2015 Connecticut General Statutes
Title 4 - Management of State Agencies
Chapter 47 - State Property and Funds
Section 4-30a - *(See end of section for amended version and effective date.) Transfer of surplus to Budget Reserve Fund and State Employees Retirement Fund. Reduction of outstanding state indebtedness.

(a) After the accounts for the General Fund have been closed for each fiscal year and the Comptroller has determined the amount of unappropriated surplus in said fund, after any amounts required by provision of law to be transferred for other purposes have been deducted, the amount of such surplus shall be transferred by the State Treasurer to a special fund to be known as the Budget Reserve Fund. When the amount in said fund equals ten per cent of the net General Fund appropriations for the fiscal year in progress, no further transfers shall be made by the Treasurer to said fund and the amount of such surplus in excess of that transferred to said fund shall be deemed to be appropriated to the State Employees Retirement Fund, in addition to the contributions required pursuant to section 5-156a, but not exceeding five per cent of the unfunded past service liability of the system as set forth in the most recent actuarial valuation certified by the Retirement Commission. Such surplus in excess of the amounts transferred to the Budget Reserve Fund and the state employees retirement system shall be deemed to be appropriated for: (1) Redeeming prior to maturity any outstanding indebtedness of the state selected by the Treasurer in the best interests of the state; (2) purchasing outstanding indebtedness of the state in the open market at such prices and on such terms and conditions as the Treasurer shall determine to be in the best interests of the state for the purpose of extinguishing or defeasing such debt; (3) providing for the defeasance of any outstanding indebtedness of the state selected by the Treasurer in the best interests of the state by irrevocably placing with an escrow agent in trust an amount to be used solely for, and sufficient to satisfy, scheduled payments of both interest and principal on such indebtedness; or (4) any combination of these methods. Pending the use or application of such amount for the payment of interest and principal, such amount may be invested in (A) direct obligations of the United States government, including state and local government treasury securities that the United States Treasury issues specifically to provide state and local governments with required cash flows at yields that do not exceed Internal Revenue Service arbitrage limits, (B) obligations guaranteed by the United States government, and (C) securities backed by United States government obligations as collateral and for which interest and principal payments on the collateral generally flow immediately through to the security holder.

(b) Moneys in said Budget Reserve Fund shall be expended only as provided in this subsection. When in any fiscal year the Comptroller has determined the amount of a deficit applicable with respect to the immediately preceding fiscal year, to the extent necessary, the amount of funds credited to said Budget Reserve Fund shall be deemed to be appropriated for purposes of funding such deficit.

(c) The Treasurer is authorized to invest all or any part of said fund in accordance with the provisions of section 3-31a. The interest derived from the investment of said fund shall be credited to the General Fund.

(P.A. 79-623, S. 6, 8; P.A. 82-443, S. 1, 3; June Sp. Sess. P.A. 83-37, S. 1, 3; P.A. 85-516, S. 1, 8; P.A. 86-403, S. 8, 132; June 23, Sp. Sess. II P.A. 86-1, S. 7, 10; P.A. 92-205, S. 6, 12; May Sp. Sess. P.A. 92-14, S. 1, 11; P.A. 02-118, S. 1; P.A. 03-2, S. 56.)

*Note: On and after July 1, 2019, this section, as amended by section 164 of public act 15-244, is to read as follows:

“Sec. 4-30a. Budget Reserve Fund and Restricted Grants Fund established. Transfer of surplus to Budget Reserve Fund and State Employees Retirement Fund. Reduction of outstanding state indebtedness. (a)(1) For the purposes of this section, “combined revenue” means revenue in any given fiscal year from estimated and final payments of the personal income tax imposed under chapter 229 plus the revenue from the corporation business tax imposed under chapter 208.

(2) There is established a Budget Reserve Fund and a Restricted Grants Fund for the purposes of this section.

(3) After the accounts for the General Fund have been closed for each fiscal year and the Comptroller has determined the amount of unappropriated surplus in the General Fund, after any amounts required by provision of law to be transferred for other purposes have been deducted, the amount of such surplus and the amount transferred to the Restricted Grants Fund pursuant to subdivision (4) of this subsection shall be transferred by the State Treasurer to the Budget Reserve Fund.

(4) (A) Commencing in the fiscal year ending June 30, 2021:

(i) If, under the consensus revenue estimate maintained or revised not later than January fifteenth annually pursuant to subsection (b) of section 2-36c, the year-end projection of combined revenue for the current fiscal year is greater than the threshold level for deposits to the Budget Reserve Fund reported pursuant to subsection (f) of section 2-36c for the current fiscal year, the amount that is projected to be over the threshold level for deposits to the Budget Reserve Fund shall be transferred by the State Treasurer from the General Fund to the Restricted Grants Fund not later than January thirty-first.

(ii) If, under the consensus revenue estimate maintained or revised not later than April thirtieth annually pursuant to subsection (b) of section 2-36c, the year-end projection of combined revenue is revised upward, the difference in the combined revenue projection from January fifteenth to April thirtieth shall be transferred by the State Treasurer from the General Fund to the Restricted Grants Fund not later than May fifteenth. If such year-end projection is revised downward, the difference in the combined revenue projection from January fifteenth to April thirtieth shall be transferred back to the General Fund from the Restricted Grants Fund not later than May fifteenth, unless the revised combined revenue projection is less than the threshold level for deposits to the Budget Reserve Fund reported pursuant to subsection (f) of section 2-36c, in which case only the difference between the combined revenue projection from January fifteenth and the calculated threshold for deposits to the Budget Reserve Fund shall be transferred back to the General Fund from the Restricted Grants Fund.

(B) (i) If, under the consensus revenue estimate maintained or revised not later than January fifteenth annually pursuant to subsection (b) of section 2-36c, the year-end projection of combined revenue for the current fiscal year is equal to or less than the threshold level for deposits to the Budget Reserve Fund reported pursuant to subsection (f) of section 2-36c for the current fiscal year, no transfer to the Restricted Grants Fund shall be made.

(ii) If, under the consensus revenue estimate maintained or revised not later than April thirtieth annually pursuant to subsection (b) of section 2-36c, the year-end projection of combined revenue is revised upward to an amount greater than the threshold level for deposits to the Budget Reserve Fund reported pursuant to subsection (f) of section 2-36c, the difference between the combined revenue projection in April and the calculated threshold for deposits to the Budget Reserve Fund shall be transferred by the State Treasurer from the General Fund to the Restricted Grants Fund not later than May fifteenth. If such year-end projection is revised upward but not to an amount greater than the threshold level for deposits to the Budget Reserve Fund calculated pursuant to subsection (f) of section 2-36c or is revised downward or remains unchanged, no transfer shall be made.

(C) If the consensus revenue estimate on either January fifteenth or April thirtieth projects a year-end General Fund deficit for the current fiscal year, no transfer to the Restricted Grants Fund shall be made.

(5) Commencing in the fiscal year ending June 30, 2020, the Comptroller shall certify the threshold level for deposits to the Budget Reserve Fund pursuant to section 3-115 by determining: (A) Combined revenue for each of the prior twenty fiscal years; (B) the ten-year average for the current fiscal year; (C) the ten-year average for each of the ten fiscal years preceding the current fiscal year; (D) the differential for each of the ten fiscal years preceding the current fiscal year; (E) the average of the differentials calculated pursuant to subparagraph (D) of this subdivision; and (F) the number calculated in subparagraph (E) of this subdivision and adding the number one. The threshold level for deposits to the Budget Reserve Fund shall be the number calculated by multiplying the number calculated under subparagraph (B) of this subdivision by the number calculated under subparagraph (F) of this subdivision. For the purposes of this subdivision, “ten-year average” means the average of combined revenue from the ten fiscal years preceding any given fiscal year; and “differential” means the difference between the actual combined revenue from any given fiscal year and the ten-year average for that same fiscal year, divided by the ten-year average for that fiscal year.

(6) Whenever the amount in the Budget Reserve Fund equals fifteen per cent or more of the net General Fund appropriations for the current fiscal year, no further transfers shall be made by the Treasurer to the Budget Reserve Fund and the amount of such surplus in excess of that transferred to said fund shall be deemed to be appropriated to the State Employees Retirement Fund, in addition to the contributions required pursuant to section 5-156a, but not exceeding five per cent of the unfunded past service liability of the system as set forth in the most recent actuarial valuation certified by the Retirement Commission. Commencing in the fiscal year ending June 30, 2021: Whenever the amount in the Budget Reserve Fund equals ten per cent or more but less than fifteen per cent of the net General Fund appropriation for the current fiscal year, fifteen per cent of any amount transferred to the Budget Reserve Fund shall be transferred to the State Employees Retirement Fund; whenever the amount in the Budget Reserve Fund equals five per cent or more but less than ten per cent of the net General Fund appropriation for the current fiscal year, ten per cent of any amount transferred to the Budget Reserve Fund shall be transferred to the State Employees Retirement Fund; and whenever the amount in the Budget Reserve Fund is less than five per cent of the net General Fund appropriation for the current fiscal year, five per cent of any amount transferred to the Budget Reserve Fund shall be transferred to the State Employees Retirement Fund.

(7) Any surplus in excess of the amounts transferred to the Budget Reserve Fund and the state employees retirement system shall be deemed to be appropriated for: (A) Redeeming prior to maturity any outstanding indebtedness of the state selected by the Treasurer in the best interests of the state; (B) purchasing outstanding indebtedness of the state in the open market at such prices and on such terms and conditions as the Treasurer shall determine to be in the best interests of the state for the purpose of extinguishing or defeasing such debt; (C) providing for the defeasance of any outstanding indebtedness of the state selected by the Treasurer in the best interests of the state by irrevocably placing with an escrow agent in trust an amount to be used solely for, and sufficient to satisfy, scheduled payments of both interest and principal on such indebtedness; or (D) any combination of the methods set forth in subparagraph (A), (B) or (C) of this subdivision. Pending the use or application of such amount for the payment of interest and principal, such amount may be invested in (i) direct obligations of the United States government, including state and local government treasury securities that the United States Treasury issues specifically to provide state and local governments with required cash flows at yields that do not exceed Internal Revenue Service arbitrage limits, (ii) obligations guaranteed by the United States government, and (iii) securities backed by United States government obligations as collateral and for which interest and principal payments on the collateral generally flow immediately through to the security holder.

(b) Moneys in the Budget Reserve Fund shall be maintained and invested for the purpose of reducing revenue volatility in the General Fund and reducing the need for increases in tax revenue and reductions in state aid due to economic changes, and shall be expended only as provided in this subsection. Whenever in any fiscal year the Comptroller has determined the amount of a deficit applicable with respect to the immediately preceding fiscal year, to the extent necessary, the amount of funds credited to the Budget Reserve Fund shall be deemed to be appropriated for purposes of funding such deficit. Commencing in the fiscal year ending June 30, 2021, if the consensus revenue estimate on April thirtieth pursuant to section 2-36c projects a two per cent decline in General Fund tax revenues from the current fiscal year to the subsequent fiscal year, the General Assembly may transfer funds from the Budget Reserve Fund to the General Fund in each of the subsequent three fiscal years.

(c) The Treasurer is authorized to invest all or any part of the Budget Reserve Fund or the Restricted Grants Fund in accordance with the provisions of section 3-31a. The interest derived from the investment of said funds shall be credited to the General Fund.

(d) No bill which, if passed, would reduce or eliminate the amount of any deposit to the Budget Reserve Fund or the Restricted Grants Fund as set forth in this section, shall be enacted by the General Assembly without an affirmative vote of at least three-fifths of the members of the joint standing committee of the General Assembly having cognizance of matters relating to appropriations and the budgets of state agencies and at least three-fifths of the members of the joint standing committee of the General Assembly having cognizance of matters relating to state finance, revenue and bonding.

(e) Not later than December 15, 2024, and every five years thereafter, the Secretary of the Office of Policy and Management, the director of the legislative Office of Fiscal Analysis and the State Comptroller shall each submit a report, in accordance with section 11-4a, to the joint standing committee of the General Assembly having cognizance of matters relating to revenue and the Governor on the Budget Reserve Fund deposit formula set forth in this section. The reports shall include an analysis of the formula’s impact on General Fund tax revenue volatility, the adequacy of deposits required by the formula to replace potential future revenue declines resulting from economic downturns, the amount of additional payments toward unfunded liability made as a result of the formula, and an analysis of the adequacy of the maximum cap on Budget Reserve Fund balances. The reports shall include recommended changes, if any, to the deposit formula or maximum balance cap that are consistent with the purposes of the Budget Reserve Fund as set forth in subsection (b) of this section.”

(P.A. 79-623, S. 6, 8; P.A. 82-443, S. 1, 3; June Sp. Sess. P.A. 83-37, S. 1, 3; P.A. 85-516, S. 1, 8; P.A. 86-403, S. 8, 132; June 23, Sp. Sess. II P.A. 86-1, S. 7, 10; P.A. 92-205, S. 6, 12; May Sp. Sess. P.A. 92-14, S. 1, 11; P.A. 02-118, S. 1; P.A. 03-2, S. 56; P.A. 15-244, S. 164.)

History: P.A. 82-443 amended Subsec. (a) to repeal provision that not less than 10% of any surplus, when determined, be transferred to the budget reserve fund, and to provide that the entire amount of any surplus, when determined, be transferred to said fund, added provision to Subsec. (a) that the amount of any surplus which may not be transferred to the budget reserve fund because of the maximum size of said fund, shall be deemed to be appropriated to retire state indebtedness and amended Subsec. (b) to provide that when a deficit has been determined for the immediately preceding fiscal year, funds credited to the budget reserve fund shall be deemed to be appropriated to fund such deficit; June Sp. Sess. P.A. 83-37 amended Subsec. (a) to provide that the portion of the state’s total indebtedness to be retired by the amount of surplus in excess of that transferred to the budget reserve fund is the portion of indebtedness “in excess of the state’s normal debt retirement schedule” and amended Subsec. (b) to repeal provision authorizing expenditure of moneys in budget reserve fund upon request of governor and approval of two-thirds of each house of the general assembly; P.A. 85-516 amended Subsec. (c) by adding provision that the interest derived from the investment of the fund shall be credited to the general fund; P.A. 86-403 made technical change in Subsec. (a); June 23 Sp. Sess. II P.A. 86-1 amended Subsec. (a) to clarify that “the amount in said fund” and “general fund appropriations” are “for the fiscal year in progress” and to replace purposes for which amount of surplus in excess of that transferred to budget reserve fund shall be deemed to be appropriated with purposes in Subdivs. (1) to (4), inclusive, and added provision re investment of amount pending application of such amount for payment of interest and principal; P.A. 92-205 amended Subsec. (a) to add provision re appropriation of surplus to state employees retirement fund, but not exceeding 5% of unfunded past service liability of the system; May Sp. Sess. P.A. 92-14 changed effective date of P.A. 92-205 but did not affect the date applicable to this section; P.A. 02-118 amended Subsec. (a) to increase amount of surplus transferred to fund from 5% to 7.5% of net General Fund appropriations for fiscal year in progress, effective July 1, 2002; P.A. 03-2 amended Subsec. (a) to increase amount of surplus transferred to fund from 7.5% to 10% of net General Fund appropriations for the fiscal year in progress, effective February 28, 2003; P.A. 15-244 substantially revised Subsec. (a) to designate existing provisions as Subdivs. (3), (6) and (7), define “combined revenue” in new Subdiv. (1), establish Restricted Grants Fund in new Subdiv. (2), establish transfer formulas commencing in fiscal year ending June 30, 2021, in new Subdiv. (4), require the Comptroller to certify threshold level for deposits to Budget Reserve Fund in new Subdiv. (5), and revise formula for transfer to State Employees Retirement Fund in Subdiv. (6), amended Subsec. (b) to describe purpose of Budget Reserve Fund and provide formula for transfer when 2 per cent decline in tax revenue is projected, added Subsec. (d) re approval by General Assembly of any bill to reduce or eliminate amount of deposit to Budget Reserve Fund and Subsec. (e) re reports to General Assembly, and made technical and conforming changes throughout, effective July 1, 2019.