date[.]"
We note that the State of Louisiana is not a named party to this suit and that no party has raised any objection to the failure to name the State as a party.
The MFP was created to provide funding for education-related obligations, and MFP funds are appropriated as a separate and distinct line item in the state budget. See Louisiana Federation of Teachers v. State, 13-0120, 12-0232, 13-0350 (La. 5/7/13), 118 So.3d 1033, 1037-38. This Court had occasion in Charlet v. Legislature of State of Louisiana, 97-0212 (La. App. 1st Cir. 6/29/98), 713 So.2d 1199, 1206-07, writ denied, 98-2023 (La. 11/13/98), 730 So.3d 934, to address the MFP process, stating:
This process allows the State the flexibility it needs to fund the public education system, while still accommodating the many other demands on state funds. The goals of the public educational system are clearly stated in the Preamble to Article VIII of the Constitution, and the mechanism for attaining those goals is set out in Section 13. Therefore, to support their motion for summary judgment, the defendants must only establish that they have followed the prescribed mechanism in a conscientious and meaningful attempt to meet the stated goals.
The defendants have done this. Ms. Langley's affidavit stated that the MFP formula adopted by BESE and approved by the legislature has been funded by legislative appropriation each year since 1992 at a level sufficient to fund a minimum foundation program of education as determined by the formula in effect each given year, as required by [La. Const. art. 8,] Section 13(B). The MFP formula also takes into account the expense of providing school books and instructional materials. [Emphasis added.]
In Charlet, on remand from the Supreme Court, this Court reversed the trial court's denial of the defendant's motion for summary judgment and rendered summary judgment in favor of the defendant. This Court held that the State's method of funding the public schools through the MFP did not violate the Louisiana Constitution, concluding that:
These facts, and the many others provided by the defendants in support of their motion for summary judgment, establish that the defendants are complying with the constitutional mandate in good faith. The problems detailed in the numerous affidavits provided by the plaintiffs are not material to a determination of whether the State is in compliance with the requirements of Article VIII. The Louisiana Constitution does not require that the educational funding provided by the state be "adequate" or "sufficient," or that it achieve some measurable result for each pupil or each school district. Article VIII, Section 13(B) requires only that BESE annually develop and adopt a formula; this is being done.Charlet, 713 So.2d at 1207.
Louisiana Constitution article 8, § 13(B) provides with respect to the MFP that:
The State Board of Elementary and Secondary Education, or its successor, shall annually develop and adopt a formula which shall be used to determine the cost of a minimum foundation program of education in all public elementary and secondary schools as well as to equitably allocate the funds to parish and city school systems. Such formula shall provide for a contribution by every city and parish school system. Prior to approval of the formula by the legislature, the legislature may return the formula adopted by the board to the board and may recommend to the board an amended formula for consideration by the board and submission to the legislature for approval. The legislature shall annually appropriate funds sufficient to fully fund the current cost to the state of such a program as determined by applying the approved formula in order to insure a minimum foundation of education in all public elementary and secondary schools. Neither the governor nor the legislature may reduce such appropriation, except that the governor may reduce such appropriation using means provided in the act containing the appropriation provided that any such reduction is consented to in writing by two-thirds of the elected members of each house of the legislature. The funds appropriated shall be equitably allocated to parish and city school systems according to the formula as adopted by the State Board of Elementary and Secondary Education, or its successor, and approved by the legislature prior to making the appropriation. Whenever the legislature fails to approve the formula most recently adopted by the board, or its successor, the last formula adopted by the board, or its successor, and approved by the legislature shall be used for the determination of the cost of the minimum foundation program and for the allocation of funds appropriated. [Emphasis added.]
Most recently, this Court had the opportunity to address retirement funding through the MFP in Pointe Coupee Parish School Board v. Louisiana School Employee's Retirement System, 13-1100, 13-1101, 13-1102 (La. App. 1st Cir. 2/14/14), ___ So.3d ___. As this Court discussed in that case:
Article 8, § 13(B) dictates specific and unique procedures for educational expenditures made through the MFP. The MFP formula originates with the State Board of Elementary and Secondary Education and is approved by the legislature. La. Const. Art. 8, § 13(B). Once approved, the legislature is required to fully fund the current cost to the state of such a program as determined by applying the approved formula. Id. The funding is accomplished via concurrent resolution and appropriated through a bill passed by both houses of the legislature. La. Const. Art. 8, § 13(B); see also La. Fed'n of Teachers v. State, 2013-0120, p. 15 (La. 5/7/13), 118 So.3d 1033, 1044 citing Joint Rules of the Louisiana Senate and House, Rule No. 20(A)(1)(b)(iii). Once appropriated, MFP funds are available for allocation or distribution to the school systems. La. Const. Art. 8, § 13(B).Pointe Coupee Parish School Board, 13-1100 at pp. 8-9. [Emphasis added.]
In light of the detailed funding and apportionment provisions of La. Const. Art. 8, §13, it is clear that the MFP funds are appropriated by the legislature and are then available for allocation or distribution to the school systems....
Also, we reject the school boards' arguments that LSERS' invocation of La. R.S. 11:1202 violates La. Const. Art. 8, § 13(B) by diverting MFP funds from their intended use. Retirement funds are a fundamental component in the cost of public education. The MFP formula includes an allowance for the support of increased mandated costs in retirement. See S. Con. Res. No. 99, La. 2012 Reg. Sess. Section IV(E) of the current MFP formula is entitled "Support for Increasing Mandated Costs in Health Insurance, Retirement, and Fuel," and states that "[c]ity, parish, and other local public school systems shall receive a minimum of $100.00 for each student in the prior year February 1 membership." Id. The provisions of La. Const. Art. 8, §13, which require that MFP funds be used for a minimum foundation program of education, are not violated where the funds are being used for their intended purpose, which includes the retirement costs of school employees. We, therefore, find that the school boards have failed to satisfy the burden of proof to show that La. R.S. 11:1202 violates La. Const. Art. 8, §13.
With respect to this case, the most significant part of this Court's discussion of the MFP in Pointe Coupee Parish School Board is the finding that: "[I]t is clear that the MFP funds are appropriated by the legislature."
In the instant case, LSERS submitted the affidavit of Beth Scioneaux, Deputy Superintendent of the Office of Management and Finance for the Louisiana Department of Education ("LDOE") since 2006, who supervises the allocation of state and federal education dollars. Previously, from 1998-2006, she was the Director of Education Finance, in which capacity she supervised the development and analysis of the Minimum Foundation Program of Education ("MFP"). The plaintiffs contest neither Ms. Scioneaux's competency nor her qualifications to testify to the matters set forth in her affidavit. She explained in her affidavit that the majority of funding for the state's elementary and secondary schools (including those that fall under the jurisdiction of the plaintiffs) come from the MFP. There are also other funding sources, including federal funds, local sales and ad valorem taxes.
Ms. Scioneaux averred that from 1992-1996 the MFP formula was based on the actual costs incurred in the school districts, including the school districts' contributions to LSERS paid to and on behalf of school district employees. The individual school districts completed a form setting forth each district's actual costs, including the employer's retirement contributions to LSERS. However, after 1996, the LDOE no longer collected actual line item data from each school district. Instead, the MFP formula increased by a fixed percentage lump sum every year, which is still intended to cover the same categories of funding as were previously covered when it was based on an item by item breakdown of components of school district expenses.
LSERS also submitted an affidavit from James A. Richardson (Ph.D.), the John Rhea Alumni Professor of Economics, the Harris J. and Marie C. Chustz Distinguished Professor in Business Administration, and Director of the Public Administration Institute at Louisiana State University. The plaintiffs have challenged neither his competency nor his qualifications as an expert. Dr. Richardson explained the MFP funding process and attested to the fact that MFP funding had increased from approximately 1.4 billion dollars for the 1999-2000 school year to more than 2.1 billion dollars for the 2009-2010 school year, representing an increase in funding of approximately 50%. The amounts the plaintiffs are called upon to pay out of these funds to fund the employer normal cost and UAL are dwarfed by the magnitude of the MFP block grants. Additionally, public school enrollments in Louisiana declined during that same period by 9.5%.
Dr. Richardson further attested to the fact that this MFP funding represented 35% of all general funds available to the legislature to appropriate for general state expenditures. The plaintiffs have offered nothing to contradict these facts and others attested to by Dr. Richardson. Thus, we find that there is no inadequacy of MFP funding. Consequently, the issue then becomes one not so much of the adequacy of the MFP funding, but one of whether the use of the MFP as the funding mechanism under the facts of this case was technically in compliance with applicable constitutional and statutory provisions.
This is very similar to Dr. Richardson's affidavit in Charlet wherein this Court noted that:
The affidavit of Dr. James A. Richardson, an economic consultant to the state of Louisiana, summarized the funding of public elementary and secondary education in Louisiana and made various comparisons to funding levels in other southern states. His data reflects that the money paid by the State is hardly a pittance; for 1996-97, the State budgeted $1.975 billion for distribution to the local school districts through the MFP, plus $100.4 million to be distributed for various specific programs. This amounted to 38.7% of all funds available to the legislature to appropriate in 1996-97 to meet all state obligations. Since 1987-88, MFP funding has grown by 59.8%, whereas the total state general funds available increased by only 40%. These facts demonstrate that the state's commitment to public education has grown in real terms, and as a percentage of available funds.Charlet, 713 So.2d at 1207.
While prior to Pointe Coupee Parish School Board there was really no jurisprudence bearing directly on the question of whether undifferentiated MFP funds satisfy the constitutional and statutory burden placed upon the State to fund these pension costs, there are a number of statutes and provisions found in the Louisiana Constitution that concern pension contributions and some limited, but controlling, jurisprudence clearly indicating that the legislature is required by law to approve and fund the necessary pension contributions.
Louisiana Constitution article 10, § 29(E)(2) states as follows:
(E) Actuarial Soundness.[Emphasis added.]
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(2) For public retirement systems whose benefits are guaranteed by this constitution as is specified in Paragraphs (A) and (B) of this Section:
(a) The legislature shall, by law, determine and set all required contributions to be made by members. However, until the unfunded accrued liability referenced in (c) below is eliminated, this determination and setting shall not cause the ratio of employee contributions to total contributions, on the basis of each particular plan or classification within each particular retirement system, to exceed such ratio as it existed on January 1, 1987. Upon elimination of the unfunded accrued liability referenced in (c) below, this determination and setting shall not cause a member's contribution to exceed an amount contributed on his behalf as an employer contribution.
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(d) Amounts provided for under (b) and (c) above are hereby guaranteed payable, each fiscal year, to each retirement system covered herein. If, for any fiscal year, the legislature fails to provide these guaranteed payments, upon warrant of the governing authority of the retirement system, following the close of said fiscal year, the state treasurer shall pay the amount guaranteed directly from the state general fund.
The plaintiffs argue that the highlighted language in La. Const. art. 10, § 29(E)(2)(a), if applicable, requires the legislature to specifically "determine and set" the level of contributions made to LSERS and that it is not sufficient just to contribute in the form of a lump sum contribution an unspecified amount as an undifferentiated part of an in globo MFP block grant, regardless of how adequate the grant of funds arguably might be. In other words, the plaintiffs present an argument to the effect that even if it can be shown that the MFP block grants are intended to cover the pension contributions to LSERS required of the plaintiffs, and in fact do so, the plaintiffs cannot be required to use those funds for that purpose because the legislature failed to perform its constitutionally mandated duty to "determine and set" the amount of those funds. The plaintiffs' position may be summed up with this statement found in their brief:
[The] fact that there are claimed ample funds in the allocations to the school boards is immaterial. The legislature must "appropriate funds for the purpose."
If the plaintiffs are correct, they would be entitled to have the legislature make an appropriation of those funds in addition to what they have already received in the way of MFP funding. The plaintiffs further contend that instead of LSERS trying to collect the pension contributions from them, it is incumbent upon LSERS to issue a warrant in that amount to the state treasurer for payment pursuant to La. Const. art. 10, § 29(E)(2)(d).
LSERS argues that the requirement that the contribution rate be set by the legislature has been satisfied in accordance with the procedure set forth in the "Supplemental Affidavit" of Charles G. Hall, president of Hall Actuarial Associates, consulting actuaries to LSERS since 1987. The plaintiffs challenge neither Mr. Hall's qualifications nor his competency concerning the matters set forth in his affidavit. Among the duties of Hall Actuarial Associates is the preparation of an annual valuation report. That report includes a determination of the necessary employer and employee contributions and the basis for same. Also included is a statement of the annual contributions, expressed both in a dollar amount and as a percentage of salaries, needed to liquidate the UAL. The actuary certifies the correctness of the report.
At the time of executing the affidavit, Mr. Hall was a voting member of the Public Retirement Systems' Actuarial Committee (PRSAC). He serves as the voting PRSAC actuary representing the State retirement systems pursuant to La. R.S. 11:122(4). He explained that:
As LSERS consulting actuary, I submit annual actuarial valuations of the system to PRSAC. La. R.S. 11:127(C). In making this valuation, I collect financial data from employees participating in the retirement system. . . . , recommending what the employer contribution rate should be and presents [sic] this estimate to LSERS Board of Trustee[s].
Mr. Hall computes the "Actuarially Required Employer Contribution" in accordance with La. R.S. 11:102(B)(2) , which encompasses LSERS' estimated normal costs, amortized portions of any existing unfunded accrued liabilities, and amortized portions of shortfalls or credits from prior years. The plaintiffs do not contest the fact that the calculations of the contributions rates are consistent with the statutorily mandated formula.
Louisiana Constitution article 10, § 29 (E)(1) requires actuarial soundness, but confers upon the legislature the power to fix the formula:
The actuarial soundness of state and statewide retirement systems shall be attained and maintained and the legislature shall establish, by law, for each state or statewide retirement system, the particular method of actuarial valuation to be employed for purposes of this Section.
Upon approval by the LSERS Board of Trustees, the projected contribution rate is presented to the PRSAC. After the PRSAC reviews the estimates and methodology, it then recommends the employer contribution rate for LSERS to the legislature in accordance with La. R.S. 11:104. According to Mr. Hall, the "recommended rate is included in LSERS proposed budget which is submitted to the Joint Legislative Committee on the Budget." The proposed budgets for the three fiscal years from 2009-2012 were approved as indicated by the dated and initialed stamps of approval of the Joint Legislative Committee on the Budget that appears on those proposed budgets annexed as exhibits to Mr. Hall's supplemental affidavit.
This Court's recent decision in Pointe Coupee Parish School Board makes clear as quoted above "that the MFP funds are appropriated by the legislature," which we find to be dispositive of this issue.
In Louisiana Municipal Association v. State, 04-0227 (La. 1/19/05), 893 So.2d 809, 849, the Louisiana Supreme Court explained that the scope of the authority of the PRSAC and the burden placed upon the legislature to act is dependent upon whether the pension plan in question is one whose benefits are guaranteed by the State or one that is not guaranteed, stating that:
Whether the legislature must approve or adopt the recommendation of the PRSAC as to the employer contribution rate or whether the rate calculated by the PRSAC is the rate to be used depends on whether the formula used is for state guaranteed systems, La. R.S. 11:102, or whether the formula used is for systems not guaranteed by the state, La. R.S. 11:103.[Bold added.]
Under La. R.S. 11:104(B), the employer contribution rate obtained by the PRSAC after performance of the calculation described in La. R.S. 11:103 is the employer contribution rate prescribed by the legislature. The legislature has provided explicit instructions for how the rate is to be determined. The PRSAC has only to apply the legislature's instructions to determine what the rate should be.
By contrast, the result of the calculation of the formula in La. R.S. 11:102, applicable to public retirement systems whose benefits are guaranteed by the state, must be presented to the legislature because, by statute, "the legislature shall set the required employer contribution rate." La. R.S. 11:102(B)(1). The legislature must set the rate for state guaranteed systems because the state must directly pay the annual shortfall between the actuarially required employer contribution rate and the employer contributions actually received and that amount is paid by the state treasurer from the state's general funds. Therefore, under La. R.S. 11:104(B), it is appropriate for the PRSAC to recommend to the legislature for approval the employer contribution rate for state guaranteed systems and it is appropriate for the PRSAC to notify each employer or retirement system what the rate shall be for systems not guaranteed by the state.
It is uncontested that the pension system that is the subject of this suit is one that is referred to in La. Const. art. 10, § 29(E)(2) as one guaranteed by "this constitution", i.e., guaranteed by the State. Therefore, we find that the legislature is required to "determine and set," the amount of employer contributions. This constitutional requirement is tracked in La. R.S. 11:102(B)(1) which mandates that "the legislature shall set the required employer contribution rate." Louisiana Municipal Association, 893 So.2d at 849. (Bold added).
Therefore, based on the language of La. Const. art. 10, § 29(E)(2) and La. R.S. 11:102(B)(1), as well as the language quoted from Louisiana Municipal Association, we find that the PRSAC does not have the authority to set the rate of the plaintiffs' required employer contribution to LSERS; the PRSAC may only recommend to the legislature for approval the employer contribution rate. According to Mr. Hall's affidavit, the PRSAC made such a recommendation to the legislature. In other words, for the PRSAC recommended rate to have effect, it must be approved ("determine[d] and set" using the language of La. Const. art. 10, § 29(E)(2) or "set" using the language of La.R.S. 11:102(B)(1)), by the legislature.
It is undisputed that there is no line item or anything else in the MFP block grants that specifically identifies any of the grant funds as being allocated in consideration of the employer share of the pension contributions required for each qualified employee of the plaintiffs. However, the MFP was created to provide funding for education-related obligations, and the legislature annually appropriates MFP funds "as a separate and distinct line item in the state budget." Federation of Teachers, 118 So.2d at 1038. LSERS notes that the MFP block grants vastly exceed the amounts needed each year to fund the normal costs and the UAL. Moreover, LSERS points out that the inclusion of those costs in the MFP block grants, while not differentiated as such, is historically based on the natural evolution from the original MFP block grants, as explained in Ms. Scioneaux's affidavit that was discussed earlier. The MFP block grants made in the early 1990s were based on funding forms that had particular line items for these pension costs. This Court has recognized the historical development of the MFP and explained with regard to the MFP formula that: "The Louisiana Constitution does not require that any particular items be included in the formula nor does it require that the formula be based on actual costs." Jones v. State Board of Elementary and Secondary Education, 05-0668, 05-0669 (La. App. 1st Cir. 11/4/05), 927 So.2d 426, 431.
We recognize that merely because a procedure has been utilized for a number of years is insufficient, in and of itself, to permit a finding that the procedure of funding plaintiffs' pension contributions through the MFP is valid. Custom and convenience cannot contravene constitutional constraints. Louisiana Federation of Teachers, 118 So.3d at 1054. Further, custom may not abrogate legislation. La. C.C. art. 2. However, the practice of funding the pension contributions through the MFP by line item in the past is indicative of the intention to continue to fund those contributions through the MFP after such time in the mid-1990s when the MFP was no longer broken down by line items, just as we may safely assume that the MFP continued to fund other vital public school funding needs that were not broken down by line items. The plaintiffs offer no countervailing evidence to show that this is not the intention.
Additionally, the plaintiffs have offered no material evidence to show that the PRSAC's calculation of the contribution rate is inconsistent with the statutorily prescribed calculation requirements. Accordingly, as to this issue it remains only for this Court to determine whether the legislature actually approved the contribution rates submitted by the PRSAC.
As stated earlier, the plaintiffs argue that the legislature is required to specifically approve an appropriation to provide for and fund the "employer" costs directly to LSERS. According to the plaintiffs, this obligation cannot be satisfied by funneling funds through the plaintiffs to LSERS, especially not in the form of amorphous lump sum MFP block grants that make it impossible to tell exactly how much, if anything, was intended to cover the plaintiffs' pension expense costs due to LSERS. Rejecting these arguments, we find, as a matter of law, that the requirement that the legislature appropriate funds for that purpose is satisfied where the legislature appropriates through the MFP block grants containing more than "ample funds in the allocations to the school boards" to cover the employer pension expenses as set forth in Ms. Scioneaux's affidavit and where, according to the uncontested attestations in Ms. Scioneaux's affidavit, the MFP block grants encompass the employer pension expenses. See Pointe Coupee Parish School Board, ___ So.3d at ___. The normal costs and UAL due to LSERS need not be broken down as separate line items as they were prior to 1996.
We further find that the procedures adopted by LSERS and the PRSAC and the indication of approval of the budget submissions to the legislature as indicated by the dated and initialed stamps of approval of the Joint Legislative Committee on the Budget are sufficient as a matter of law and uncontroverted fact to demonstrate compliance with the constitutional and statutory requirements that the legislature "determine and set" the contribution rate. See La. Const. art. 10, § 29(E)(2)(a); see also La. R.S. 11:102(B)(1); Louisiana Municipal Association, 893 So.2d at 849. As noted by this Court in Pointe Coupee Parish School Board, ___ So.3d at ___, "it is clear that the MFP funds are appropriated by the legislature."
The burden of proof at trial would be on the plaintiffs to show that the legislature failed to set, approve or adopt the contribution rate confected by the PRSAC. Therefore, in view of the evidentiary submissions by LSERS on this issue, the burden of proof has shifted to the plaintiffs and they have failed to discharge this burden. See La. C.C.P. art. 966(C)(2); see also Independent Fire Insurance Company, 755 So.2d at 231. Accordingly, based on the record before us, we find that the plaintiffs have failed to raise a genuine issue of material fact concerning the question of whether the legislature "set" the contribution rates in conformity with the requirements of La. Const. art. 10, § 29(E)(2)(a) and La. R.S. 11:102(B)(1).
Had this Court adopted the reasoning of the plaintiffs, it would result in an unwarranted windfall to the plaintiffs. Where sufficient funds are provided in the MFP in contemplation of and in satisfaction of the plaintiffs' employer pension contributions, requiring the legislature to allocate an additional sum to cover those same costs would result in double payment to the plaintiffs. In other words, the plaintiffs are unable to show that they have sustained any damage as a result of receiving funding as part of the in globo, undifferentiated MFP block grant, rather than receiving funding in a specifically designated form. The plaintiffs object to being required to fund the employer portion of the pension costs, but where the legislature gives them the money to do so, we cannot see where they have sustained any damages requiring relief from this Court. Nor do we find that they have shown a likelihood of such damage in the future so as to warrant declaratory or injunctive relief from this Court.
II. The plaintiffs have failed to show that there is a genuine issue of material fact concerning the funding of the UAL.
Subsidiary to the basic funding claim made by the plaintiffs, is their related contention that the contributions that are required each year to keep the UAL from increasing are not being made. While the plaintiffs acknowledge that the "unfunded accrued liability existing as of June 30, 1988" has been funded as required by La. Const. art. 10, § 29(E)(2), they contend that since 2002, the UAL has recurred and grown dramatically. The plaintiffs contend that this growth contravenes the La. Const. art. 10, § 29(E)(1) requirement that "[t]he actuarial soundness of state and statewide retirement systems shall be attained and maintained[.]" [Emphasis added.]
However, the Louisiana Supreme Court explained in Louisiana Municipal Association, 893 So.2d at 855, that:
The presence or growth of unfunded accrued liabilities in the actuarial equation is not inconsistent with the constitutional requirement that the public retirement systems maintain actuarial soundness. The unfunded accrued liability is but one factor in the multi-level formula for determining actuarial soundness of the system. To focus on one factor in the multi-level formula to the exclusion of the other 40 or 50 factors and without the proper context is error. The one factor of the unfunded accrued liability taken alone, or the increase of it, does not destroy actuarial soundness. An increasing unfunded accrued liability is nevertheless consistent with maintaining actuarial soundness provided there is a funding structure present to liquidate the liability. A floating employer contribution rate as determined by La. R.S. 11:103, which increases the assets of the system to offset increased liabilities, helps the current funding structure of the [Firefighters' Retirement System] to achieve this. [Emphasis added.] [Footnote omitted.]
While the retirement system involved in Louisiana Municipal Association was a different one than in this case, the principles and legal analysis of the constitutional provisions and statutes are equally valid and applicable to LSERS. Therefore, the fact that the unfunded accrued liability may have risen in some recent years does not mean that the system is not funded in a manner consistent with the actuarial standards called for in La. Const. art. 10, § 29(E)(1). Louisiana Municipal Association, 893 So.2d at 855. The plaintiffs have offered no evidence of any of the potentially forty to fifty factors that go into determining actuarial soundness as referred to by the Supreme court in Louisiana Municipal Association. The plaintiffs' argument is based solely on the increase in the amount of the UAL. The Louisiana Supreme Court has specifically rejected this argument. Louisiana Municipal Association, 893 So.2d at 855.
For these reasons, we find that the plaintiffs have failed to raise a genuine issue of material fact concerning the actuarial soundness of the pension fund.
III. The plaintiffs have failed to raise a genuine issue of material fact concerning whether requiring them to make the employer pension contributions to LSERS out of the MFP funding constitutes a prohibited unfunded mandate.
The plaintiffs argue that requiring them to make the employer contributions to LSERS out of the MFP constitutes a prohibited unfunded mandate, because the legislature failed to appropriate "funds for the purpose" as required by La. Const. art. 6, § 14(B). The plaintiffs call this Court's attention to the following language found in La. Const. art. 6 § 14(B)(1) prohibiting certain unfunded mandates:
No law requiring increased expenditures within a city, parish, or other local public school system for any purpose shall become effective within such school system only as long as the legislature appropriates funds for the purpose to the affected school system and only to the extent and amount that such funds are provided, or until a law provides for a local source of revenue within the school system for the purpose and the affected school board is authorized by ordinance or resolution to levy and collect such revenue and only to the extent and amount of such revenue.
In making their argument, the plaintiffs appear to have overlooked La. Const. art. 6, § 14(B)(2)(g), which provides that:
(2) This Paragraph shall not apply to:
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(g) The formula for the Minimum Foundation Program of education as required by Article VIII, Section 13(B) of this constitution, nor to any instrument adopted or enacted by the legislature approving such formula. [Emphasis added.]
There is no jurisprudence explaining the intent of Paragraph (g). Regardless of how it is interpreted, however, on the showing made, the plaintiffs have failed to raise a genuine issue of material fact concerning unfunded mandates.
The plaintiffs contend that requiring them to pay for the employer contributions out of the MFP amounts to an unfunded mandate because the MFP has not grown at a pace sufficient to keep up with the cost of operating the schools. However, as previously explained in our discussion of the MFP funding, the plaintiffs have failed to demonstrate any expenditure that they have been required to make by law that has not been funded.
While the record reflects that the normal cost payments have risen from $20,969,420.00 in 2002 to $29,264,303.00 in 2009, the increase has not been in a straight line - in 2004 and in 2006 the payments actually went down. Moreover, these payments are but a small fraction of the MFP payments made to the plaintiffs in those years. Thus, the fact that the per pupil amount of the MFP may not have risen in some years in which the normal cost payments and the UAL may have increased does not mean that the State has failed to provide adequate funding for those expenses through the MFP. Nor does it mean that the State has created a prohibited unfunded mandate. As noted earlier, the amount of the annual contributions the plaintiffs complain about having to make to LSERS is dwarfed by the magnitude of the MFP block grants that have consistently been in the billions of dollars as opposed to the pension funding requirements that have been in the low millions. Finally, this Court has very recently observed that, "[t]he MFP formula includes an allowance for the support of increased mandated costs in retirement." Pointe Coupee Parish School Board, ___ So.3d at ___.
LSERS offered evidence to show that the MFP provides more than adequate funds to fund the plaintiffs' employer pension contributions, thereby shifting the burden to the plaintiffs to show otherwise. La. C.C.P. art. 966(C)(2). The plaintiffs have failed to meet this burden. Consequently, we find, based on the record before us, that the plaintiffs have failed to raise a genuine issue of material fact concerning their argument that the requirement that they pay the employer pension contributions out of the MFP creates a prohibited unfunded mandate. Therefore, we conclude that the plaintiffs have failed to raise a genuine issue of material fact concerning the issue of unfunded mandates. Nor have they shown the existence of genuine issues of material fact concerning any other issue.
CONCLUSION
For the foregoing reasons, we affirm the judgments of the trial court denying plaintiffs' motion for summary judgment and granting summary judgment in favor of LSERS dismissing plaintiffs' suit. Plaintiffs are to pay the costs of this appeal in the amount of $8,307.00.
AFFIRMED.