2013 Maryland Code
STATE PERSONNEL AND PENSIONS
§ 21-304 - Employer contributions -- State

§21-304.

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

(2) With respect to local employees, “aggregate annual earnable compensation” means the total annual earnable compensation payable by a local employer to all of its local employees, calculated as of June 30 of the second prior fiscal year before the fiscal year for which the calculation is made under this section, adjusted by any actuarial assumed salary increases that were used in the actuarial valuation prepared under § 21-125(b) of this title for the immediate prior fiscal year.

(3) “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.

(4) “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.

(5) “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.

(6) “Local employee” means a member of the Teachers’ Retirement System or the Teachers’ Pension System who is an employee of a day school in the State under the authority and supervision of a county board of education or the Baltimore City Board of School Commissioners, employed as:

(i) a clerk;

(ii) a helping teacher;

(iii) a principal;

(iv) a superintendent;

(v) a supervisor; or

(vi) a teacher.

(7) “Local employer” means a county board of education or the Baltimore City Board of School Commissioners.

(8) “New legislative change” means a legislative change that results in an adjustment to the normal cost or accrued liabilities that has not previously been recognized in an actuarial valuation under § 21-125(b) of this title.

(9) “Preliminary funding rate” means the full funding rate without any adjustment to the normal cost or accrued liabilities for a new legislative change.

(10) “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.

(11) “Total employer contribution for local employees” means that portion of the employer contribution calculated under subsection (b) of this section that is attributable to all local employees.

(b) (1) Subject to paragraphs (4) and (5) of this subsection, 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.

(4) (i) Subject to § 21-309.1 of this subtitle, beginning on July 1, 2012 and each fiscal year thereafter, each local employer shall pay to the appropriate accumulation fund an amount equal to the local share of the total employer contribution for local employees as provided in this paragraph.

(ii) For fiscal years 2013 through 2016, each local employer shall pay to the Board of Trustees its local share, which shall be equal to the following amounts:

Local Employer

Fiscal Year 2013

Fiscal Year 2014

Fiscal Year 2015

Fiscal Year 2016

Allegany	1,487,742	1,885,754	2,412,465	2,773,677
Anne Arundel	11,493,684	14,568,567	18,637,716	21,428,297
Baltimore City	12,922,862	16,380,092	20,955,217	24,092,793
Baltimore	15,755,802	19,970,922	25,549,002	29,374,395
Calvert	2,835,938	3,594,631	4,598,648	5,287,193
Caroline	793,934	1,006,334	1,287,413	1,480,175
Carroll	4,005,782	5,077,441	6,495,621	7,468,196
Cecil	2,459,819	3,117,889	3,988,747	4,585,973
Charles	3,936,516	4,989,645	6,383,304	7,339,061
Dorchester	656,543	832,186	1,064,625	1,224,028
Frederick	5,893,461	7,470,128	9,556,610	10,987,499
Garrett	664,714	842,544	1,077,874	1,239,262
Harford	5,529,741	7,009,102	8,966,815	10,309,396
Howard	9,821,066	12,448,477	15,925,463	18,309,945
Kent	366,147	464,102	593,730	682,628
Montgomery	27,227,553	34,511,689	44,151,153	50,761,802
Prince George’s	19,554,579	24,785,979	31,708,954	36,456,662
Queen Anne’s	1,105,527	1,401,286	1,792,679	2,061,093
St. Mary’s	2,485,697	3,150,691	4,030,711	4,634,220
Somerset	480,124	608,570	778,550	895,121
Talbot	628,456	796,586	1,019,080	1,171,665
Washington	3,094,113	3,921,875	5,017,294	5,768,522
Wicomico	2,173,593	2,755,091	3,524,616	4,052,348
Worcester	1,271,561	1,611,739	2,061,914	2,370,640

(iii) Beginning in fiscal year 2017, each local employer shall pay to the Board of Trustees its local share equal to the normal contribution rate for the Teachers’ Retirement System and the Teachers’ Pension System multiplied by the aggregate annual earnable compensation of the local employees of that local employer.

(5) The difference between the total employer contribution for local employees and the local share of the total employer contribution for all local employees shall be the obligation of the State.

(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(h) and (i) 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) Subject to paragraph (4) of this subsection, 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) 1. 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; or

2. for a fiscal year for which an adjustment to normal cost or accrued liabilities for a new legislative change is first determined as a result of an actuarial valuation under § 21-125(b) of this title, 20% of the difference between the preliminary funding rate for the current fiscal year and the employees’ system contribution rate for the previous fiscal year.

(3) Subject to paragraph (4) of this subsection, 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) 1. 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; or

2. for a fiscal year for which an adjustment to normal cost or accrued liabilities for a new legislative change is first determined as a result of an actuarial valuation under § 21-125(b) of this title, 20% of the difference between the employees’ system contribution rate for the previous fiscal year and the preliminary funding rate for the current fiscal year.

(4) For a fiscal year for which an adjustment to normal cost or accrued liabilities for a new legislative change is determined as a result of an actuarial valuation under § 21-125(b) of this title, the contribution rate for the employees’ systems under paragraph (2) or (3) of this subsection shall be adjusted to fully reflect the cost or savings of the new legislative changes that result in changes in normal contributions or accrued liabilities and to amortize over 25 years any changes in accrued liabilities of the employees’ systems.

(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) Subject to paragraph (4) of this subsection, 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) 1. 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; or

2. for a fiscal year for which an adjustment to normal cost or accrued liabilities for a new legislative change is first determined as a result of an actuarial valuation under § 21-125(b) of this title, 20% of the difference between the preliminary funding rate for the current fiscal year and the teachers’ system contribution rate for the previous fiscal year.

(3) Subject to paragraph (4) of this subsection, 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) 1. 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; or

2. for a fiscal year for which an adjustment to normal cost or accrued liabilities for a new legislative change is first determined as a result of an actuarial valuation under § 21-125(b) of this title, 20% of the difference between the teachers’ system contribution rate for the previous fiscal year and the preliminary funding rate for the current fiscal year.

(4) For a fiscal year for which an adjustment to normal cost or accrued liabilities for a new legislative change is determined as a result of an actuarial valuation under § 21-125(b) of this title, the contribution rate for the teachers’ systems under paragraph (2) or (3) of this subsection shall be adjusted to fully reflect the cost or savings of the new legislative changes that result in changes in normal contributions or accrued liabilities and to amortize over 25 years any changes in accrued liabilities of the teachers’ systems.