38. a. (1) Commencing July 1, 2011 and thereafter, the contribution required, by law, to be made by the State to the Teachers’ Pension and Annuity Fund, established pursuant to N.J.S. 18A:66-1 et seq., the Judicial Retirement System, established pursuant to P.L.1973, c.140 (C. 43:6A-1 et seq.), the Prison Officers’ Pension Fund, established pursuant to P.L.1941, c.220 (C. 43:7-7 et seq.), the Public Employees’ Retirement System, established pursuant to P.L.1954, c.84 (C. 43:15A-1 et seq.), the Consolidated Police and Firemen’s Pension Fund, established pursuant to R.S.43:16-1 et seq., the Police and Firemen’s Retirement System, established pursuant to P.L.1944, c.255 (C. 43:16A-1 et seq.), and the State Police Retirement System, established pursuant to P.L.1965, c.89 (C. 53:5A-1 et seq.), shall be made in full each year to each system or fund in the manner and at the time provided by law. The contribution shall be computed by actuaries for each system or fund based on an annual valuation of the assets and liabilities of the system or fund pursuant to consistent and generally accepted actuarial standards and shall include the normal contribution and the unfunded accrued liability contribution. Notwithstanding the provisions of any law to the contrary, the assets to be included in the calculation described in this paragraph shall not include the special asset value.

(2) The State with regard to its obligations funded through the annual appropriations act shall be in compliance with this requirement provided the State makes a payment, to each State-administered retirement system or fund, of at least 1/7th of the full contribution, as computed by the actuaries, in the State fiscal year commencing July 1, 2011 and a payment in each subsequent fiscal year that increases by at least an additional 1/7th until payment of the full contribution is made in the seventh fiscal year and thereafter.

(3) The sum of the accrued liability and the normal contribution, calculated by the actuaries with respect to the unfunded accrued liability and normal cost for each retirement system, as defined pursuant to section 3 of P.L.2017, c.98 (C. 5:9-22.7), shall be reduced annually by the product of the allocable percentage for such retirement system, established in section 5 of P.L.2017, c.98 (C. 5:9-22.9), the adjustment percentage for such retirement system, as set forth in subsection c. of this section, and the special asset adjustment as set forth in this paragraph.

For State fiscal year 2018, the annual special asset adjustment shall equal $1,000,976,874.

For State fiscal year 2019, the annual special asset adjustment shall equal $1,037,148,584.

For State fiscal year 2020, the annual special asset adjustment shall equal $1,070,451,102.

For State fiscal year 2021, the annual special asset adjustment shall equal $1,084,354,841.

For State fiscal year 2022, the annual special asset adjustment shall equal $1,095,871,137.

After State fiscal year 2022, the special asset adjustment shall be determined based on an amortization of the special asset value over the remaining term of the lottery contribution made pursuant to section 4 of P.L.2017, c.98 (C. 5:9-22.8), at the regular interest rate applicable to the retirement systems; provided, however, in no event shall the annual special asset adjustment be more than the maximum special asset adjustment.

The maximum special asset adjustment shall be determined based on a 30-year amortization of the initial special asset value at the regular interest rate applicable to the retirement systems.

The special asset value shall initially be the value set forth in section 5 of P.L.2017, c.98 (C. 5:9-22.9), and shall be revalued periodically as follows:

(a) if and as requested by the State Treasurer, in the Treasurer’s discretion, which revaluation shall not occur more than once in any State fiscal year; and

(b) five years from the date of the last valuation performed, whether discretionary or otherwise.

The special asset value shall exclude proceeds counted in any prior actuarial valuation as a receivable. The special asset shall be depreciated on a straight-line basis over the remaining term of the lottery contribution based on the special asset value.

As used in this paragraph:

“Special asset adjustment” means the periodic actuarial adjustment with respect to the special asset applicable to the retirement systems.

b. In the State fiscal year commencing July 1, 2017 and in each State fiscal year thereafter, the contribution required to be made by the State pursuant to this section shall be made to each system on the following schedule: at least 25 percent by September 30, at least 50 percent by December 31, at least 75 percent by March 31, and at least 100 percent by June 30. The amount of the contribution shall be net of the amount of any increase in the interest on the tax and revenue anticipation notes attributable solely to the need to borrow an increased amount in order to make the quarterly payments.

c. For State fiscal years 2018 through 2022, the adjustment percentage applicable to the Teachers’ Pension and Annuity Fund, established pursuant to N.J.S. 18A:66-1 et seq., the Public Employees’ Retirement System, established pursuant to P.L.1954, c.84 (C. 43:15A-1 et seq.), and the Police and Firemen’s Retirement System, established pursuant to P.L.1944, c.255 (C. 43:16A-1 et seq.), shall be 100 percent. For State fiscal years beginning 2023 and thereafter, the adjustment percentage applicable to: (1) the Teachers’ Pension and Annuity Fund shall be 88.27 percent; (2) the Public Employees’ Retirement System shall be 57.29 percent; and (3) the Police and Firemen’s Retirement System shall be 0.00 percent. In State fiscal years 2023 and thereafter, for each of the Teachers’ Pension and Annuity Fund, the Public Employees’ Retirement System, and the Police and Firemen’s Retirement System, in their entirety, if the funded ratio falls below 50 percent for any State fiscal year, the adjustment percentage for such fiscal year shall be reduced by a number of percentage points equal to three times the difference between 50 percent and the funded ratio,

rounded to the nearest percentage point. For the purposes of this subsection, the funded ratio shall include the special asset value.

L.2010, c.1, s.38; amended 2016, c.83; 2017, c.98, s.17.