Maryland State Personnel and Pensions Section 21-304

      (a)      (1)      In this section the following words have the meanings indicated.

            (2)      "Full funding rate" means the sum of:

                  (i)      the aggregate normal rate that is based on the normal contribution rate calculated under subsection (c) of this section and adjusted to incorporate legislative changes in benefits to reflect changes to the normal cost; and

                  (ii)      the aggregate unfunded accrued liability contribution rate that is based on the unfunded accrued liability contribution rate under subsection (d)(1) and (2) of this section.

            (3)      "Funding ratio for the employees' systems" means the actuarial value of assets for the employees' systems divided by the actuarial accrued liability for the employees' systems.

            (4)      "Funding ratio for the teachers' systems" means the actuarial value of assets for the teachers' systems divided by the actuarial accrued liability for the teachers' systems.

            (5)      "State member" does not include a member on whose behalf a participating governmental unit is required to make an employer contribution under § 21-305 or § 21-306 of this subtitle.

      (b)      (1)      Each fiscal year, on behalf of the State members of each State system, the State shall pay to the appropriate accumulation fund an amount equal to or greater than the sum of the amount, if any, required to be included in the budget bill under § 3-501(c)(2)(ii) of this article and the product of multiplying:

                  (i)      the aggregate annual earnable compensation of the State members of that State system; and

                  (ii)      1.      for State members of the Law Enforcement Officers' Retirement System, State Police Retirement System, and the Judges' Retirement System, the sum of the normal contribution rate and the accrued liability contribution rate, as determined under this section;

                        2.      for State members of the Employees' Pension System, Employees' Retirement System, Correctional Officers' Retirement System, and Legislative Pension Plan, the employees' systems contribution rate determined under subsection (e) of this section; or

                        3.      for State members of the Teachers' Pension System and Teachers' Retirement System, the teachers' systems contribution rate determined under subsection (f) of this section.

            (2)      The amount determined under paragraph (1) of this subsection for each State system shall be based on an actuarial determination of the amounts that are required to preserve the integrity of the funds of the several systems using:

                  (i)      the entry-age actuarial cost method; and

                  (ii)      actuarial assumptions adopted by the Board of Trustees.

            (3)      For the purpose of making the determinations required under this section:

                  (i)      the Employees' Retirement System, the Employees' Pension System, the Correctional Officers' Retirement System, and the Legislative Pension Plan shall be considered together as one State system; and

                  (ii)      the Teachers' Retirement System and the Teachers' Pension System shall be considered together as one State system.

      (c)      (1)      As part of each actuarial valuation, the actuary shall determine the normal contributions, net of member contributions, on account of the State members of each State system.

            (2)      For each State system, the normal contribution rate equals the fraction that has:

                  (i)      as its numerator, the sum of the normal contributions determined under this subsection; and

                  (ii)      as its denominator, the aggregate annual earnable compensation of the State members of the State system.

      (d)      (1)      Beginning July 1, 2001, each year the Board of Trustees shall set contribution rates for each State system that shall amortize:

                  (i)      all unfunded liabilities or surpluses accrued as of June 30, 2000, over 20 years; and

                  (ii)      any new unfunded liabilities or surpluses that have accrued from July 1 of the preceding fiscal year over 25 years to reflect:

                        1.      experience gains and losses;

                        2.      the effect of changes in actuarial assumptions; and

                        3.      the effect of legislation effective on or after July 1, 2001.

            (2)      If the accrued liability is increased by legislation that provides for early retirement of State employees, the additional liability shall be funded over a period of 5 years beginning on:

                  (i)      July 1, 1997 for legislation effective June 1, 1996; and

                  (ii)      July 1, 1998 for legislation effective June 1, 1997.

            (3)      If the accrued liability is increased by legislation effective June 1, 1998, that provides for the early retirement of employees of the University System of Maryland who are members of the Employees' Pension System or the Employees' Retirement System, the additional liability shall be determined by the actuary and funded over a period of 5 years beginning on July 1, 1999 by payment of an annual accrued liability contribution by the University System of Maryland and the Medical System as provided in § 21-307(i) and (j) of this subtitle.

      (e)      (1)      When the funding ratio for the employees' systems is between 90% and 110%, inclusive, the employees' system contribution rate is the rate for the previous fiscal year, adjusted to reflect legislative changes that result in changes in normal cost and to amortize over 25 years any actuarial liabilities of the employees' systems.

            (2)      When the funding ratio for the employees' systems is below 90%, the employees' system contribution rate shall be the sum of:

                  (i)      the employees' system contribution rate for the previous fiscal year; and

                  (ii)      20% of the difference between the full funding rate for the current fiscal year and the employees' system contribution rate for the previous fiscal year.

            (3)      When the funding ratio for the employees' systems is above 110%, the employees' system contribution rate shall be the difference between:

                  (i)      the employees' system contribution rate for the previous fiscal year; and

                  (ii)      20% of the difference between the employees' system contribution rate for the previous fiscal year and the full funding rate for the current fiscal year.

      (f)      (1)      When the funding ratio for the teachers' systems is between 90% and 110%, the teachers' system contribution rate is the rate for the previous fiscal year, adjusted to reflect legislative changes that result in changes in normal cost and to amortize over 25 years any actuarial liabilities of the teachers' systems.

            (2)      When the funding ratio for the teachers' systems is below 90%, the teachers' system contribution rate shall be the sum of:

                  (i)      the teachers' system contribution rate for the previous fiscal year; and

                  (ii)      20% of the difference between the full funding rate for the current fiscal year and the teachers' system contribution rate for the previous fiscal year.

            (3)      When the funding ratio for the teachers' systems is above 110%, the teachers' system contribution rate shall be the difference between:

                  (i)      the teachers' system contribution rate for the previous fiscal year; and

                  (ii)      20% of the difference between the teachers' system contribution rate for the previous fiscal year and the full funding rate for the current fiscal year.