New Jersey § 43:15a-24

§ 43:15a-24.

The contingent reserve fund shall be the fund in which shall be credited contributions

made by the State and other employers. a. Upon the basis of the tables recommended by the actuary which the board adopts

and regular interest, the actuary shall compute annually, beginning as of March 31,

1992, the amount of contribution which shall be the normal cost as computed under

the projected unit credit method attributable to service rendered under the retirement

system for the year beginning on July 1 immediately succeeding the date of the computation. This shall be known as the “normal contribution.” b. With respect to employers other than the State, upon the basis of the tables recommended

by the actuary which the board adopts and regular interest, the actuary shall compute

the amount of the accrued liability of the retirement system as of March 31, 1992

under the projected unit credit method, excluding the liability for pension adjustment

benefits for active employees funded pursuant to section 2 of P.L.1990, c. 6 ( C.43:15A-24.1 ), which is not already covered by the assets of the retirement system, valued in

accordance with the asset valuation method established in this section. Using the total amount of this unfunded accrued liability, the actuary shall compute

the initial amount of contribution which, if paid annually in level dollars for a

specific period of time, will amortize this liability. The State Treasurer shall determine, upon the advice of the Director of the Division

of Pensions and Benefits, the board of trustees and the actuary, the time period for

full funding of this liability, which shall not exceed 40 years on initial application

of this section as amended by this act, P.L.1994, c. 62 . This shall be known as the “accrued liability contribution.” Any increase or decrease in the unfunded accrued liability as a result of actuarial

losses or gains for the 10 valuation years following valuation year 1992 shall serve

to increase or decrease, respectively, the unfunded accrued liability contribution. Thereafter, any increase or decrease in the unfunded accrued liability as a result

of actuarial losses or gains for subsequent valuation years shall serve to increase

or decrease, respectively, the amortization period for the unfunded accrued liability,

unless an increase in the amortization period will cause it to exceed 30 years. If an increase in the amortization period as a result of actuarial losses for a

valuation year would exceed 30 years, the accrued liability contribution shall be

computed for the valuation year in the same manner provided for the computation of

the initial accrued liability contribution under this section. Beginning with the July 1, 2019 actuarial valuation, the accrued liability contribution

shall be computed so that if the contribution is paid annually in level dollars, it

will amortize this unfunded accrued liability over a closed 30-year period. Beginning with the July 1, 2029 actuarial valuation, when the remaining amortization

period reaches 20 years, any increase or decrease in the unfunded accrued liability

as a result of actuarial losses or gains for subsequent valuation years shall serve

to increase or decrease, respectively, the amortization period for the unfunded accrued

liability, unless an increase in the amortization period will cause it to exceed 20

years. If an increase in the amortization period as a result of actuarial losses for a

valuation year would exceed 20 years, the accrued liability contribution shall be

computed for the valuation year in the same manner provided for the computation of

the initial accrued liability contribution under this section. With respect to the State, upon the basis of the tables recommended by the actuary

which the commission adopts and regular interest, the actuary shall annually determine

if there is an amount of the accrued liability of the retirement system, computed

under the projected unit credit method, which is not already covered by the assets

of the retirement system, valued in accordance with the asset valuation method established

in this section. This shall be known as the “unfunded accrued liability.” If there was no unfunded accrued liability for the valuation period immediately preceding

the current valuation period, the actuary, using the total amount of this unfunded

accrued liability, shall compute the initial amount of contribution which, if paid

annually in level dollars for a specific period of time, will amortize this liability. The State Treasurer shall determine, upon the advice of the Director of the Division

of Pensions and Benefits, the commission and the actuary, the time period for full

funding of this liability, which shall not exceed 30 years. This shall be known as the “accrued liability contribution.” Thereafter, any increase or decrease in the unfunded accrued liability as a result

of actuarial losses or gains for subsequent valuation years shall serve to increase

or decrease, respectively, the amortization period for the unfunded accrued liability,

unless an increase in the amortization period will cause it to exceed 30 years. If an increase in the amortization period as a result of actuarial losses for a

valuation year would exceed 30 years, the accrued liability contribution shall be

computed for the valuation year in the same manner provided for the computation of

the initial accrued liability contribution under this section. Beginning with the July 1, 2019 actuarial valuation, the accrued liability contribution

shall be computed so that if the contribution is paid annually in level dollars, it

will amortize this unfunded accrued liability over a closed 30-year period. Beginning with the July 1, 2029 actuarial valuation, when the remaining amortization

period reaches 20 years, any increase or decrease in the unfunded accrued liability

as a result of actuarial losses or gains for subsequent valuation years shall serve

to increase or decrease, respectively, the amortization period for the unfunded accrued

liability, unless an increase in the amortization period will cause it to exceed 20

years. If an increase in the amortization period as a result of actuarial losses for a

valuation year would exceed 20 years, the accrued liability contribution shall be

computed for the valuation year in the same manner provided for the computation of

the initial accrued liability contribution under this section. The State may pay all or any portion of its unfunded accrued liability under the retirement

system from any source of funds legally available for the purpose, including, without

limitation, the proceeds of bonds authorized by law for this purpose. The value of the assets , excluding the special asset value set forth in section 38 of P.L.2010, c. 1 ( C.43:3C-14 ), to be used in the computation of the contributions provided for under this section

for valuation periods shall be the value of the assets for the preceding valuation

period increased by the regular interest rate, plus the net cash flow for the valuation

period (the difference between the benefits and expenses paid by the system and the

contributions to the system) increased by one half of the regular interest rate, plus

20% of the difference between this expected value and the full market value of the

assets as of the end of the valuation period. This shall be known as the “valuation assets.” Notwithstanding the first sentence of this paragraph, the valuation assets for the

valuation period ending March 31, 1996 shall be the full market value of the assets

as of that date and, with respect to the valuation assets allocated to the State,

shall include the proceeds from the bonds issued pursuant to the “Pension Bond Financing

Act of 1997,” P.L.1997, c. 114 ( C.34:1B-7.45 et seq. ), paid to the system by the New Jersey Economic Development Authority to fund the

unfunded accrued liability of the system. Notwithstanding the first sentence of this paragraph, the valuation assets for the

valuation period ending June 30, 1999 shall be the full market value of the assets

as of that date. “ Excess valuation assets ” for a valuation period means, with respect to the valuation assets allocated to

the State: (1) the valuation assets allocated to the State; less (2) the actuarial accrued liability of the State for basic benefits and pension adjustment

benefits under the retirement system; less (3) the contributory group insurance premium fund, created by section 4 of P.L.1955,

c. 214 ( C.43:15A-91 ), as amended by section 4 of P.L.1960, c. 79; less (4) the post retirement medical premium fund, created pursuant to section 2 of P.L.1990,

c. 6 ( C.43:15A-24.1 ), as amended by section 8 of P.L.1994, c. 62 ; less (5) the present value of the projected total normal cost for pension adjustment benefits

in excess of the projected total phased-in normal cost for pension adjustment benefits

for the State authorized by section 2 of P.L.1990, c. 6 ( C.43:15A-24.1 ) over the full phase-in period, determined in the manner prescribed for the determination

and amortization of the unfunded accrued liability of the system, if the sum of the

foregoing items is greater than zero. “ Excess valuation assets ” for a valuation period means, with respect to the valuation assets allocated to

other employers: (1) the valuation assets allocated to the other employers; less (2) the actuarial accrued liability of the other employers for basic benefits and

pension adjustment benefits under the retirement system, excluding the unfunded accrued

liability for early retirement incentive benefits pursuant to P.L.1991, c. 229, P.L.1991, c. 230, P.L.1993, c. 138, and P.L.1993, c. 181, for employers other than the State; less (3) the contributory group insurance premium fund, created by section 4 of P.L.1955,

c. 214 ( C.43:15A-91 ), as amended by section 4 of P.L.1960, c. 79; less (4) the present value of the projected total normal cost for pension adjustment benefits

in excess of the projected total phased-in normal cost for pension adjustment benefits

for the other employers authorized by section 2 of P.L.1990, c. 6 ( C.43:15A-24.1 ) over the full phase-in period, determined in the manner prescribed for the determination

and amortization of the unfunded accrued liability of the system, if the sum of the

foregoing items is greater than zero. If there are excess valuation assets allocated to the State or to the other employers

for the valuation period ending March 31, 1996, the normal contributions payable by

the State or by the other employers for the valuation periods ending March 31, 1996

and March 31, 1997 which have not yet been paid to the retirement system shall be

reduced to the extent possible by the excess valuation assets allocated to the State

or to the other employers, respectively, provided that with respect to the excess

valuation assets allocated to the State, the General Fund balances that would have

been paid to the retirement system except for this provision shall first be allocated

as State aid to public schools to the extent that additional sums are required to

comply with the May 14, 1997 decision of the New Jersey Supreme Court in Abbott v.

Burke. If there are excess valuation assets allocated to the State or to the other employers

for a valuation period ending after March 31, 1996, the State Treasurer may reduce

the normal contribution payable by the State or by the other employers for the next

valuation period as follows: (1) for valuation periods ending March 31, 1997 through March 31, 2001, to the extent

possible by up to 100% of the excess valuation assets allocated to the State or to

the other employers, respectively; (2) for the valuation period ending March 31, 2002, to the extent possible by up to

84% of the excess valuation assets allocated to the State or to the other employers,

respectively; (3) for the valuation period ending March 31, 2003, to the extent possible by up to

68% of the excess valuation assets allocated to the State or to the other employers,

respectively; and (4) for valuation periods ending March 31, 2004 through June 30, 2007, to the extent

possible by up to 50% of the excess valuation assets allocated to the State or to

the other employers, respectively. For calendar years 1998 and 1999, the rate of contribution of members of the retirement

system under section 25 of P.L.1954, c. 84 ( C.43:15A-25 ) shall be reduced by 1/2 of 1% from excess valuation assets and for calendar years

2000 and 2001, the rate of contribution shall be reduced by 2% from excess valuation

assets. Thereafter, through calendar year 2007, the rate of contribution of members of the

retirement system under that section for a calendar year shall be reduced equally

with normal contributions to the extent possible, but not by more than 2%, from excess

valuation assets if the State Treasurer determines that excess valuation assets shall

be used to reduce normal contributions by the State and local employers for the fiscal

year beginning immediately prior to the calendar year, or for the calendar year for

local employers whose fiscal year is the calendar year, and excess valuation assets

above the amount necessary to fund the reduction for that calendar year in the member

contribution rate plus an equal reduction in the normal contribution shall be available

for the further reduction of normal contributions, subject to the limitations prescribed

by this subsection. If there are excess valuation assets after reductions in normal contributions and

member contributions as authorized in the preceding paragraphs for a valuation period

beginning with the valuation period ending June 30, 1999, an amount of excess valuation

assets not to exceed the amount of the member contributions for the fiscal year in

which the normal contributions are payable shall be credited to the benefit enhancement

fund. The amount of excess valuation assets credited to the benefit enhancement fund shall

not exceed the present value of the expected additional normal contributions attributable

to the provisions of P.L.2001, c. 133 payable on behalf of the active members over the expected working lives of the active

members in accordance with the tables of actuarial assumptions for the valuation period. No additional excess valuation assets shall be credited to the benefit enhancement

fund after the maximum amount is attained. Interest shall be credited to the benefit enhancement fund as provided under section

33 of P.L.1954, c. 84 ( C.43:15A-33 ). The normal contribution for the increased benefits for active employees under P.L.2001, c. 133 shall be paid from the benefit enhancement fund. If assets in the benefit enhancement fund are insufficient to pay the normal contribution

for the increased benefits for a valuation period, the State shall pay the amount

of normal contribution for the increased benefits not covered by assets from the benefit

enhancement fund. c. The retirement system shall certify annually the aggregate amount payable to the

contingent reserve fund in the ensuing year, which amount shall be equal to the sum

of the amounts described in this section. The State Treasurer shall reduce the normal and accrued liability contributions payable

by employers other than the State, excluding the contribution payable from the benefit

enhancement fund, to a percentage of the amount certified annually by the retirement

system, which percentage shall be: for payments due in the State fiscal year ending

June 30, 2005, 20%; for payments due in the State fiscal year ending June 30, 2006,

not more than 40%; for payments due in the State fiscal year ending June 30, 2007,

not more than 60%; and for payments due in the State fiscal year ending June 30,

2008, not more than 80%. The State Treasurer shall reduce the normal and accrued liability contributions payable

by employers other than the State, excluding the contribution payable from the benefit

enhancement fund, to 50 percent of the amount certified annually by the retirement

system, for payments due in the State fiscal year ending June 30, 2009. An employer that elects to pay the reduced normal and accrued liability contribution

shall adopt a resolution, separate and apart from other budget resolutions, stating

that the employer needs to pay the reduced contribution and providing an explanation

of that need which shall include (1) a description of its inability to meet the levy

cap without jeopardizing public safety, health, and welfare or without jeopardizing

the fiscal stability of the employer, or (2) a description of another condition that

offsets the long term fiscal impact of the payment of the reduced contribution. An employer also shall document those actions it has taken to reduce its operating

costs, or provide a description of relevant anticipated circumstances that could have

an impact on revenues or expenditures. This resolution shall be submitted to and approved by the Local Finance Board after

making a finding that these fiscal conditions are valid and affirming the findings

contained in the employer resolution. An employer that elects to pay 100 percent of the amount certified by the retirement

system for the State fiscal year ending June 30, 2009 shall be credited with such

payment and any such amounts shall not be included in the employer's unfunded liability. The actuaries for the retirement system shall determine the unfunded liability of

the retirement system, by employer, for the reduced normal and accrued liability contributions

provided under P.L.2009, c. 19 . This unfunded liability shall be paid by the employer in level annual payments over

a period of 15 years beginning with the payments due in the State fiscal year ending

June 30, 2012 and shall be adjusted by the rate of return on the actuarial value of

assets. The retirement system shall annually certify to each employer the contributions due

to the contingent reserve fund for the liability under P.L.2009, c. 19 . The contributions certified by the retirement system shall be paid by the employer

to the retirement system on or before the date prescribed by law for payment of employer

contributions for basic retirement benefits. If payment of the full amount of the contribution certified is not made within 30

days after the last date for payment of employer contributions for basic retirement

benefits, interest at the rate of 10% per year shall be assessed against the unpaid

balance on the first day after the thirtieth day. The State shall pay into the contingent reserve fund during the ensuing year the amount

so determined. The death benefits, payable as a result of contribution by the State under the provisions

of this chapter upon the death of an active or retired member, shall be paid from

the contingent reserve fund. d. The disbursements for benefits not covered by reserves in the system on account

of veterans shall be met by direct contributions of the State and other employers.