Section 22C: Commonwealth's Pension Liability Fund; funding schedules; appropriations
Section 22C. (1) In each fiscal year, there shall be transferred from the General Fund by the comptroller, without further appropriation, to the Commonwealth's Pension Liability Fund the amount necessary to fully fund the system as determined by the schedule set forth in this section, including, without limitation, the amounts required under section 104. In addition to the amount necessary to fully fund the system that is transferred to the Commonwealth's Pension Liability Fund, the schedule shall include, and the comptroller shall transfer from the General Fund to the appropriate parties without further appropriation, the following amounts: (i) the administrative expenses for the public employee retirement administration commission as adopted annually by the commission pursuant to section 49 of chapter 7; (ii) the administrative costs of the deferred compensation plan operated by the board of higher education authorized by section 18A of chapter 15 and the employer contributions and administrative costs of the optional retirement program authorized by section 40 of chapter 15A; and (iii) reimbursements to local retirement systems for all cost of living adjustments made available by those systems on or after July 1, 1981 including, but not limited to, adjustments made available pursuant to section 102. Those amounts shall be accounted for separately. The comptroller may make such transfer in increments during the fiscal year as he deems appropriate to meet the cash flow needs of the commonwealth. The first such funding schedule shall be filed by the commissioner not later than March 1, 1988 and subsequent schedules shall be prepared pursuant to this section relating to the establishment of funding schedules and filed triennially on or before January 15. Said funding schedule shall be established and updated from time to time by said commissioner after reviewing the periodic actuarial valuation reports required by section twenty-one and such other reports as may be prepared pursuant to section thirty-five H of chapter ten; provided, however, that the house and senate committees on ways and means shall have reviewed and approved in advance the actuarial, economic, and demographic assumptions upon which said actuarial valuation reports and such other reports are based, and the manner and methodology used in the development of the actuarial reports and recommendations, prior to the consideration of said actuarial valuation, reports, and schedules by the general court. Said commissioner shall establish said schedule such that the increase in the amortization component of the appropriations or transfers required by this section from year to year shall not exceed seven and one-half per cent.
Said funding schedule, and any future updates thereto, shall be designed to reduce the unfunded actuarial liability attributable to the commonwealth's pension liability as of January first, nineteen hundred and eighty-seven to zero by June 30, 2040 and to meet the normal cost of all future benefits for which the commonwealth is obligated, and to meet any other component of the commonwealth's pension liability, as defined in section one. Updates of the funding schedule required by changes in the projected unfunded actuarial liability as determined by any periodic actuarial valuation report pursuant to section twenty-one, may reflect the further amortization time periods authorized by said section twenty-one; provided, however, that the senate committee on ways and means shall have reviewed and that the house committee on ways and means shall have approved in advance the actuarial, economic, and demographic assumptions upon which said actuarial valuation reports and such other reports are based, and the manner and methodology used in the development of the actuarial reports and recommendations, prior to the consideration of said actuarial valuation, reports, and schedules by the general court. The first such funding schedule shall be filed by said commissioner not later than March first, nineteen hundred and eighty-eight and subsequent schedules shall be prepared pursuant to the provisions of this section relating to the establishment of funding schedules and filed triennially on March first. If, within forty-five days of such filing, the house committee on ways and means has taken no action to approve or disapprove any such schedule, such schedule shall be deemed to have been approved. If said schedule is not so approved such payments or transfers shall be made in accordance with the most recent three year actuarial valuation which was so approved; provided, that such payments shall be an amount which is not less than the then previous year's appropriations, or transfers.
[ Third paragraph of subdivision (1) effective until July 1, 2023. For text effective July 1, 2023, see below.]
Notwithstanding any general or special law to the contrary, appropriations or transfers made to the Commonwealth's Pension Liability Fund in fiscal years 2021 to 2023, inclusive, shall be made in accordance with the following funding schedule: (i) $3,115,163,424 in fiscal year 2021; (ii) $3,415,153,662 in fiscal year 2022; and (iii) $3,744,032,959 in fiscal year 2023. Notwithstanding any provision of this subdivision to the contrary, any adjustments to these amounts shall be limited to increases in the schedule amounts for each of the specified years.
[ Third paragraph of subdivision (1) as amended by 2023, 28, Sec. 22 effective July 1, 2023. See 2023, 28, Sec. 115. For text effective until July 1, 2023, see above.]
Notwithstanding any general or special law to the contrary, appropriations or transfers made to the Commonwealth's Pension Liability Fund in fiscal years 2024 to 2026, inclusive, shall be made in accordance with the following funding schedule: (i) $4,104,583,378 in fiscal year 2024; (ii) $4,499,854,757 in fiscal year 2025; and (iii) $4,933,190,770 in fiscal year 2026. Notwithstanding any provision of this subdivision to the contrary, any adjustments to these amounts shall be limited to increases in the schedule amounts for each of the specified years.
(2) In addition to the annual appropriation required to meet the commonwealth funding schedule established pursuant to subdivision (1), the governor shall recommend an additional appropriation to the Commonwealth's Pension Liability Fund to further reduce the commonwealth's unfunded pension liability. Such additional appropriation shall be determined to be the amount which when added to the appropriation required pursuant to said subdivision (1) is equal to the sum of all retirement benefits paid by the commonwealth pursuant to this chapter for the state employees' and teachers' retirement systems, reimbursements to local retirement systems for pension obligations which the commonwealth has assumed on behalf of such systems, and the employer normal cost as determined in the most recent actuarial valuation report pursuant to section twenty-one for the state employees' and teachers' retirement systems. If the governor determines that funds are not available to allow recommendation of all of the additional appropriation required by this subdivision, the governor shall file a statement with the clerks of the senate and house of representatives supporting such determination. In such event, the governor shall determine the amount of available funds and shall recommend an additional appropriation as equal as possible to the amount required by this subdivision. Amounts required to fund the commonwealth's pension liability pursuant to this subdivision shall be subject to appropriation and shall not be subject to the provisions of section twenty-five.
(3) In addition to the funding schedule updates filed triennially beginning on March first, nineteen hundred and ninety, the commissioner of administration shall file also an advanced funding schedule which, notwithstanding the provisions of the definition of the commonwealth's funding schedule as appearing in section one, or the provisions of subdivision (1) of section twenty-one or of this section, shall not include in the calculation of the annual appropriations required to meet said schedule the amounts, if any, which have been appropriated to the Commonwealth's Pension Liability Fund pursuant to subdivision (2) as additional appropriations to reduce the unfunded pension liability, nor the amounts, if any, by which the actual investment return on the assets of the state employees' retirement system, the teachers' retirement system, and the Commonwealth's Pension Liability Fund exceed the return which would have been realized under the interest assumption utilized in the actuarial evaluation used to establish the most recently approved commonwealth funding schedule; provided, however, that any such amounts may be included in establishing a funding schedule pursuant to this section in any year in which the required actuarial valuation indicates that there is no remaining unfunded commonwealth pension liability.
(4) In each fiscal year, the governor shall recommend to the general court in addition to the appropriation pursuant to subdivision (1), such additional amount as may be required to meet the advanced funding schedule established pursuant to subdivision (3). Amounts required to fund the commonwealth's pension liability pursuant to this subdivision shall be subject to appropriation and shall not be subject to the provisions of section twenty-five.