New Jersey § 53:5a-34

§ 53:5a-34.

The Contingent Reserve Fund shall be the fund in which shall be credited contributions

made by the State. 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 June 30,

1992, the amount of the 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. Upon the basis of the tables recommended by the actuary which the board 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 board of trustees 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 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 June 30, 1996 shall be the full market value of the assets

as of that date and 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. “ Excess valuation assets ” means the valuation assets for a valuation period less the actuarial accrued liability

for the valuation period, if the sum is greater than zero. If there are excess valuation assets for the valuation period ending June 30, 1996,

the normal contributions for the valuation periods ending June 30, 1996 and June 30,

1997 which have not yet been paid to the retirement system shall be reduced to the

extent possible by the excess valuation assets, provided that 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 for a valuation period ending after June 30,

1996, the State Treasurer may reduce the normal contribution payable for the next

valuation period as follows: (1) for valuation periods ending June 30, 1997 through June 30, 2001, to the extent

possible by up to 100% of the excess valuation assets; (2) for the valuation period ending June 30, 2002, to the extent possible by up to

84% of the excess valuation assets; (3) for the valuation period ending June 30, 2003, to the extent possible by up to

68% of the excess valuation assets; and (4) for valuation periods ending June 30, 2004 through June 30, 2007, to the extent

possible by up to 50% of the excess valuation assets. c. The actuary 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 shall pay into the Contingent Reserve Fund during the ensuing year the

amount so certified. In the event the amount certified to be paid by the State includes amounts due for

services rendered by members to specific instrumentalities or authorities the total

amounts so certified shall be paid to the retirement system by the State; provided,

however, the full cost attributable to such services rendered to such instrumentalities

and authorities shall be computed separately by the actuary and the State shall be

reimbursed for such amounts by such instrumentalities or authorities. The cash death benefits, payable as the result of contribution by the State under

the provisions of this act upon the death of a member in active service and after

retirement shall be paid from the Contingent Reserve Fund.