Connecticut General Statutes 10-183z – Funding of system on actuarial reserve basis. Use of funds
(a) The retirement system for teachers shall be funded on an actuarial reserve basis. The retirement board shall, on or before December first, annually, certify to the General Assembly the amount necessary, on the basis of an actuarial determination, to establish and maintain the retirement fund on such determined actuarial reserve basis and make such other recommendations with regard to the fund and its administration as the board deems necessary. On the basis of each evaluation, the retirement board shall redetermine the normal rate of contribution and, until it is amortized, the unfunded past service liability. The General Assembly shall review the board’s recommendations and certification and shall appropriate to the retirement fund the amount certified by the retirement board as necessary, provided said certification is in compliance with this section. On and after the effective date of this section, no public or special act of the General Assembly shall reduce such appropriation to an amount below such amount certified unless the Governor declares an emergency or the existence of extraordinary circumstances, in which the provisions of section 4-85 are invoked, and at least three-fifths of the members of each chamber of the General Assembly vote to reduce such appropriation during the biennium for which the emergency or existence of extraordinary circumstances is declared. The amount appropriated by the General Assembly shall be deposited by the Treasurer into the retirement fund in quarterly allotments on July fifteenth, October first, January first and April first.
Terms Used In Connecticut General Statutes 10-183z
- Actuarial reserve basis: means a basis under which the liabilities of the retirement system are determined under acceptable actuarial methods and under which assets are accumulated under a program designed to achieve a proper balance between the accumulated assets and the liabilities of the system. See Connecticut General Statutes 10-183b
- Amortization: Paying off a loan by regular installments.
- Appropriation: The provision of funds, through an annual appropriations act or a permanent law, for federal agencies to make payments out of the Treasury for specified purposes. The formal federal spending process consists of two sequential steps: authorization
- Board: means the Teachers' Retirement Board. See Connecticut General Statutes 10-183b
- Current service: means service rendered in the current fiscal year. See Connecticut General Statutes 10-183b
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Funding: means the accumulation of assets in advance of the payment of retirement allowances in accordance with a board-approved actuarial methodology. See Connecticut General Statutes 10-183b
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Normal cost: means the amount of contribution which the state is required to make into the retirement fund in order to meet the actuarial cost of current service. See Connecticut General Statutes 10-183b
- System: means the Connecticut teachers' retirement system. See Connecticut General Statutes 10-183b
- Unfunded liability: means the actuarially determined value of the liability for service before the date of the actuarial valuation less the accumulated assets in the retirement fund. See Connecticut General Statutes 10-183b
(b) The board shall determine on an actuarial basis (1) a normal rate of contribution which the state shall be required to make into the retirement fund in order to meet the actuarial cost of current service and (2) the unfunded past service liability. In making such determination the board shall assume that the annual rate of interest earned by the funds of the system invested by the State Treasurer pursuant to section 10-183m equals the total assumed rate of return adopted by the board under the provisions of section 10-183nn. For the first eight years, the funding program for the actuarial reserve basis shall consist of the following percentages of the sum of normal cost and the amount required for a forty-year amortization of unfunded liabilities, provided, if in any such year the amount required to be paid by this section is less than the amount which would be required to fund the system on a terminal basis and to pay the annual cost of benefits payable under subsection (j) of section 10-183g or under other prior legislative adjustments to retirement benefits, the state shall pay the greater amount:
|
FISCAL YEAR |
PERCENTAGE TO BE PAID OF NORMAL COST |
|
7-1-85 |
65 |
|
7-1-86 |
70 |
|
7-1-87 |
75 |
|
7-1-88 |
80 |
|
7-1-89 |
85 |
|
7-1-90 |
90 |
|
7-1-91 |
95 |
|
7-1-92 |
100 |
Commencing with the fiscal year ending June 30, 1993, and through the fiscal year ending June 30, 2019, the unfunded liability shall be amortized over a period of forty years. Commencing with the fiscal year ending June 30, 2020, the unfunded liability as of June 30, 2018, shall be separately amortized over a closed period of thirty years and future actuarial gains and losses shall be amortized over separate closed periods of twenty-five years, beginning the year each separate base is established. The phrase “fund the system on a terminal basis” means contribution by the state of such moneys as are certified by the Teachers’ Retirement Board as necessary, according to the mortality table adopted yearly, for the full reserve for pensions for retiring teachers provided under sections 10-183f, 10-183j and 10-183aa, but not such moneys as are necessary to make payments under subsection (j) of section 10-183g or under other prior legislative amendments to retirement benefits.
(c) No act liberalizing the benefits of the retirement system shall be enacted by the General Assembly until the assembly has requested and received from the retirement board a certification of the unfunded liability created by such change and the cost of such change under the actuarial funding basis adopted by section 10-183b. Any unfunded liability created by such change shall be amortized over a period consistent with actuarial recommendations approved by the retirement board.
(d) The funds of the teachers’ retirement system, except the expense fund, shall not be reduced or used for other than the purposes of said system.