Maryland State Personnel and Pensions Section 34-101

      (a)      There is a Postretirement Health Benefits Trust Fund.

      (b)      The Postretirement Health Benefits Trust Fund shall be established as a tax-exempt trust, in accordance with § 115 of the Internal Revenue Code or other applicable federal statute.

      (c)      The purpose of the Postretirement Health Benefits Trust Fund is to assist the State in financing the postretirement health insurance subsidy, as specified in § 2-508 of this article.

      (d)      Beginning in fiscal year 2008, any subsidy received by the State that is provided to employers as a result of the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or similar federal subsidy received as a result of the State's prescription drug program, shall be deposited into the Postretirement Health Benefits Trust Fund.

      (e)      (1)      The Board of Trustees are the trustees of the Postretirement Health Benefits Trust Fund.

            (2)      Notwithstanding any other provision of law:

                  (i)      the Board of Trustees shall have full power to invest and manage the assets of the Postretirement Health Benefits Trust Fund to achieve the statutory purpose of the Fund; and

                  (ii)      each member of the Board of Trustees shall discharge the member's duties with respect to the Postretirement Health Benefits Trust Fund as a fiduciary and be indemnified in accordance with the provisions of Title 21, Subtitle 2 of this article.

            (3)      The Board of Trustees may incur reasonable investment expenses payable from the assets of the Postretirement Health Benefits Trust Fund, and in accordance with § 21-315(d) of this article, for:

                  (i)      services of managers to invest the assets of the Postretirement Health Benefits Trust Fund;

                  (ii)      services of one or more duly qualified banks or trust companies for the safe custody of the investments and banking services; and

                  (iii)      any other service that the Board of Trustees deems reasonable and necessary in connection with the investments of the Postretirement Health Benefits Trust Fund.

            (4)      (i)      The Board of Trustees may incur reasonable administrative expenses payable from the assets of the Postretirement Health Benefits Trust Fund.

                  (ii)      Administrative expenses paid under subparagraph (i) of this paragraph may not exceed an amount equal to the amount of administrative expenses paid by the Board of Trustees under § 21-315(c) of this article multiplied by a fraction:

                        1.      the numerator of which equals the total assets of the Postretirement Health Benefits Trust Fund; and

                        2.      the denominator of which equals the combined total assets of the several systems and the Postretirement Health Benefits Trust Fund.

            (5)      The Board of Trustees is not subject to Division II of the State Finance and Procurement Article for:

                  (i)      obtaining services of managers to invest the assets of the Postretirement Health Benefits Trust Fund; and

                  (ii)      expenditures to manage, maintain, and enhance the value of the assets of the Postretirement Health Benefits Trust Fund.

      (f)      To the extent possible, the assets of the Postretirement Health Benefits Trust Fund shall be invested in the same manner as those of the several systems.

      (g)      For fiscal year 2008 through fiscal year 2017, no payments may be made from the Postretirement Health Benefits Trust Fund.

      (h)      For fiscal year 2018 and each fiscal year thereafter, the Board of Trustees shall transfer to the General Fund, for the sole purpose of assisting in the payment of the State's postretirement health insurance subsidy, the lesser of:

            (1)      one-quarter of the prior year's investment gains of the Postretirement Health Benefits Trust Fund; or

            (2)      the amount necessary to pay the annual health insurance premiums and other costs that constitute the State's postretirement health insurance subsidy specified in § 2-508 of this article.

      (i)      If for any reason the State discontinues the postretirement health insurance subsidy specified in § 2-508 of this article or a successor subsidy, the assets of the Postretirement Health Benefits Trust Fund shall be transferred to the General Fund.

      (j)      On or before October 1, 2009, and on or before October 1 thereafter, the Board of Trustees shall publish an annual consolidated report that includes:

            (1)      the fiscal transactions of the Postretirement Health Benefits Trust Fund for the preceding fiscal year; and

            (2)      the amount of the accumulated cash, securities, and other assets of the Postretirement Health Benefits Trust Fund.