(a)  Municipal Incentive Aid described in this chapter shall be distributed to eligible municipalities on the basis of the most recent population estimate for each municipality as a share of the total state population reported by the U.S. Department of Commerce, Bureau of the Census as of January 1 in the year of the payment. Such payments shall be made to eligible communities in March of each year to the extent that funds are appropriated.

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(b)  For fiscal year 2014, municipalities shall be eligible to receive aid under this chapter if: (1) the municipality has no locally-administered pension; or (2) the municipality notified plan participants, beneficiaries and others pursuant to chapter 65 of this title, and submitted to the state’s department of revenue a Funding Improvement Plan (“FIP”), pursuant to § 45-65-6, for every locally-administered pension plan in that municipality, and each FIP had been approved by the plan sponsor and the local governing body no later than June 1, 2013; or (3) there existed a locally-administered pension plan(s) in that municipality, but either: (i) no FIP was required pursuant to chapter 65 of this title; or (ii) a FIP is required pursuant to chapter 65 of this title, but, the due date for the FIP submission is after the March payment of state aid.

(c)  For fiscal year 2015 and each fiscal year thereafter that municipal incentive aid is distributed to eligible municipalities under this chapter, municipalities shall be eligible to receive aid under this chapter, if: (1) the municipality has no locally-administered pension; or (2) the municipality has transitioned all locally-administered pension plans into MERS by June 30, 2014; or (3) the municipality had notified plan participants, beneficiaries and others pursuant to chapter 65 of this title and had submitted to the state’s department of revenue a FIP, pursuant to chapter 65 of this title, for every locally-administered pension plan and each submitted FIP meets the guidelines of the Study Commission on Locally-Administered Pension Plans created pursuant to § 45-65-8 or otherwise applicable guidelines or regulations and each FIP has been approved by the plan sponsor and the local governing body; or (4) the municipality has implemented the original recommended FIP or an amended FIP pursuant to chapter 65 of this title within one month after the close of the fiscal year and made the required funding payment (formerly referred to as Annually Required Contribution, or ARC) in compliance with the municipality’s adopted FIP(s) and the funding guidelines established by the Pension Study Commission and the FIPs are approved by the plan sponsor and the local governing body; or (5) there existed a locally-administered pension plan in that municipality, but either: (i) no FIP was required pursuant to chapter 65 of this title and either: (A) the municipality is funding one hundred percent (100%) of its required funding payment; or (B) the municipality has a funded ratio of one hundred percent (100%) or greater; or (ii) FIP is required pursuant to chapter 65 of this title, however, the due date for the FIP submission or implementation is after the March payment of this municipal incentive aid.

(d)  For fiscal year 2014, and in any year thereafter that a municipality is not eligible to receive a distribution under this chapter, the distribution that said municipality would have received had it been eligible shall be reappropriated to the immediately following fiscal year, at which time the amount reappropriated shall be distributed to said municipality provided that said municipality has satisfied the eligibility requirements of both the prior fiscal year and the then current fiscal year. In the event that said municipality fails to satisfy the eligibility requirements for the prior and the then current fiscal year by the time that eligibility to receive distributions in the next fiscal year is determined, then the amount that would have been distributed to the municipality for said prior year will be distributed in the month of May among the municipalities that received a distribution in the prior fiscal year, with the share to be received by each municipality calculated in the same manner as distributions were calculated in the prior fiscal year.