<section article="gsp" article_name="State Personnel and Pensions" number="21-101" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>There is a State Retirement and Pension System.</text> </level> <level label="b"> <text>The State Retirement and Pension System shall provide benefits under this Division II for participants in the several systems.</text> </level> <level label="c"> <text>The State Retirement and Pension System has the powers and privileges of a corporation.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-102" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <text>The State Retirement and Pension System consists of:</text> <level label="1"> <text>the Correctional Officers’ Retirement System, established on July 1, 1974;</text> </level> <level label="2"> <text>the Employees’ Pension System, established on January 1, 1980;</text> </level> <level label="3"> <text>the Employees’ Retirement System, established on October 1, 1941;</text> </level> <level label="4"> <text>the Judges’ Retirement System, which consists of:</text> <level label="i"> <text>the contributory plan, established on July 1, 1969; and</text> </level> <level label="ii"> <text>the noncontributory plan, established on April 7, 1904;</text> </level> </level> <level label="5"> <text>the Legislative Pension Plan;</text> </level> <level label="6"> <text>the Local Fire and Police System, established on July 1, 1989;</text> </level> <level label="7"> <text>the Law Enforcement Officers’ Pension System, established on July 2, 1990;</text> </level> <level label="8"> <text>the State Police Retirement System, established on July 1, 1949;</text> </level> <level label="9"> <text>the Teachers’ Pension System, established on January 1, 1980;</text> </level> <level label="10"> <text>the Teachers’ Retirement System, established on August 1, 1927; and</text> </level> <level label="11"> <text>any other system or subsystem that the Board of Trustees administers.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-103" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <text>There is a Board of Trustees for the State Retirement and Pension System.</text> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-104" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>The Board of Trustees consists of the following 15 trustees:</text> <level label="1"> <text>the Secretary of Budget and Management, ex officio, who may appoint a deputy secretary as designee;</text> </level> <level label="2"> <text>the State Comptroller, ex officio, who may appoint a deputy comptroller as designee;</text> </level> <level label="3"> <text>the State Treasurer, ex officio, who may appoint a deputy treasurer as designee; and</text> </level> <level label="4"> <text>12 trustees elected or appointed as follows:</text> <level label="i"> <text>one trustee who is an active member of the Correctional Officers’ Retirement System, the Employees’ Pension System, the Employees’ Retirement System, the Judges’ Retirement System, the Legislative Pension Plan, the Local Fire and Police System, or the Law Enforcement Officers’ Pension Plan, who shall be elected as provided in subsection (b) of this section and may not be an employee of the State Retirement Agency;</text> </level> <level label="ii"> <text>one trustee who is a retiree of the Correctional Officers’ Retirement System, the Employees’ Pension System, the Employees’ Retirement System, the Judges’ Retirement System, the Legislative Pension Plan, the Local Fire and Police System, or the Law Enforcement Officers’ Pension Plan, who shall be elected as provided in subsection (b) of this section and may not be an employee of the State Retirement Agency;</text> </level> <level label="iii"> <text>one trustee who is an active member of the Teachers’ Pension System or the Teachers’ Retirement System, who shall be elected as provided in subsection (b) of this section and may not be an employee of the State Retirement Agency;</text> </level> <level label="iv"> <text>one trustee who is a retiree of the Teachers’ Pension System or the Teachers’ Retirement System, who shall be elected as provided in subsection (b) of this section and may not be an employee of the State Retirement Agency;</text> </level> <level label="v"> <text>one trustee who is either an active member or retiree of the State Police Retirement System, who shall be elected as provided in subsection (b) of this section and may not be an employee of the State Retirement Agency;</text> </level> <level label="vi"> <text>one trustee who represents the interests of participating governmental units in the Employees’ Pension System and the Employees’ Retirement System;</text> </level> <level label="vii"> <text>one trustee who represents the interests of county governments who has at least 10 years of experience in financial management and oversight of county government budgets; and</text> </level> <level label="viii"> <text>five trustees who:</text> <level label="1"> <text>represent the interests of the public;</text> </level> <level label="2"> <text>are not members of any of the several systems;</text> </level> <level label="3"> <text>are not employees, directors, partners, or officers of any of the external investment managers for the several systems;</text> </level> <level label="4"> <text>do not have an ownership interest in any of the external investment managers of the several systems that is greater than 5% of the issued or outstanding stock;</text> </level> <level label="5"> <text>are not directors, partners, or officers of any corporation or large organization in which any of the external managers for the several systems own 10% or more of the issued or outstanding stock of the corporation or large organization; and</text> </level> <level label="6"> <text>have at least 10 years of substantial experience overseeing similar pension systems, large foundations, or other similar large organizations with fiduciary responsibilities relating to different classes of participants.</text> </level> </level> </level> </level> <level label="b"> <level label="1"> <level label="i"> <text>The trustees who are members or retirees of the Correctional Officers’ Retirement System, the Employees’ Pension System, the Employees’ Retirement System, the Judges’ Retirement System, the Legislative Pension Plan, the Local Fire and Police System, or the Law Enforcement Officers’ Pension Plan shall be elected by the active members and the retirees of those State systems.</text> </level> <level label="ii"> <text>The trustees who are members or retirees of the Teachers’ Pension System or the Teachers’ Retirement System shall be elected by the active members and the retirees of those State systems.</text> </level> <level label="iii"> <text>The trustee who is a member or retiree of the State Police Retirement System shall be elected by the active members and the retirees of that State system.</text> </level> <level label="iv"> <text>The elections shall be conducted under regulations that the Board of Trustees adopts.</text> </level> </level> <level label="2"> <text>The trustee who represents the interests of participating subdivisions in the Employees’ Pension System and the Employees’ Retirement System shall be appointed by the Governor.</text> </level> <level label="3"> <text>The trustees who represent the public shall be appointed by the Governor with the advice and consent of the Senate.</text> </level> <level label="4"> <text>The trustee who represents the interests of county governments shall be appointed by the Governor and may be from a list submitted to the Governor by the Maryland Association of Counties.</text> </level> </level> <level label="c"> <level label="1"> <text>Within 10 days after the appointment or election of an individual as a trustee, the individual shall take and subscribe to an oath of office that, so far as it devolves on the individual, as trustee the individual:</text> <level label="i"> <text>will diligently and honestly administer the affairs of the Board of Trustees; and</text> </level> <level label="ii"> <text>will not knowingly violate or willingly allow a violation of the law applicable to the several systems.</text> </level> </level> <level label="2"> <text>The officer before whom the individual takes the oath shall:</text> <level label="i"> <text>certify the oath; and</text> </level> <level label="ii"> <text>submit the oath immediately to the office of the Secretary of State for filing in that office.</text> </level> </level> </level> <level label="d"> <level label="1"> <level label="i"> <text>The term of an appointed or elected trustee is 4 years.</text> </level> <level label="ii"> <text>Trustees who represent the public serve staggered 4–year terms.</text> </level> </level> <level label="2"> <text>A trustee who is a member but not a retiree of the Correctional Officers’ Retirement System, the Employees’ Pension System, the Employees’ Retirement System, the Judges’ Retirement System, the Legislative Pension Plan, the Local Fire and Police System, the Law Enforcement Officers’ Pension Plan, the Teachers’ Pension System, or the Teachers’ Retirement System at the time of election of the trustee may complete the term of office even if, during the term, the trustee:</text> <level label="i"> <text>becomes a retiree of the State system of which the trustee was a member at the time of election; and</text> </level> <level label="ii"> <text>has completed more than 3 years of the trustee’s term of office.</text> </level> </level> <level label="3"> <text>A vacancy in the office of a trustee shall be filled for the unexpired term in the same manner as the office was previously filled.</text> </level> <level label="4"> <text>At the end of a term, a trustee continues to serve until a successor is appointed or elected.</text> </level> <level label="5"> <text>A trustee who is appointed after a term has begun serves only for the rest of the term and until a successor is selected and qualifies.</text> </level> </level> <level label="e"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, each trustee shall attend at least 80% of the monthly Board of Trustees meetings held during a 1–year period beginning January 1.</text> </level> <level label="2"> <level label="i"> <text>A trustee may be granted an excused absence by the chairman of the Board or another officer of the Board due to:</text> <level label="1"> <text>illness;</text> </level> <level label="2"> <text>family emergencies;</text> </level> <level label="3"> <text>jury duty; or</text> </level> <level label="4"> <text>attendance at investment or fiduciary training.</text> </level> </level> <level label="ii"> <text>An excused absence under this paragraph may not be considered an absence for the purposes of paragraph (1) of this subsection.</text> </level> </level> <level label="3"> <level label="i"> <text>Any elected or Governor–appointed trustee that fails to attend at least 80% of the meetings, not including excused absences under paragraph (2) of this subsection, shall be removed from the Board of Trustees by the Governor.</text> </level> <level label="ii"> <text>The Governor shall fill the vacancy for the office of the trustee for the unexpired term in the same manner as the office was previously filled.</text> </level> </level> <level label="4"> <text>An elected trustee representing employees of any of the several systems shall be given reasonable time during work to attend monthly meetings of the Board of Trustees or committee meetings of the Board of Trustees.</text> </level> </level> <level label="f"> <text>Notwithstanding subsection (d) of this section, the Governor may remove a Governor–appointed trustee for incompetence or misconduct.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-105" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <text>The Board of Trustees shall:</text> <level label="1"> <text>elect a chairman annually from its membership; and</text> </level> <level label="2"> <text>by a majority vote of all of the trustees, elect a secretary who may be one of its members.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-106" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>Each trustee is entitled to one vote on the Board of Trustees.</text> </level> <level label="b"> <text>A majority of the trustees then serving on the Board of Trustees is a quorum for:</text> <level label="1"> <text>the transaction of any business;</text> </level> <level label="2"> <text>the exercise of any power; or</text> </level> <level label="3"> <text>the performance of any duty authorized or imposed by law.</text> </level> </level> <level label="c"> <text>The Board of Trustees shall set the times and places of its meetings.</text> </level> <level label="d"> <text>A trustee:</text> <level label="1"> <text>may not receive compensation from the several systems for service as a trustee; but</text> </level> <level label="2"> <text>is entitled to reimbursement for expenses under the Standard State Travel Regulations, as provided in the State budget.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-107" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <text>The Attorney General is the legal adviser of the Board of Trustees.</text> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-108" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>The responsibility for the management, general administration, and proper operation of the several systems is vested in the Board of Trustees.</text> </level> <level label="2"> <text>The Board of Trustees is not responsible for:</text> <level label="i"> <text>reviewing the benefit structures for any of the several systems, except for the purpose of making technical corrections; or</text> </level> <level label="ii"> <text>considering benefit enhancements for any of the several systems.</text> </level> </level> <level label="3"> <level label="i"> <text>Each trustee on the Board of Trustees is required to complete at least 8 hours of educational training, including training on investments, fiduciary conduct, board governance, retirement administration and operations, and other relevant topics that the Chairman of the Board of Trustees may deem appropriate, during a 1–year period beginning January 1.</text> </level> <level label="ii"> <text>The training shall be approved by the Chairman of the Board of Trustees to satisfy the 8–hour requirement under subparagraph (i) of this paragraph.</text> </level> </level> </level> <level label="b"> <text>In addition to the Investment Committee established under § 21–114 of this subtitle and the Compensation and Staffing Committee established under § 21–122 of this subtitle, the Board of Trustees may establish other committees.</text> </level> <level label="c"> <text>Subject to §§ 21–122 and 21–123 of this subtitle, the Board of Trustees shall have full power to invest the assets of the several systems.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-109" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <text>The Board of Trustees shall submit the budget for the several systems annually to the Governor for inclusion in the State budget.</text> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-110" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>The Board of Trustees shall adopt regulations providing for:</text> <level label="1"> <text>the administration of the several systems;</text> </level> <level label="2"> <text>the management of the assets of the several systems;</text> </level> <level label="3"> <text>the transaction of its business;</text> </level> <level label="4"> <text>the imposition of an administrative fee on any participating employer that fails to provide the information required by the State Retirement Agency to properly enroll eligible employees in the several systems;</text> </level> <level label="5"> <text>notwithstanding the provisions of § 9–602 of the Criminal Law Article, the management of monitoring and recording, for training and quality control purposes:</text> <level label="i"> <text>incoming telephone conversations to employees of the Member Services division of the State Retirement Agency, to telephones within the offices of the State Retirement Agency; and</text> </level> <level label="ii"> <text>outgoing telephone conversations initiated by the Member Services division’s virtual hold callback feature of the automated call distribution system; and</text> </level> </level> <level label="6"> <text>rules regarding the retention of recordings made in accordance with paragraph (5) of this subsection, including a prohibition on the retention of recordings for longer than 10 years.</text> </level> </level> <level label="b"> <level label="1"> <text>Subject to the approval of the Board of Public Works, the Board of Trustees may adopt regulations for the administration of funds of a pension or retirement system established under §§ 7-206 and 7-603 of the Transportation Article.</text> </level> <level label="2"> <text>The Maryland Transit Administration shall pay all financing costs of a pension or retirement system established under §§ 7-206 and 7-603 of the Transportation Article, including the pro rata share of the administrative costs that the Board of Trustees incurs.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-111" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>As the Board of Trustees considers necessary to properly administer and enforce this Division II or regulations adopted under this Division II, the Board of Trustees may:</text> <level label="i"> <text>require any officer or unit of the State or of a political subdivision of the State to furnish the Board of Trustees without charge with a certified copy of any record or paper in the official custody of the officer or unit; and</text> </level> <level label="ii"> <text>issue a summons, subpoena, or other process, for the attendance of witnesses and the production of documents before the Board of Trustees.</text> </level> </level> <level label="2"> <text>The Board of Trustees, or any trustee on the Board of Trustees, may administer an oath to a witness who appears before the Board of Trustees.</text> </level> </level> <level label="b"> <level label="1"> <text>In addition to any hearing that Title 10 of the State Government Article requires, the Board of Trustees may hold hearings as necessary to perform its duties.</text> </level> <level label="2"> <text>The hearings are governed by regulations of the Board of Trustees.</text> </level> <level label="3"> <text>The Board of Trustees is not bound by technical rules of evidence.</text> </level> <level label="4"> <text>If the Board of Trustees approves an application for disability retirement on behalf of a State police officer under § 2-415(b) of the Public Safety Article, the Board of Trustees shall hold a hearing unless the officer waives the hearing in writing.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-112" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>Each year the Board of Trustees shall:</text> <level label="1"> <text>publish a consolidated report that includes:</text> <level label="i"> <text>the fiscal transactions of the several systems for the preceding fiscal year;</text> </level> <level label="ii"> <text>the amount of the accumulated cash, securities, and other assets of each State system; and</text> </level> <level label="iii"> <text>the last balance sheet that shows the financial condition of each State system by means of an actuarial valuation of the assets and liabilities of the State system; and</text> </level> </level> <level label="2"> <text>provide each member and retiree with a statement on the State Retirement Agency’s website that:</text> <level label="i"> <text>summarizes the information in the report under item (1) of this subsection; and</text> </level> <level label="ii"> <text>explains any material modifications to the applicable State system during the period covered by the annual report.</text> </level> </level> </level> <level label="b"> <text>The Board of Trustees shall make the following information available to each member and retiree through a secure access participant portal:</text> <level label="1"> <text>the member’s vested benefits or the benefits the member will be entitled to on vesting;</text> </level> <level label="2"> <text>the date when the member was or will be vested; and</text> </level> <level label="3"> <text>the present value of any annuity.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-113" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>Except as provided in § 29–409 of this article, if, because of an error, a retiree or beneficiary receives a benefit that differs from the benefit the retiree or beneficiary is entitled to receive, the Board of Trustees shall:</text> <level label="1"> <text>correct the error; and</text> </level> <level label="2"> <text>to the extent practicable, adjust the payment to the retiree or beneficiary to provide the actuarial equivalent to which the retiree or beneficiary is correctly entitled.</text> </level> </level> <level label="b"> <level label="1"> <text>Notwithstanding § 21-502 of this title, the Board of Trustees may recover the amount of any improper payment.</text> </level> <level label="2"> <text>After due notice, if a person who receives an improper payment fails to repay the money owed, the Board of Trustees may:</text> <level label="i"> <text>begin an action to recover the amount of the improper payment and the costs of bringing the action; or</text> </level> <level label="ii"> <text>adjust any future monthly payments of that person's allowance to recover the amount owed.</text> </level> </level> <level label="3"> <text>Subject to the approval of the Board of Trustees, the Executive Director of the State Retirement Agency shall:</text> <level label="i"> <text>determine any monthly adjustment under paragraph (2)(ii) of this subsection; and</text> </level> <level label="ii"> <text>notify the person of the total amount to be recovered, the monthly adjustment, and the period of recovery.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-114" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <text>There is an Investment Committee of the Board of Trustees.</text> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-115" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>The Board of Trustees shall:</text> <level label="1"> <text>specify by resolution the number of members of the Investment Committee; and</text> </level> <level label="2"> <text>except as provided in subsection (b)(2) of this section, appoint annually the members of the Investment Committee from the members of the Board of Trustees.</text> </level> </level> <level label="b"> <text>The Board of Trustees shall ensure that the membership of the Investment Committee includes:</text> <level label="1"> <text>a representative of each of:</text> <level label="i"> <text>the Employees’ Pension System or the Employees’ Retirement System;</text> </level> <level label="ii"> <text>the Teachers’ Pension System or the Teachers’ Retirement System; and</text> </level> <level label="iii"> <text>the State Police Retirement System; and</text> </level> </level> <level label="2"> <text>three representatives from the public appointed by the Board of Trustees with the approval of the Board of Public Works for staggered 3-year terms who:</text> <level label="i"> <text>are not members, retirees, or beneficiaries under any of the several systems;</text> </level> <level label="ii"> <text>have had experience in the management and control of large investments; and</text> </level> <level label="iii"> <text>have at least 10 years of substantial experience as any one or a combination of the following:</text> <level label="1"> <text>a portfolio manager acting in a fiduciary capacity;</text> </level> <level label="2"> <text>an employee or principal of a trust institution, investment organization, or endowment fund acting either in a management-related capacity or an investment-related capacity;</text> </level> <level label="3"> <text>a chartered financial analyst in good standing; or</text> </level> <level label="4"> <text>a professional engaged in a public or private financial or investment field that is comparable to the fields listed in this item.</text> </level> </level> </level> </level> <level label="c"> <text>The Board of Trustees may:</text> <level label="1"> <text>set additional qualifications for public members; and</text> </level> <level label="2"> <text>adopt regulations on ethical standards and conflicts of interest for public members.</text> </level> </level> <level label="d"> <text>By resolution, the Board of Trustees shall designate the chairman of the Investment Committee.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-116" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>By resolution, the Board of Trustees shall specify the powers of the Investment Committee.</text> </level> <level label="b"> <text>The Investment Committee shall advise the Board of Trustees and make recommendations on:</text> <level label="1"> <text>the investment programs;</text> </level> <level label="2"> <text>compliance of the investment programs with the policies of the Board of Trustees; and</text> </level> <level label="3"> <text>bonding for employees of the State Retirement Agency in the form and amount required by law.</text> </level> </level> <level label="c"> <level label="1"> <text>Subject to subsections (d) and (e) of this section, the Board of Trustees shall adopt an investment policy manual that details:</text> <level label="i"> <text>the functions of the Investment Division of the State Retirement Agency;</text> </level> <level label="ii"> <text>the goals and objectives of the several investment programs; and</text> </level> <level label="iii"> <text>the policies that govern the selection and retention of investments.</text> </level> </level> <level label="2"> <text>The Investment Committee shall:</text> <level label="i"> <text>prepare and maintain the investment policy manual; and</text> </level> <level label="ii"> <text>submit the investment policy manual, and any subsequent amendments to the manual, to the Board of Trustees for approval.</text> </level> </level> </level> <level label="d"> <level label="1"> <level label="i"> <text>Consistent with minority business purchasing standards applicable to units of State government under the State Finance and Procurement Article and consistent with the fiduciary duties of the Board of Trustees, the Board of Trustees shall direct the Investment Committee to attempt to use to the greatest extent feasible minority business enterprises to provide brokerage and investment management services to the Board.</text> </level> <level label="ii"> <text>For the fiscal year beginning July 1, 2022, and each fiscal year thereafter, the Board of Trustees shall assess the use of minority business enterprises as required under this subsection.</text> </level> <level label="iii"> <text>For purposes of this subsection, brokerage and investment management services shall include services relating to all allocated asset classes.</text> </level> </level> <level label="2"> <level label="i"> <text>To assist it in achieving the goal described under paragraph (1) of this subsection, the Investment Committee shall undertake measures to remove any barriers that limit full participation by minority business enterprises in brokerage and investment management services opportunities afforded under this title.</text> </level> <level label="ii"> <text>The measures undertaken by the Investment Committee shall include the use of a wide variety of media, including the State Retirement Agency’s website, to provide notice to a broad and varied range of potential providers about the brokerage and investment management services opportunities afforded by the State Retirement Agency.</text> </level> </level> <level label="3"> <text>In consultation with the Governor’s Office of Small, Minority, and Women Business Affairs and the Investment Committee, the Board of Trustees shall develop guidelines to assist the Investment Committee in identifying and evaluating qualified minority business enterprises in order to help the State Retirement Agency achieve the objective for greater use of minority business enterprises for brokerage and investment management services.</text> </level> <level label="4"> <text>On or before November 1 each year, the Investment Committee shall submit a report to the Board of Trustees, the Governor’s Office of Small, Minority, and Women Business Affairs and, subject to § 2–1257 of the State Government Article, the General Assembly on:</text> <level label="i"> <text>the identity of the minority business enterprise brokerage and investment management services firms used by the Investment Committee in the immediately preceding fiscal year;</text> </level> <level label="ii"> <text>the percentage and dollar value of the assets that are under the control of the Investment Committee that are under the investment control of minority business enterprise brokerage and investment management services firms for each allocated asset class; and</text> </level> <level label="iii"> <text>the measures the Investment Committee undertook in the immediately preceding fiscal year in accordance with paragraph (2)(ii) of this subsection.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>Consistent with its fiduciary duties, the Board of Trustees shall include policies in the investment policy manual adopted under subsection (c) of this section regarding the management of risk, including the management of climate risks in accordance with § 21–116.1 of this subtitle, in the investment of system assets, and shall address:</text> <level label="i"> <text>investment principles, guidelines, and policies that govern the selection and retention of the investments of the several systems, including proxy voting and engagement guidelines; and</text> </level> <level label="ii"> <text>a policy that proxy votes and sample due diligence questionnaires for prospective managers be published on the State Retirement Agency’s website.</text> </level> </level> <level label="2"> <level label="i"> <text>Consistent with its fiduciary duties, on or before January 31, 2019, and every year thereafter, the Board of Trustees shall submit a report on the risk assessment of the several systems, including climate risk, in accordance with § 21–116.1 of this subtitle and § 2–1257 of the State Government Article, to the General Assembly.</text> </level> <level label="ii"> <text>The assessment shall:</text> <level label="1"> <text>identify recent studies or actions by other U.S. state public pension funds, financial institutions, or risk experts, including those related to disclosure, risk assessment, investment principles, or other related issues or activities;</text> </level> <level label="2"> <text>based on the information obtained in item 1 of this subparagraph, recommend best practices and consider whether these best practices can be incorporated into the investment policy manual;</text> </level> <level label="3"> <text>examine the potential magnitude of the long–term risks and opportunities of multiple scenarios and related regulatory developments across industry sectors, asset classes, and the total portfolio of the several systems; and</text> </level> <level label="4"> <text>include any other information the Board of Trustees or Investment Committee deems necessary.</text> </level> </level> <level label="iii"> <text>The State Retirement Agency shall post a report regarding the risk assessment on its website.</text> </level> </level> <level label="3"> <text>To the extent practicable, the State Retirement Agency shall request all information necessary from managers, brokers, or other entities to carry out the policies of the Board of Trustees with respect to an assessment conducted in accordance with this subsection.</text> </level> <level label="4"> <text>The Board of Trustees, or any other fiduciary of the several systems as defined in § 21–201(b) of this title, may not be held liable for any actions taken or decisions made in good faith for the purpose of complying with or executing this subsection.</text> </level> <level label="5"> <text>Nothing in this subsection shall require the Board of Trustees to take action as described in this section unless the Board of Trustees determines, in good faith, that the action is consistent with the fiduciary responsibilities of the Board of Trustees as described in Subtitle 2 of this title.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-116.1" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>In accordance with the fiduciary responsibilities as described in Subtitle 2 of this title, when managing the assets of the several systems, a fiduciary shall consider the potential systemic risks of the impact of climate change on the assets of the several systems, including monitoring net–zero aligned investments and climate solutions to ensure a path to a long–term sustainable portfolio.</text> </level> <level label="b"> <text>The climate risk assessment required under § 21–116 of this subtitle shall include:</text> <level label="1"> <text>a review of the total investment portfolio of the several systems to determine the level of climate risk across industry sectors and asset classes that prioritize high–impact sectors responsible for greenhouse gas emissions;</text> </level> <level label="2"> <text>identifying investment opportunities in:</text> <level label="i"> <text>emerging technologies in renewable energy; and</text> </level> <level label="ii"> <text>transitioning, reducing, and eliminating carbon–emitting technology;</text> </level> </level> <level label="3"> <text>establishing a process for regular reassessment of the potential systemic risks of the impact of climate change on the assets of the several systems; and</text> </level> <level label="4"> <text>utilization of the best data and practices available in current science, investment strategies, and climate risk analyses.</text> </level> </level> <level label="c"> <text>Based on the information obtained in accordance with subsection (b) of this section, the Chief Investment Officer, subject to the policies adopted by the Board of Trustees:</text> <level label="1"> <text>shall review and manage the investments of the several systems; and</text> </level> <level label="2"> <text>may choose to invest or divest in funds within the several systems.</text> </level> </level> <level label="d"> <text>The Chief Investment Officer shall:</text> <level label="1"> <text>identify environmentally sustainable investment opportunities to support a low–carbon economy;</text> </level> <level label="2"> <text>develop transition assessments relating to investments in high–impact sectors;</text> </level> <level label="3"> <text>evaluate whether internal and external investment managers are taking steps to transition to a more sustainable business model aligned with a low–carbon economy; and</text> </level> <level label="4"> <text>work with managers, data providers, index providers, or consultants to identify, analyze, define, and prioritize asset–class specific metrics and minimum standards to evaluate transition readiness and resiliency for companies in high–impact sectors.</text> </level> </level> <level label="e"> <text>The policies of the Board of Trustees shall address and mitigate climate risk in the investment of system assets through:</text> <level label="1"> <text>direct engagement with managers, brokers, or other entities;</text> </level> <level label="2"> <text>proxy voting;</text> </level> <level label="3"> <text>a periodic review and assessment of the effectiveness of procedures used for direct engagement and proxy voting; and</text> </level> <level label="4"> <text>to the extent practicable, the establishment of an advisory panel of experts in the analysis of climate change risk to provide the most current science and data available.</text> </level> </level> <level label="f"> <text>Any action taken in accordance with this section shall be included in the risk assessment report required under § 21–116 of this subtitle.</text> </level> <level label="g"> <text>The Board of Trustees, or any other fiduciary of the several systems as defined in § 21–201(b) of this title, may not be held liable for any actions taken or decisions made in good faith for the purpose of complying with or executing this section.</text> </level> <level label="h"> <text>Nothing in this section shall require the Board of Trustees, or any other fiduciary of the several systems as defined in § 21–201(b) of this title, to take action as described in this section unless the Board of Trustees or other fiduciary determines, in good faith, that the action is consistent with the fiduciary responsibilities of the Board of Trustees as described in Subtitle 2 of this title.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-117" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>There is a State Retirement Agency.</text> </level> <level label="b"> <text>The State Retirement Agency is an agency of the Board of Trustees.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-118" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>The Board of Trustees shall appoint the Executive Director of the State Retirement Agency.</text> </level> <level label="2"> <text>The Executive Director serves at the pleasure of the Board of Trustees.</text> </level> </level> <level label="b"> <text>The Executive Director shall:</text> <level label="1"> <text>be in charge of the State Retirement Agency;</text> </level> <level label="2"> <text>compile annually a comprehensive budget for submission to the Board of Trustees; and</text> </level> <level label="3"> <text>have the duties and functions that the Board of Trustees may delegate.</text> </level> </level> <level label="c"> <level label="1"> <level label="i"> <text>The Executive Director shall employ a staff to carry out the administrative duties of the several systems.</text> </level> <level label="ii"> <text>Except as provided in § 21–315 of this title, the compensation of the Executive Director and staff shall be as provided in the State budget.</text> </level> </level> <level label="2"> <text>Except for employees described in paragraph (3) of this subsection, the employees are skilled service or professional service employees subject to the provisions of this article that govern skilled service or professional service employees.</text> </level> <level label="3"> <text>An employee is in the executive service, management service, or is a special appointment in the State Personnel Management System if:</text> <level label="i"> <text>the employee holds a position that the Executive Director, with the approval of the Board of Trustees, designates as a professional or technical position that involves specialized skill, education, and knowledge; and</text> </level> <level label="ii"> <text>the employee’s labor is predominantly intellectual rather than manual or physical.</text> </level> </level> </level> <level label="d"> <text>The Executive Director and the Chief Investment Officer and staff of the Investment Division of the State Retirement Agency shall comply with the policies that the Board of Trustees prescribes about conflicts of interest and personal investments.</text> </level> <level label="e"> <level label="1"> <text>A document that must be executed by or for the Board of Trustees shall be signed:</text> <level label="i"> <text>by the Executive Director of the State Retirement Agency; or</text> </level> <level label="ii"> <text>in the absence or disability of the Executive Director, by another employee whom the Executive Director, with the approval of the Chairman of the Board of Trustees, designates in writing.</text> </level> </level> <level label="2"> <text>If a countersignature is required, with the approval of the Chairman of the Board of Trustees, the Executive Director shall designate those employees of the State Retirement Agency who may sign.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-118.1" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>Notwithstanding any other provision of law, on the recommendation of the Executive Director and the Investment Committee, the Board of Trustees shall determine the qualifications and appointment, as well as compensation and leave, for the Chief Investment Officer who shall be the head of the Investment Division.</text> </level> <level label="2"> <text>The Compensation and Staffing Committee shall assist the Executive Director and the Investment Committee in recommending qualifications, compensation, and leave for the Chief Investment Officer, including any salary changes for the Chief Investment Officer.</text> </level> </level> <level label="b"> <level label="1"> <text>In making recommendations, determinations, and appointments under this section, the Board of Trustees, Executive Director, Investment Committee, and Compensation and Staffing Committee shall consider the comparative qualifications, compensation, and leave of employees serving in similar positions and discharging similar duties at comparable public pension funds.</text> </level> <level label="2"> <level label="i"> <level label="1"> <text>The Board of Trustees shall adopt objective criteria for setting the qualifications and compensation of the Chief Investment Officer.</text> </level> <level label="2"> <text>The Board shall consider the recommendations of the Compensation and Staffing Committee under § 21–122(g) of this subtitle before adopting objective criteria for setting compensation.</text> </level> </level> <level label="ii"> <text>The criteria adopted under subparagraph (i) of this paragraph shall include objective benchmarks of investment performance that shall be met or exceeded for the Chief Investment Officer to be eligible for an increase in compensation.</text> </level> <level label="iii"> <text>The Board may not grant any increases in compensation to the Chief Investment Officer in a fiscal year in which State employees are subject to a furlough.</text> </level> <level label="iv"> <text>The Chief Investment Officer’s compensation may not be adjusted in accordance with cost–of–living adjustments and merit increases available to State employees.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>In addition to the Board of Trustees setting the compensation of the Chief Investment Officer under subsection (a) of this section, the Board of Trustees may also award financial incentives to the Chief Investment Officer in accordance with this subsection and subsection (d) of this section.</text> </level> <level label="2"> <level label="i"> <text>Any financial incentives paid shall be paid over multiple fiscal years in equal installments.</text> </level> <level label="ii"> <text>The dates on which financial incentives awarded under this section shall be paid shall be set by the Board of Trustees at the time the financial incentives are determined.</text> </level> <level label="iii"> <text>The dates set under subparagraph (ii) of this paragraph may not be changed after being set.</text> </level> </level> <level label="3"> <level label="i"> <text>Except as provided in subparagraph (ii) of this paragraph, if the Chief Investment Officer separates from employment, the Board of Trustees may not pay out any remaining financial incentives due to be paid after the date of separation from employment.</text> </level> <level label="ii"> <text>The Board of Trustees may pay any remaining awarded financial incentives after the date of separation from employment if the Chief Investment Officer retires directly from the Investment Division on or within 30 days after the date of separation from employment.</text> </level> </level> <level label="4"> <level label="i"> <text>The Board of Trustees may not pay financial incentives in a fiscal year in which State employees are subject to a furlough.</text> </level> <level label="ii"> <text>Except as provided in subparagraph (iii) of this paragraph, the Board of Trustees shall pay out any financial incentives not paid in accordance with subparagraph (i) of this paragraph only:</text> <level label="1"> <text>after the furlough period has ended; and</text> </level> <level label="2"> <text>if the Chief Investment Officer is currently employed as the Chief Investment Officer.</text> </level> </level> <level label="iii"> <text>After a furlough period has ended, the Board of Trustees shall pay out any remaining awarded financial incentives not paid to the Chief Investment Officer in accordance with subparagraph (i) of this paragraph if:</text> <level label="1"> <text>the Chief Investment Officer separates from employment with the Investment Division during the furlough period; and</text> </level> <level label="2"> <text>after the date of separation from employment, the Chief Investment Officer retires directly from the Investment Division or within 30 days after the date of separation from employment.</text> </level> </level> </level> </level> <level label="d"> <level label="1"> <level label="i"> <level label="1"> <text>On the recommendation of the Compensation and Staffing Committee, the Board of Trustees shall establish objective criteria for awarding financial incentives to the Chief Investment Officer.</text> </level> <level label="2"> <text>The Board shall consider the recommendations of the Compensation and Staffing Committee under § 21–122(g) of this subtitle before adopting objective criteria for awarding financial incentives.</text> </level> </level> <level label="ii"> <text>Financial incentives may only be awarded based on the objective criteria adopted in accordance with subparagraph (i) of this paragraph.</text> </level> </level> <level label="2"> <text>The criteria under paragraph (1) of this subsection shall include:</text> <level label="i"> <text>objective benchmarks of investment performance for the assets of the several systems that shall be met or exceeded;</text> </level> <level label="ii"> <text>objective criteria used by comparable public pension funds awarding financial incentives to chief investment officers; and</text> </level> <level label="iii"> <text>limitations on the amount of financial incentives in a fiscal year, not to exceed 33% of the Chief Investment Officer’s compensation exclusive of financial incentives.</text> </level> </level> <level label="3"> <text>The Chief Investment Officer may not participate in any deliberations regarding the establishment of criteria under this subsection.</text> </level> <level label="4"> <text>The criteria established under this subsection shall be included in the investment policy manual.</text> </level> <level label="5"> <text>On or before September 1 of each year, the Board of Trustees shall submit to the Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article, a copy of the most recent criteria established under this section and any financial incentives that were awarded for the previous fiscal year to the Chief Investment Officer.</text> </level> </level> <level label="e"> <text>The Chief Investment Officer appointed under this section is a State employee and shall be entitled to participate in the Employees’ Pension System under Title 23 of this article.</text> </level> <level label="f"> <text>On the recommendation of either the Investment Committee or the Executive Director and on receiving an affirmative vote from a majority of the Board of Trustees, the Executive Director shall terminate the appointment of the Chief Investment Officer.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-118.2" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>The Executive Director shall employ a Director of Diversity, Equity, and Inclusion of the State Retirement Agency.</text> </level> <level label="2"> <text>The Director of Diversity, Equity, and Inclusion shall report directly to the Executive Director.</text> </level> </level> <level label="b"> <text>The Director of Diversity, Equity, and Inclusion shall:</text> <level label="1"> <text>identify and minimize barriers to open and equitable processes by ensuring the State Retirement Agency provides access and opportunities to underrepresented groups;</text> </level> <level label="2"> <text>engage with the Board of Trustees, staff, and external entities to promote and support diversity of participation and leadership;</text> </level> <level label="3"> <text>provide assistance as necessary to the Investment Division established under § 21–122 of this subtitle;</text> </level> <level label="4"> <text>provide advice and reports to the Board of Trustees on topics including diversity, equity, and inclusion; and</text> </level> <level label="5"> <text>have the duties and functions that the Executive Director or the Board of Trustees may delegate.</text> </level> </level> <level label="c"> <text>On the recommendation of the Executive Director and on receiving an affirmative vote from a majority of the Board of Trustees, the Executive Director shall terminate the Director of Diversity, Equity, and Inclusion.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-119" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <text>The State Retirement Agency shall carry out the administrative duties of the several systems.</text> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-120" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>On or before December 15 of each year, the Executive Director shall submit a report to the Board of Trustees about the operation and performance of the State Retirement Agency during the fiscal year that ended on the preceding June 30.</text> </level> <level label="b"> <text>The report shall include data on all commissions the State Retirement Agency paid on investments during that fiscal year.</text> </level> <level label="c"> <text>The Board of Trustees may:</text> <level label="1"> <text>prescribe the format of the report; and</text> </level> <level label="2"> <text>require any information it considers appropriate.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-121" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>The State Retirement Agency may at any time examine the records of a participating employer to determine whether the payment of benefits to a participant and the payment of contributions by a participating employer or participant are and will be in accordance with the provisions of Division II of this article.</text> </level> <level label="b"> <text>Whenever an audit reveals that the payment of benefits to a participant or the payment of contributions by a participating employer or participant is not in accordance with the provisions of Division II of this article:</text> <level label="1"> <text>the State Retirement Agency and participating employer shall correct their records; and</text> </level> <level label="2"> <level label="i"> <text>the participating employer shall pay any amounts owed to the accumulation fund of the appropriate State system; and</text> </level> <level label="ii"> <text>the member contributions owed by the participant shall be made by the participant in accordance with § 21–312(e) of this title.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-122" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>There is an Investment Division in the State Retirement Agency.</text> </level> <level label="2"> <text>Subject to subsection (f) of this section, the Board of Trustees shall determine the qualifications and compensation for positions within the Investment Division.</text> </level> <level label="3"> <text>The Board of Trustees:</text> <level label="i"> <text>may determine and create the type and number of positions necessary for carrying out the professional investment functions of the Investment Division; and</text> </level> <level label="ii"> <text>shall adopt objective criteria to be followed when exercising its authority under item (i) of this paragraph and paragraph (2) of this subsection.</text> </level> </level> <level label="4"> <text>On or before October 1, 2012, and each October 1 thereafter, the Board of Trustees shall report to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article on:</text> <level label="i"> <text>the current compensation of the Chief Investment Officer and employees of the Investment Division;</text> </level> <level label="ii"> <text>any compensation increases the Chief Investment Officer and employees of the Investment Division have received in the fiscal year immediately preceding that October 1;</text> </level> <level label="iii"> <level label="1"> <text>the number of individuals in the Investment Division of the State Retirement Agency who were employed as professional investment staff and terminated employment with the State Retirement Agency in the fiscal year immediately preceding that October 1;</text> </level> <level label="2"> <text>the number of years of employment an individual described in item 1 of this item had accrued with the State Retirement Agency at the time the individual terminated employment with the State Retirement Agency; and</text> </level> <level label="3"> <text>to the extent possible, the new employer, position, and compensation the individual described in item 1 of this item accepted upon terminating employment with the State Retirement Agency;</text> </level> </level> <level label="iv"> <text>the criteria used to set the compensation of employees of the Investment Division;</text> </level> <level label="v"> <text>the criteria used to determine the type and number of positions necessary to carry out the functions of the Investment Division;</text> </level> <level label="vi"> <text>the number of employees eligible for financial incentives, and the financial incentives paid in the current fiscal year; and</text> </level> <level label="vii"> <text>the net impact on system investment returns attributable to the costs of the Investment Division for the preceding fiscal year.</text> </level> </level> </level> <level label="b"> <text>As the Board of Trustees specifies, the Investment Division shall invest the assets of the several systems.</text> </level> <level label="c"> <level label="1"> <text>Quarterly, the Investment Division shall submit to the Board of Trustees a report about the commissions that the State Retirement Agency pays on investments.</text> </level> <level label="2"> <text>The report shall detail:</text> <level label="i"> <text>the identity of each recipient of a commission that the State Retirement Agency paid during the previous quarter;</text> </level> <level label="ii"> <text>the dollar amount of commission business that each recipient performs;</text> </level> <level label="iii"> <text>the average price–per–share each recipient charged or, if the commission was paid on a net basis, the markup or markdown that the recipient uses; and</text> </level> <level label="iv"> <text>a reasonable history of the allocation of commissions.</text> </level> </level> </level> <level label="d"> <text>On behalf of the several systems, the Chief Investment Officer:</text> <level label="1"> <text>may hire external investment managers to invest the assets of the several systems;</text> </level> <level label="2"> <text>may select and invest in specific investment vehicles, including limited partnerships, private equity fund investments, and private real estate fund investments; and</text> </level> <level label="3"> <text>may terminate the appointment of an external investment manager.</text> </level> </level> <level label="e"> <text>Prior to terminating the appointment of an external investment manager under subsection (d)(3) of this section, the Chief Investment Officer shall provide written documentation to the Board of Trustees and the Investment Committee explaining the basis for the termination.</text> </level> <level label="f"> <level label="1"> <level label="i"> <level label="1"> <text>The Board of Trustees shall adopt objective criteria for setting the qualifications and compensation of positions under subsection (a) of this section.</text> </level> <level label="2"> <text>The Board shall consider the recommendations of the Compensation and Staffing Committee under subsection (g) of this section before adopting objective criteria for setting compensation.</text> </level> </level> <level label="ii"> <text>The criteria adopted under subparagraph (i) of this paragraph shall include:</text> <level label="1"> <text>consideration of the comparative qualifications and compensation of employees serving in similar positions and discharging similar duties at comparable public pension funds;</text> </level> <level label="2"> <text>limitations on the amount by which the compensation for a position may be increased each fiscal year, not to exceed 10%; and</text> </level> <level label="3"> <text>objective benchmarks of investment performance that shall be met or exceeded by an individual to be eligible for an increase in compensation.</text> </level> </level> <level label="iii"> <text>The Board of Trustees may not grant any increases in compensation in a fiscal year in which State employees are subject to a furlough.</text> </level> <level label="iv"> <text>For positions that do not involve discretion over investment–related decisions, the Board of Trustees may not set compensation that exceeds compensation for providing comparable services in other State employment.</text> </level> <level label="v"> <text>Except for positions under subparagraph (iv) of this paragraph, the compensation of an employee may not be adjusted in accordance with cost–of–living adjustments and merit increases available to State employees.</text> </level> <level label="vi"> <text>Based on the recommendations of the Compensation and Staffing Committee under subsection (g) of this section, the Board of Trustees shall approve:</text> <level label="1"> <text>the type and number of positions in the Investment Division;</text> </level> <level label="2"> <text>the qualifications for each position in the Investment Division, as approved under item 1 of this subparagraph;</text> </level> <level label="3"> <text>any compensation and financial incentives for the Investment Division staff, including salary increases or decreases recommended for the employees of the Investment Division; and</text> </level> <level label="4"> <text>in accordance with § 21–118.1 of this subtitle, any compensation and financial incentives for the Chief Investment Officer, including salary increases or decreases recommended for the Chief Investment Officer.</text> </level> </level> </level> <level label="2"> <level label="i"> <level label="1"> <text>The Board of Trustees shall adopt objective criteria for awarding financial incentives under subsection (a) of this section.</text> </level> <level label="2"> <text>The Board shall consider the recommendations of the Compensation and Staffing Committee under subsection (g) of this section before adopting objective criteria for awarding financial incentives.</text> </level> </level> <level label="ii"> <text>Financial incentives may only be awarded based on the objective criteria adopted in accordance with subparagraph (i) of this paragraph.</text> </level> <level label="iii"> <text>The criteria adopted under subparagraph (i) of this paragraph shall include:</text> <level label="1"> <text>limitations on the amount of financial incentives for a position in a fiscal year, not to exceed 33% of a position’s compensation, exclusive of financial incentives; and</text> </level> <level label="2"> <text>objective benchmarks of investment performance that shall be met or exceeded by an individual to be eligible for financial incentives, including benchmarks for the asset class in which investments are under the direction of the individual.</text> </level> </level> <level label="iv"> <level label="1"> <text>Any financial incentives paid shall be paid over multiple fiscal years in equal installments.</text> </level> <level label="2"> <text>The dates on which financial incentives awarded under this section shall be paid shall be set by the Board of Trustees at the time the financial incentives are determined.</text> </level> <level label="3"> <text>The dates set under subsubparagraph 2 of this subparagraph may not be changed after being set.</text> </level> </level> <level label="v"> <text>Except as provided in subparagraph (vi) of this paragraph, if an individual who has been awarded financial incentives separates from employment in the Investment Division, the Board of Trustees may not pay out any remaining financial incentives due to be paid after the date of separation from employment.</text> </level> <level label="vi"> <text>The Board of Trustees may pay any remaining awarded financial incentives after the date of separation from employment if the individual retires directly from the Investment Division on or 30 days after the date of separation.</text> </level> <level label="vii"> <text>The Board of Trustees may not award financial incentives for positions that do not involve discretion over investment–related decisions.</text> </level> <level label="viii"> <level label="1"> <text>The Board of Trustees may not pay out financial incentives in a fiscal year in which State employees are subject to a furlough.</text> </level> <level label="2"> <text>Except as provided in subsubparagraph 3 of this subparagraph, the Board of Trustees shall pay out any financial incentives not paid to an individual in accordance with subsubparagraph 1 of this subparagraph only:</text> </level> <level label="A"> <text>after the furlough period has ended; and</text> </level> <level label="B"> <text>if the individual is currently employed in the Investment Division.</text> </level> <level label="3"> <text>After a furlough period has ended, the Board of Trustees shall pay out any remaining awarded financial incentives not paid to an individual in accordance with subsubparagraph 1 of this subparagraph if:</text> </level> <level label="A"> <text>the individual separates from employment with the Investment Division during the furlough period; and</text> </level> <level label="B"> <text>after the date of separation from employment, the individual retires directly from the Investment Division or within 30 days after the date of separation from employment.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>On or before October 1 each year, the Board of Trustees shall submit to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article, a copy of the most recent criteria adopted under this subsection, including any changes to compensation and incentives for the Chief Investment Officer and Investment Division staff.</text> </level> <level label="ii"> <text>In addition to the report required under subparagraph (i) of this paragraph, the Board of Trustees shall submit, within 30 days of adoption by the Board of Trustees, a copy of any changes adopted to the criteria established under this subsection to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article.</text> </level> </level> <level label="4"> <text>On or before October 1, January 1, March 1, and July 1 each year, the Board of Trustees shall submit to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article, a report on system investment returns for the preceding fiscal quarter, including:</text> <level label="i"> <text>investment performance by asset class, including performance relative to asset class benchmarks; and</text> </level> <level label="ii"> <text>investment performance of assets under the direction of each Investment Division employee.</text> </level> </level> </level> <level label="g"> <level label="1"> <text>There is a Compensation and Staffing Committee of the Board of Trustees.</text> </level> <level label="2"> <level label="i"> <text>The following members shall be included on the Committee:</text> <level label="1"> <text>the Secretary of Budget and Management or the Secretary’s designee;</text> </level> <level label="2"> <text>one or more members of the Board of Trustees under § 21–104(a)(4)(i), (ii), (iii), (iv), or (v) of this subtitle, appointed by the Chairman of the Board of Trustees;</text> </level> <level label="3"> <text>one or more members of the Board of Trustees under § 21–104(a)(4)(vi) or (vii) of this subtitle, appointed by the Chairman of the Board of Trustees; and</text> </level> <level label="4"> <text>one or more members of the Board of Trustees under § 21–104(a)(4)(viii) of this subtitle, appointed by the Chairman of the Board of Trustees.</text> </level> </level> <level label="ii"> <text>The following members may be appointed to the Committee by the Chairman of the Board of Trustees:</text> <level label="1"> <text>the State Treasurer, or the State Treasurer’s designee; and</text> </level> <level label="2"> <text>the Comptroller, or the Comptroller’s designee.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>The Chairman of the Board of Trustees shall appoint the Chair of the Committee.</text> </level> <level label="ii"> <text>The Chairman of the Board of Trustees may not serve as the Chair of the Committee.</text> </level> </level> <level label="4"> <text>The Committee shall make recommendations to the Board of Trustees regarding:</text> <level label="i"> <text>objective criteria under § 21–118.1(b)(2) and (d) of this subtitle for the compensation and financial incentives for the Chief Investment Officer; and</text> </level> <level label="ii"> <text>objective criteria under subsections (a) and (f) of this section for the compensation and financial incentives for the positions in the Investment Division.</text> </level> </level> <level label="5"> <level label="i"> <text>The Board of Trustees shall enter into an agreement with a consultant to assist the Committee and the Board regarding objective criteria under this subsection and the Board’s responsibilities for compensation and staffing.</text> </level> <level label="ii"> <level label="1"> <text>Except as provided in subsubparagraph 2 of this subparagraph, the Board of Trustees may not enter into an agreement with a consultant under subparagraph (i) of this paragraph if that consultant is actively providing consulting services for the Board of Trustees or the staff of the Investment Division.</text> </level> <level label="2"> <text>The Board of Trustees may enter into an agreement with a consultant selected under subparagraph (i) of this paragraph to provide executive search services for the Board of Trustees or the Executive Director.</text> </level> </level> <level label="iii"> <text>The Chief Investment Officer may not separately retain the consultant hired under subparagraph (i) of this paragraph for any services.</text> </level> </level> <level label="6"> <level label="i"> <text>The Executive Director shall serve in an advisory capacity to the Committee regarding compensation and incentive compensation for the Chief Investment Officer and Investment Division staff.</text> </level> <level label="ii"> <text>The Chief Investment Officer may not participate in any deliberations regarding the criteria for compensation and financial incentives for the Chief Investment Officer or Investment Division staff.</text> </level> <level label="iii"> <text>The Chief Investment Officer shall serve in an advisory capacity regarding the type of, number of, and qualifications for positions in the Investment Division.</text> </level> </level> </level> <level label="h"> <level label="1"> <text>There is a governance program within the Investment Division of the State Retirement Agency established in accordance with the policies of the Board of Trustees.</text> </level> <level label="2"> <level label="i"> <text>Subject to subsection (a) of this section, the Chief Investment Officer shall employ an individual to assist in the implementation of the governance program.</text> </level> <level label="ii"> <text>On the recommendation of the Chief Investment Officer and on receiving an affirmative vote from a majority of the Board of Trustees, the Executive Director shall terminate an individual employed in accordance with subparagraph (i) of this paragraph.</text> </level> </level> <level label="3"> <text>The responsibilities of the individual employed under paragraph (2)(i) of this subsection shall be consistent with the fiduciary responsibilities and shall include:</text> <level label="i"> <text>developing appropriate standards, policies, and processes for the implementation and management of the governance program;</text> </level> <level label="ii"> <text>monitoring, evaluating, and quantifying the risks and effects of material environmental, social, and governance factors on the investment of the assets of the several systems;</text> </level> <level label="iii"> <text>working across asset classes to integrate consideration of material environmental, social, and governance factors into investment due diligence and recommendations;</text> </level> <level label="iv"> <text>providing recommendations to the Chief Investment Officer based on research and analysis of material environmental, social, and governance factors, including diversity, equity, and inclusion;</text> </level> <level label="v"> <text>assisting the Investment Division in identifying and recommending investment opportunities to the Chief Investment Officer;</text> </level> <level label="vi"> <text>evaluating whether internal and external investment managers represent a diverse set of backgrounds;</text> </level> <level label="vii"> <text>working with investment managers, data providers, index providers, or consultants to identify, analyze, define, and prioritize specific metrics to align with an inclusive environment;</text> </level> <level label="viii"> <text>supporting the Board of Trustees with the implementation of the State’s minority business enterprise policies by the Investment Division, in accordance with Title 14, Subtitle 3 of the State Finance and Procurement Article and § 21–116(d) of this subtitle; and</text> </level> <level label="ix"> <text>providing advice and reports to the Board of Trustees on governance topics.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-123" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>Except for those assets that the law requires another entity or person to control, the State Retirement Agency, under the supervision of the Board of Trustees, shall manage all assets of the several systems.</text> </level> <level label="b"> <text>The Board of Trustees:</text> <level label="1"> <text>is deemed the owner of all the assets of the several systems; but</text> </level> <level label="2"> <text>may delegate some or all incidents of ownership to the State Retirement Agency to administer the investment portfolios of the several systems.</text> </level> </level> <level label="c"> <level label="1"> <text>The Board of Trustees may invest assets of the several systems subject to the conditions that it imposes.</text> </level> <level label="2"> <text>The Board of Trustees shall include the conditions that it adopts under paragraph (1) of this subsection in the investment policy manual required by § 21–116(c) of this subtitle.</text> </level> </level> <level label="d"> <level label="1"> <text>This subsection applies only to the execution of:</text> <level label="i"> <text>ground rent redemption deeds;</text> </level> <level label="ii"> <text>releases or reassignments of mortgages; and</text> </level> <level label="iii"> <text>satisfactions or reassignments of notes conveying, releasing, or reassigning any interest owned by the State for the use of a fund of the several systems.</text> </level> </level> <level label="2"> <text>An instrument must be executed by any two of:</text> <level label="i"> <text>the State Treasurer;</text> </level> <level label="ii"> <text>the Executive Director of the State Retirement Agency;</text> </level> <level label="iii"> <text>the Chief Investment Officer of the State Retirement Agency; or</text> </level> <level label="iv"> <text>another employee of the State Retirement Agency as the Executive Director designates with the approval of the Board of Trustees.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>The Board of Trustees may commingle assets of the several systems, including the Postretirement Health Benefits Trust Fund, if the Board of Trustees keeps separate sets of records for each State system or group of State systems listed in paragraph (2) of this subsection that show:</text> <level label="i"> <text>the percentage of participation of each State system or group of State systems, including the Postretirement Health Benefits Trust Fund;</text> </level> <level label="ii"> <text>the percentage of income, gains, and losses applicable to each State system or group of State systems, including the Postretirement Health Benefits Trust Fund; and</text> </level> <level label="iii"> <text>the total contributions and disbursements applicable to each State system or group of State systems, including the Postretirement Health Benefits Trust Fund.</text> </level> </level> <level label="2"> <text>The Board of Trustees shall keep records required by paragraph (1) of this subsection for each of the following:</text> <level label="i"> <text>the group that consists of the Correctional Officers’ Retirement System, the Employees’ Pension System, the Employees’ Retirement System, and the Legislative Pension Plan;</text> </level> <level label="ii"> <text>the Judges’ Retirement System;</text> </level> <level label="iii"> <text>the Law Enforcement Officers’ Pension System;</text> </level> <level label="iv"> <text>the State Police Retirement System;</text> </level> <level label="v"> <text>the group that consists of the Teachers’ Pension System and the Teachers’ Retirement System; and</text> </level> <level label="vi"> <text>the Postretirement Health Benefits Trust Fund.</text> </level> </level> </level> <level label="f"> <text>On behalf of the several systems, the Board of Trustees shall make arrangements for the safe custody, domestic or global, of investments with one or more duly qualified custodian banks or trust companies.</text> </level> <level label="g"> <level label="1"> <text>Notwithstanding any other law in force on or after July 1, 1988, unless the law makes specific reference to this subsection, and subject to paragraph (2) of this subsection, the Board of Trustees may keep all analyses, forecasts, negotiations, papers, records, recommendations, and reports closed to public inspection until:</text> <level label="i"> <text>the release of the information would not adversely affect the negotiation for or market price of a security; and</text> </level> <level label="ii"> <text>completion of:</text> <level label="1"> <text>a proposed purchase or program of purchases leading to a cumulative position in a security;</text> </level> <level label="2"> <text>the making, sale, or prepayment of a loan;</text> </level> <level label="3"> <text>any proposed sale or program of sales leading to the elimination of a position in a security; or</text> </level> <level label="4"> <text>the sale or purchase of real estate.</text> </level> </level> </level> <level label="2"> <text>The sale or purchase of real estate shall be subject to the approval of a majority of the Comptroller, Treasurer, and Secretary of Budget and Management, in their capacity as members of the Board of Trustees.</text> </level> </level> <level label="h"> <text>Any direct owned real estate purchased as an investment by the State Retirement and Pension System shall be managed by an external investment manager selected by the Chief Investment Officer.</text> </level> <level label="i"> <text>Title 4, Subtitle 3, Part III and § 10–305 of the State Finance and Procurement Article do not apply to the sale, acquisition, lease, transfer, exchange, or other disposition of any real or personal property acquired by the Board of Trustees in any transaction authorized under this title.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-123.1" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="2"> <level label="i"> <text>“Actively managed separate accounts” means the accounts of the several systems that are actively managed at the direction of the Board of Trustees and held in separate accounts.</text> </level> <level label="ii"> <text>“Actively managed separate accounts” does not mean indexed funds, private equity funds, real estate funds, or other commingled or passively managed funds.</text> </level> </level> <level label="3"> <text>“Company” means any corporation, utility, partnership, joint venture, franchisor, franchisee, trust, entity investment vehicle, financial institution, or a wholly owned subsidiary of any of these entities.</text> </level> <level label="4"> <text>“Divestment action” means selling, redeeming, transferring, exchanging, otherwise disposing of, and refraining from further investment in certain investments.</text> </level> <level label="5"> <text>“Doing business in Iran” means the company has, with actual knowledge, on or after August 5, 1996, made an investment of $20,000,000 or more, or any combination of investments of at least $10,000,000 each, which in the aggregate equals or exceeds $20,000,000 in any 12–month period, and which directly or significantly contributes to the enhancement of Iran’s ability to develop the petroleum or natural gas resources of Iran.</text> </level> <level label="6"> <text>“Doing business in Sudan” means engaging in commerce in Sudan by maintaining or leasing equipment, facilities, personnel, or other apparatus of business or commerce in oil–related activities, mineral extraction activities, power production activities, or production of military equipment of Sudan.</text> </level> <level label="7"> <text>“Eligible accounts” means actively managed separate accounts containing funds of the several systems.</text> </level> <level label="8"> <text>“Government of Iran” means the government of Iran, its instrumentalities, and companies owned or controlled by the government of Iran.</text> </level> <level label="9"> <text>“Investment” means the commitment of funds or other assets to a company, including:</text> <level label="i"> <text>the ownership or control of a share or interest in the company; or</text> </level> <level label="ii"> <text>the ownership or control of a bond or other debt instrument of a company.</text> </level> </level> <level label="10"> <text>“Iran” means the Islamic Republic of Iran.</text> </level> <level label="11"> <level label="i"> <text>“Sudan” means the government in Khartoum, Sudan, that is led by the National Congress Party (formerly known as the National Islamic Front) or any successor government formed on or after October 13, 2006, including the Coalition National Unity Government agreed on in the Comprehensive Peace Agreement for Sudan.</text> </level> <level label="ii"> <text>“Sudan” does not mean the regional government of southern Sudan.</text> </level> </level> </level> <level label="b"> <text>The Board of Trustees shall review the investment holdings in eligible accounts for the purpose of determining the extent to which funds in eligible accounts are invested in companies doing business in Iran or Sudan.</text> </level> <level label="c"> <level label="1"> <text>Except as otherwise provided in this section, and consistent with the fiduciary duties of the Board of Trustees under Subtitle 2 of this title and all other applicable law, the Board of Trustees shall, within 30 days of its review under subsection (b) of this section, provide written notice and opportunity to comment to a company in which eligible accounts are invested and that has been identified as doing business in Iran or Sudan.</text> </level> <level label="2"> <text>Any notice provided by the Board of Trustees under paragraph (1) of this subsection shall state that the company shall be subject to divestment action by the Board of Trustees unless the company provides written comments within 90 days to the Board of Trustees:</text> <level label="i"> <text>demonstrating that the company is not doing business in Iran or Sudan; or</text> </level> <level label="ii"> <text>stating that, within 60 days of providing written comments to the Board of Trustees under this paragraph, the company will produce a plan to end doing business in Iran or Sudan within 1 year.</text> </level> </level> <level label="3"> <text>If the company demonstrates to the satisfaction of the Board of Trustees that it is not doing business in Iran or Sudan, the Board of Trustees may not take any divestment action against the company.</text> </level> <level label="4"> <level label="i"> <text>If within 60 days of providing written comments to the Board of Trustees under paragraph (2) of this subsection, the company produces a plan to cease doing business in Iran or Sudan within 1 year, the Board of Trustees may not take any divestment action against the company.</text> </level> <level label="ii"> <text>If the Board of Trustees does not take any divestment action under subparagraph (i) of this paragraph, the Board of Trustees shall monitor the progress of the company’s plan to cease doing business in Iran or Sudan over the 12 months immediately following receipt of the plan.</text> </level> <level label="iii"> <text>If the company ceases doing business in Iran or Sudan within 1 year, the Board of Trustees may not take any divestment action against the company.</text> </level> <level label="iv"> <text>If the company does not cease doing business in Iran or Sudan within 1 year, the Board of Trustees shall take divestment action against the company as provided in subsection (d) of this section.</text> </level> </level> </level> <level label="d"> <text>Except as provided in subsections (c) and (e) of this section, the Board of Trustees:</text> <level label="1"> <text>shall take divestment action in eligible accounts with regard to current investments:</text> <level label="i"> <text>in any company doing business in Iran or Sudan; or</text> </level> <level label="ii"> <text>in any security or instrument issued by Iran or Sudan; and</text> </level> </level> <level label="2"> <text>may not make any new investments from net new funds in an eligible account in any company that is doing business in Iran or Sudan as determined in accordance with the procedures set forth in subsection (c) of this section.</text> </level> </level> <level label="e"> <text>Notwithstanding the provisions of this section, the Board of Trustees may exclude from the provisions of subsections (c) and (d) of this section, a company:</text> <level label="1"> <text>that the United States government affirmatively declares to be excluded from its federal sanctions regime relating to Iran or Sudan; and</text> </level> <level label="2"> <text>whose divestment cannot be executed for fair market value or greater.</text> </level> </level> <level label="f"> <text>If the Board of Trustees takes divestment action under subsection (d) of this section, with respect to investments in a company, the Board of Trustees shall provide the company with written notice of its decision and reasons for the decision.</text> </level> <level label="g"> <text>On or before October 1 of each year, and every 6 months thereafter, the Board of Trustees shall submit a report in accordance with § 2–1257 of the State Government Article to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions that provides:</text> <level label="1"> <text>a summary of correspondence with companies engaged by the Board of Trustees under this section;</text> </level> <level label="2"> <text>all divestment actions taken by the Board of Trustees in accordance with this section;</text> </level> <level label="3"> <text>a list of companies doing business in Iran or Sudan which the Board of Trustees has determined to be ineligible for investments of net new funds under subsection (d)(2) of this section; and</text> </level> <level label="4"> <text>other developments relevant to investment in companies doing business in Iran or Sudan.</text> </level> </level> <level label="h"> <text>The Board of Trustees, or any other fiduciary of the several systems, may not be held liable for any actions taken or decisions made in good faith for the purpose of complying with or executing the requirements of any divestment provisions under this subtitle.</text> </level> <level label="i"> <text>The Board of Trustees shall act in good faith to carry out divestment action as required by this section in compliance with all applicable State and federal law, including relevant judicial decisions and the federal Sudan Accountability and Divestment Act of 2007.</text> </level> <level label="j"> <text>Nothing in this section shall require the Board of Trustees to take action as described in this section unless the Board of Trustees determines, in good faith, that the action is consistent with the fiduciary responsibilities of the Board of Trustees as described in Subtitle 2 of this title.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-123.2" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Private equity” means an asset class consisting of equity securities and debt in operating companies that are not publicly traded on a stock exchange.</text> </level> <level label="3"> <text>“Venture capital” means an investment of capital to a business at any stage of its development before the business makes a public offering of stock.</text> </level> </level> <level label="b"> <text>For purposes of this section, an investment in the State shall include an investment in an entity or vehicle that:</text> <level label="1"> <text>is domiciled in the State;</text> </level> <level label="2"> <text>operates in the State; or</text> </level> <level label="3"> <text>is reasonably expected to invest in entities that are in the State.</text> </level> </level> <level label="c"> <text>It is the intent of the General Assembly that State contributions in excess of statutory requirements be invested in the State with a goal to increase the risk capital available in the State, if the investments are consistent with, and do not compromise or conflict with, the fiduciary duties of the Board of Trustees to the participants of the several systems.</text> </level> <level label="d"> <level label="1"> <text>The Board of Trustees may enter into an agreement with the Maryland Technology Development Corporation or another entity to make and manage investments on behalf of the Board of Trustees in private equity and venture capital in the State with the amount of money appropriated to the system, the State Retirement Agency, or the accumulation funds of the several systems that:</text> <level label="i"> <text>for fiscal year 2017, is in addition to:</text> <level label="1"> <text>the amounts appropriated for the State and local employer contributions and the supplemental contribution required under §§ 21–308, 21–309, 21–309.1, and 21–310 of this title;</text> </level> <level label="2"> <text>the amount appropriated under § 7–311(j)(1)(i)1 of the State Finance and Procurement Article; and</text> </level> <level label="3"> <text>any other amounts required by any other provisions of law to be appropriated to the system, the State Retirement Agency, or the accumulation funds of the several systems; and</text> </level> </level> <level label="ii"> <text>for fiscal years 2019 through 2022, is appropriated under § 21–308(a)(4) of this title.</text> </level> </level> <level label="2"> <text>If the Board of Trustees does not enter into an agreement with the Maryland Technology Development Corporation or another entity in accordance with paragraph (1) of this subsection, the Board of Trustees shall develop a process that authorizes the Maryland Technology Development Corporation or another entity to provide recommendations regarding investments in private equity and venture capital in the State with respect to the amount described under paragraph (1) of this subsection.</text> </level> <level label="3"> <text>The investments or recommendations made in accordance with this section shall include a goal of investments or recommendations for the investment of 50% of the funds in commercialization of technology sponsored or created by a university in the State.</text> </level> <level label="4"> <text>An entity providing services to the Board of Trustees in accordance with paragraph (1) or (2) of this subsection shall be subject to the standards of care under § 21–203 of this title and the prohibited transactions under § 21–205 of this title, with respect to the services provided.</text> </level> </level> <level label="e"> <text>All profits of and return of principal from investments made under this section shall accrue to the accumulation funds of the several systems.</text> </level> <level label="f"> <level label="1"> <text>On or before December 31 each year, the Board of Trustees shall submit a report to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article, and subject to § 4–335 of the General Provisions Article, that includes a detailed description of:</text> <level label="i"> <text>the investments, if any, made under this section;</text> </level> <level label="ii"> <text>the recommendations, if any, made under this section;</text> </level> <level label="iii"> <text>the actions, if any, taken by the Board of Trustees on the recommendations made under this section;</text> </level> <level label="iv"> <text>the investment performance of any investments made under this section;</text> </level> <level label="v"> <text>to the extent possible, an accounting of the fees and expenses incurred under this section; and</text> </level> <level label="vi"> <text>to the extent possible, the ratio of funds invested in projects under this section to the total percentage of venture capital funds raised in the State by all sources.</text> </level> </level> <level label="2"> <text>On or before December 1 each year, the Maryland Technology Development Corporation or another entity with which the Board of Trustees entered into an agreement under subsection (d)(1) or (2) of this section shall submit a report to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions, in accordance with § 2–1257 of the State Government Article, that, to the extent possible, provides:</text> <level label="i"> <text>the economic benefit generated from investments made under this section, including:</text> <level label="1"> <text>the creation of new businesses;</text> </level> <level label="2"> <text>the expansion of existing businesses;</text> </level> <level label="3"> <text>the creation of new jobs;</text> </level> <level label="4"> <text>the termination of any jobs; and</text> </level> <level label="5"> <text>any increases in payroll; and</text> </level> </level> <level label="ii"> <text>the number of businesses receiving funds from investments under this section that subsequently relocate to other states or countries.</text> </level> </level> </level> <level label="g"> <text>The Board of Trustees, or any other fiduciary of the several systems as defined in § 21–201(b) of this title, may not be held liable for any actions taken or decisions made in good faith for the purpose of complying with or executing the requirements of this section.</text> </level> <level label="h"> <text>The Board of Trustees shall act in good faith to carry out the requirements of this section in compliance with all applicable State and federal law, including relevant judicial decisions.</text> </level> <level label="i"> <text>Nothing in this section shall require the Board of Trustees to take action as described in this section unless the Board of Trustees determines, in good faith, that the action is consistent with the fiduciary responsibilities of the Board of Trustees as described in Subtitle 2 of this title.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-123.3" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <level label="i"> <text>“Actively managed separate accounts” means the accounts of the several systems that are actively managed at the direction of the Board of Trustees and held in separate accounts.</text> </level> <level label="ii"> <text>“Actively managed separate accounts” does not mean indexed funds, private equity funds, real estate funds, or other commingled or passively managed funds.</text> </level> </level> <level label="3"> <text>“Company” means any corporation, utility, partnership, joint venture, franchisor, franchisee, trust, entity investment vehicle, financial institution, or a wholly owned subsidiary of any of these entities.</text> </level> <level label="4"> <text>“Divestment action” means selling, redeeming, transferring, exchanging, otherwise disposing of, and refraining from further investment in certain investments.</text> </level> <level label="5"> <text>“Eligible accounts” means actively managed separate accounts containing funds of the several systems.</text> </level> <level label="6"> <text>“Investment” means the commitment of funds or other assets to a company including:</text> <level label="i"> <text>the ownership or control of a share or interest in the company; or</text> </level> <level label="ii"> <text>the ownership or control of a bond or other debt instrument of a company.</text> </level> </level> <level label="7"> <level label="i"> <text>“Russia” means the government of Russia or the government of the Russian Federation.</text> </level> <level label="ii"> <text>“Russia” includes all agencies, institutions, instrumentalities, and political subdivisions of Russia.</text> </level> </level> <level label="8"> <text>“Russia–restricted investment” means an investment in a company:</text> <level label="i"> <text>identified by the Federal Office of Foreign Assets Control as a Russian entity with which transactions are prohibited by federal law;</text> </level> <level label="ii"> <text>owned, in whole or in part, by Russia;</text> </level> <level label="iii"> <text>controlled by a company that is owned, in whole or in part, by Russia;</text> </level> <level label="iv"> <text>incorporated in Russia; or</text> </level> <level label="v"> <text>whose principal place of business is located within Russia, to the extent this determination can be made.</text> </level> </level> </level> <level label="b"> <text>The Board of Trustees shall review the investment holdings in eligible accounts for the purpose of determining the extent to which funds in eligible accounts are invested in Russia–restricted investments.</text> </level> <level label="c"> <text>Except as provided in subsection (d) of this section, the Board of Trustees:</text> <level label="1"> <text>shall take divestment action in eligible accounts with regard to current investments:</text> <level label="i"> <text>in any Russia–restricted investment; or</text> </level> <level label="ii"> <text>in any security or instrument issued by Russia; and</text> </level> </level> <level label="2"> <text>may not make any new investments from net new funds in an eligible account in any Russia–restricted investment.</text> </level> </level> <level label="d"> <text>Notwithstanding the provisions of this section, the Board of Trustees may exclude from the provisions of subsection (c) of this section a company:</text> <level label="1"> <text>that the United States government affirmatively declares to be excluded from its federal sanctions regime relating to Russia; and</text> </level> <level label="2"> <text>whose divestment cannot be executed for fair market value or greater.</text> </level> </level> <level label="e"> <text>On or before April 1 and October 1 each year, the Board of Trustees shall submit a report, in accordance with § 2–1257 of the State Government Article, to the Senate Budget and Taxation Committee, the House Appropriations Committee, and the Joint Committee on Pensions that provides:</text> <level label="1"> <text>all divestment actions taken by the Board of Trustees in accordance with this section;</text> </level> <level label="2"> <text>a list of investments that the Board of Trustees has determined to be ineligible for investments of net new funds under subsection (c)(2) of this section; and</text> </level> <level label="3"> <text>other developments relevant to Russia–restricted investments.</text> </level> </level> <level label="f"> <text>The Board of Trustees or any other fiduciary of the several systems may not be held liable for any actions taken or decisions made in good faith for the purpose of complying with or executing the requirements of any divestment provisions under this section.</text> </level> <level label="g"> <text>The Board of Trustees shall act in good faith to carry out divestment action as required by this section in compliance with all applicable State and federal law, including relevant judicial decisions.</text> </level> <level label="h"> <text>Nothing in this section shall require the Board of Trustees to take action as described in this section unless the Board of Trustees determines in good faith that the action is consistent with the fiduciary responsibilities of the Board of Trustees as described in Subtitle 2 of this title.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-124" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <level label="1"> <text>The State Treasurer is the custodian of:</text> <level label="i"> <text>the accumulation, annuity savings, and expense funds of the several systems; and</text> </level> <level label="ii"> <text>the assets of the Board of Trustees.</text> </level> </level> <level label="2"> <text>The State Retirement Agency shall make all payments from the accumulation, annuity savings, and expense funds of the several systems in accordance with regulations that the Board of Trustees adopts with the approval of the State Treasurer.</text> </level> </level> <level label="b"> <level label="1"> <text>The State Treasurer may make arrangements with one or more duly qualified banks or trust companies in this State, organized under the laws of this State or of the United States, for:</text> <level label="i"> <text>banking services; and</text> </level> <level label="ii"> <text>any other function that the State Treasurer considers necessary to safeguard physically the assets that the Board of Trustees manages.</text> </level> </level> <level label="2"> <text>The State Treasurer:</text> <level label="i"> <text>may deposit any of the securities that the Board of Trustees purchases in vaults or in other safe depositories outside the office of the State Treasurer, whether or not in this State; and</text> </level> <level label="ii"> <text>shall deliver to the Board of Trustees a safekeeping receipt that:</text> <level label="1"> <text>describes the securities that the State Treasurer deposits; and</text> </level> <level label="2"> <text>is payable on demand and without conditions to the Board of Trustees, to any designated fund of the several systems that the Board of Trustees controls, or to the State Treasurer.</text> </level> </level> </level> <level label="3"> <text>The Board of Trustees shall keep on file any safekeeping receipt that the State Treasurer delivers.</text> </level> </level> <level label="c"> <level label="1"> <text>Subject to paragraph (2) of this subsection, to make disbursements, the State Treasurer may keep cash on deposit in one or more duly qualified banks or trust companies in this State that are organized under the laws of this State or of the United States.</text> </level> <level label="2"> <text>The State Treasurer may not:</text> <level label="i"> <text>keep more than 10% of the total amount in the funds of the several systems on deposit as cash; or</text> </level> <level label="ii"> <text>keep cash that exceeds 25% of the paid–up capital and surplus of the bank or trust company in that bank or trust company.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-125" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>The Board of Trustees shall designate an actuary who shall:</text> <level label="1"> <text>give technical advice to the Board of Trustees on the operation of the funds of the several systems; and</text> </level> <level label="2"> <text>perform other related duties that the Board of Trustees requires.</text> </level> </level> <level label="b"> <level label="1"> <text>On the basis of actuarial assumptions that the Board of Trustees adopts, each year the actuary shall make a valuation of the assets and liabilities of the funds of the several systems and shall recommend the rates of employer contributions to be certified by the Board of Trustees.</text> </level> <level label="2"> <level label="i"> <level label="1"> <text>Each year, on the recommendation of the actuary, the Board of Trustees shall certify to the Secretary of Budget and Management and to the Governor the rates of employer contributions.</text> </level> <level label="2"> <text>Each year, on the recommendation of the actuary, the Board of Trustees shall certify to all other participating employers the rates of employer contributions.</text> </level> </level> <level label="ii"> <text>The normal contribution rate recommended by the actuary and certified by the Board of Trustees for all employers under subparagraph (i) of this paragraph for each fiscal year shall include an amount necessary for the administrative and operational expenses of the Board of Trustees and the State Retirement Agency, excluding the administrative and operational expenses of the Investment Division.</text> </level> </level> <level label="3"> <text>For purposes of actuarial valuation, the Board of Trustees may adopt a generally accepted actuarial method for determining the value of the assets held by the several systems.</text> </level> <level label="4"> <text>For general ledger accounting and financial reporting, the Board of Trustees shall use generally accepted accounting principles.</text> </level> </level> <level label="c"> <level label="1"> <text>At least once in each 5–year period, the actuary shall make:</text> <level label="i"> <text>actuarial investigations into the compensation, mortality, and service experience of the participants of each of the several systems; and</text> </level> <level label="ii"> <text>a valuation of the assets and liabilities of the funds of each of the several systems.</text> </level> </level> <level label="2"> <text>The Board of Trustees shall:</text> <level label="i"> <text>review the results of the investigations and valuations of the actuary; and</text> </level> <level label="ii"> <text>adopt the actuarial assumptions for each of the several systems as the Board of Trustees considers necessary.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-126" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>The Board of Trustees shall establish one or more medical boards.</text> </level> <level label="b"> <level label="1"> <text>Each medical board consists of three members and not more than three alternates.</text> </level> <level label="2"> <text>Each medical board member and alternate shall be a physician who is not eligible to be a member of a State system.</text> </level> <level label="3"> <level label="i"> <text>The Board of Trustees shall appoint the medical board members and any alternates.</text> </level> <level label="ii"> <text>Notwithstanding paragraph (2) of this subsection, the Board of Trustees may appoint a physician who is a participating employee in the Optional Retirement Program under Title 30 of this article to a medical board if the physician is not eligible to receive a disability benefit under Title 29, Subtitle 1 of this article.</text> </level> </level> <level label="4"> <text>In the absence of a medical board member, an alternate may serve on a medical board.</text> </level> </level> <level label="c"> <text>Two members of a medical board are a quorum for the conduct of business.</text> </level> <level label="d"> <text>A medical board shall:</text> <level label="1"> <text>arrange for and approve all medical examinations required under this Division II;</text> </level> <level label="2"> <text>investigate all essential certificates and statements by or on behalf of a member concerning the application of the member for disability retirement; and</text> </level> <level label="3"> <text>submit written reports to the Board of Trustees, with conclusions and recommendations, on all matters that the Board of Trustees refers to the medical board.</text> </level> </level> <level label="e"> <text>The Board of Trustees may employ other physicians to report on special cases.</text> </level> <level label="f"> <text>A member of a medical board appointed under subsection (b)(3)(ii) of this section may not participate in a case concerning the application of a member for disability retirement if the applicant is an employee of the same institution that is the employing institution, as defined in § 30–101 of this article, of the member of the medical board.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-128" title_number="21" title_name="State Retirement and Pension System" subtitle_number="1" subtitle_name="Administration"> <level label="a"> <text>In this section, “retiree organization” means an organization in which State retirees participate and that has as one of its primary purposes, representing or providing services to State retirees.</text> </level> <level label="b"> <text>This section applies to any retiree organization that has the legal authority to provide services to retirees of the several systems.</text> </level> <level label="c"> <level label="1"> <text>A retiree organization may submit only two requests each year to the Board of Trustees to assist the retiree organization in performing direct mailings to retirees of the several systems who are members of the retiree organization or eligible to become members of the retiree organization.</text> </level> <level label="2"> <text>The direct mailings may not be for the purpose of supporting or opposing any political party, ballot measure, or candidate in any election, including any State general or primary election or any election within the retiree organization.</text> </level> <level label="3"> <level label="i"> <text>The Board of Trustees shall provide the retiree data for addressing envelopes only to the mail processing center under a secure data share agreement with the mail processing center under which neither the retiree organization nor any other entity has direct access to any names or addresses.</text> </level> <level label="ii"> <text>If the Board of Trustees provides any retiree data to a mail processing center under subparagraph (i) of this paragraph, the Board of Trustees is not required to notify a retiree whose data is released of the provisions of § 21–504 of this title.</text> </level> </level> <level label="4"> <level label="i"> <text>A retiree organization shall provide the Board of Trustees with copies of all materials that will be included in the direct mailing.</text> </level> <level label="ii"> <text>The Board of Trustees shall review the materials provided under subparagraph (i) of this paragraph before providing any retiree data to a mail processing center.</text> </level> </level> </level> <level label="d"> <text>The direct mailing shall provide retirees of the several systems who are members of the retiree organization or eligible to become members of the retiree organization with information that explains the services offered by the retiree organization.</text> </level> <level label="e"> <level label="1"> <text>A retiree organization is solely responsible for the procurement of a mail processing center under this section.</text> </level> <level label="2"> <text>The retiree organization shall provide all printed materials to be mailed and envelopes to a mail processing center.</text> </level> <level label="3"> <text>The retiree organization is responsible for paying all costs for generating mailing labels, inserting materials into envelopes, sealing, labeling, and delivering materials to be mailed to a bulk mail center or post office.</text> </level> <level label="4"> <text>The retiree organization is responsible for all postage costs involved for the direct mailings.</text> </level> </level> <level label="f"> <text>The Board of Trustees is not liable for the content of any direct mailing sent under this section.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-201" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Fiduciary” means:</text> <level label="1"> <text>a member of the Board of Trustees;</text> </level> <level label="2"> <text>a member of the Investment Committee;</text> </level> <level label="3"> <text>a member of a committee established by the Board of Trustees as authorized under § 21–108 of this title;</text> </level> <level label="4"> <text>a member of a committee established under § 21–122(g) of this title; or</text> </level> <level label="5"> <text>an employee of the State Retirement Agency who exercises any discretionary authority or control over:</text> <level label="i"> <text>the management or administration of the several systems; or</text> </level> <level label="ii"> <text>the management or disposition of the assets of the several systems.</text> </level> </level> </level> <level label="c"> <text>“Several systems” includes the optional retirement program to the extent that the Board of Trustees administers the program under Title 30 of this article.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-202" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <text>The Board of Trustees shall hold the assets of each of the several systems for the exclusive purposes of providing:</text> <level label="1"> <text>benefits to participants; and</text> </level> <level label="2"> <text>for reasonable expenses of administration.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-203" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <text>A fiduciary shall discharge the fiduciary's duties with respect to the several systems solely in the interest of the participants and as follows:</text> <level label="1"> <text>for the exclusive purposes of providing benefits to the participants and for reasonable expenses of administering the several systems;</text> </level> <level label="2"> <text>with the care, skill, prudence, and diligence under the circumstances then prevailing, that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;</text> </level> <level label="3"> <text>by diversifying the investments of the several systems so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so;</text> </level> <level label="4"> <text>in accordance with the laws governing the several systems; and</text> </level> <level label="5"> <text>in accordance with the documents and instruments governing the several systems to the extent that the documents and instruments are consistent with this subtitle.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-204" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <level label="a"> <level label="1"> <text>Except as otherwise provided in subsection (c) of this section, in exercising the standards set forth in § 21-203 of this subtitle:</text> <level label="i"> <text>the trustees jointly shall manage and control the assets of the several systems; and</text> </level> <level label="ii"> <text>each trustee of the several systems, when acting as a fiduciary, shall use reasonable care to prevent another trustee from committing a breach.</text> </level> </level> <level label="2"> <text>Paragraph (1) of this subsection does not preclude any agreement that allocates specific responsibilities, obligations, or duties among the trustees.</text> </level> </level> <level label="b"> <text>The Board of Trustees may:</text> <level label="1"> <text>allocate the responsibilities of the fiduciaries among the fiduciaries; and</text> </level> <level label="2"> <text>designate any other person to carry out the responsibilities of a fiduciary.</text> </level> </level> <level label="c"> <level label="1"> <text>If the Board of Trustees makes an allocation or designation to a person under subsection (b) of this section, the Board of Trustees is not liable for an act or omission of that person in carrying out the responsibility, except to the extent that the Board of Trustees violates § 21-203 of this subtitle with respect to:</text> <level label="i"> <text>the allocation or designation;</text> </level> <level label="ii"> <text>the establishment or implementation of a procedure to allocate or designate; or</text> </level> <level label="iii"> <text>the continuance or review of the allocation or designation.</text> </level> </level> <level label="2"> <text>Except as otherwise provided in paragraph (1) of this subsection, a trustee to whom certain responsibilities, obligations, or duties have not been allocated is not liable, either individually or as a trustee, for any loss resulting to the several systems arising from an act or omission of another person to whom the responsibilities, obligations, or duties have been allocated.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-205" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <text>In exercising authority, control, or discretion with respect to the several systems, a fiduciary may not:</text> <level label="1"> <text>use the assets of the several systems for the fiduciary's own interest or account;</text> </level> <level label="2"> <text>act in a transaction involving the several systems on behalf of a person, or represent a person, if the interests of the person are adverse to the interests of the several systems or the interests of participants;</text> </level> <level label="3"> <text>receive any consideration for the fiduciary's own account from a person dealing with the several systems in connection with a transaction involving the assets of the several systems; or</text> </level> <level label="4"> <text>become an endorser or surety or, in any manner, an obligor, for money lent to or borrowed from the Board of Trustees.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-206" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <level label="a"> <text>Subject to § 21-207 of this subtitle, a fiduciary who breaches any of the responsibilities, obligations, or duties imposed on a fiduciary by this subtitle:</text> <level label="1"> <text>is personally liable to the several systems for any losses to the several systems resulting from a breach;</text> </level> <level label="2"> <text>shall restore to the several systems any profits of the fiduciary made through use of assets of the several systems by the fiduciary; and</text> </level> <level label="3"> <text>is subject to any equitable or remedial relief, including removal of the fiduciary, that a court considers appropriate.</text> </level> </level> <level label="b"> <text>A fiduciary is not liable with respect to a breach of fiduciary duty under this subtitle if the breach was committed:</text> <level label="1"> <text>before the fiduciary became a fiduciary; or</text> </level> <level label="2"> <text>after the fiduciary ceased to be a fiduciary.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-207" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <level label="a"> <text>Subject to the provisions of this section, the State shall indemnify a fiduciary who is, or is threatened to be made, a party to an action or proceeding, including an administrative or investigative proceeding, by reason of the fiduciary’s service as a fiduciary.</text> </level> <level label="b"> <level label="1"> <text>In this subsection, “expenses” include:</text> <level label="i"> <text>reasonable attorney’s fees;</text> </level> <level label="ii"> <text>judgments;</text> </level> <level label="iii"> <text>fines; and</text> </level> <level label="iv"> <text>other expenses that were actually and reasonably incurred by the fiduciary in connection with the action or proceeding.</text> </level> </level> <level label="2"> <text>With respect to a civil, administrative, or investigative action or proceeding, the State shall indemnify a fiduciary for the expenses of the action or proceeding if the fiduciary acted:</text> <level label="i"> <text>in good faith; and</text> </level> <level label="ii"> <text>in a manner the fiduciary reasonably believed to be in or not opposed to the best interest of the several systems.</text> </level> </level> <level label="3"> <text>With respect to a criminal action or proceeding, the State shall indemnify a fiduciary for the expenses of the action or proceeding if the fiduciary:</text> <level label="i"> <text>acted in good faith;</text> </level> <level label="ii"> <text>acted in a manner the fiduciary reasonably believed to be in or not opposed to the best interest of the several systems; and</text> </level> <level label="iii"> <text>did not have reasonable cause to believe that the fiduciary’s conduct was unlawful.</text> </level> </level> </level> <level label="c"> <text>Any termination of an action or proceeding does not, of itself, create a presumption that the fiduciary did not meet the standards for indemnification described in subsection (b)(2) and (3) of this section.</text> </level> <level label="d"> <text>The State may not indemnify:</text> <level label="1"> <text>a fiduciary with respect to an action or proceeding as to which the fiduciary was held liable for gross negligence or willful misconduct in the performance of the fiduciary’s duty to the several systems; or</text> </level> <level label="2"> <text>an independent contractor furnishing services to the several systems.</text> </level> </level> <level label="e"> <level label="1"> <text>The State shall provide insurance for a fiduciary eligible for indemnification under this section.</text> </level> <level label="2"> <text>For the purpose of paragraph (1) of this subsection, the State may provide self–insurance under terms and conditions satisfactory to the State Treasurer.</text> </level> <level label="3"> <text>A fiduciary may not be required to pay amounts attributable to liability described in this section because the State does not provide adequate insurance coverage or otherwise fails to indemnify in accordance with this section.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-208" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <level label="a"> <text>Except as provided in § 21-204(b) and (c) of this subtitle, a provision in an agreement that purports to relieve a fiduciary from a responsibility, obligation, or duty, or liability for a responsibility, obligation, or duty under this subtitle is against public policy and void.</text> </level> <level label="b"> <text>This subtitle does not preclude indemnification of a fiduciary in accordance with § 21-207 of this subtitle.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-209" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <level label="a"> <level label="1"> <text>Notwithstanding any other law, a person may not serve as a fiduciary if the person has been convicted of:</text> <level label="i"> <text>a felony;</text> </level> <level label="ii"> <text>a misdemeanor involving moral turpitude;</text> </level> <level label="iii"> <text>a violation of this subtitle;</text> </level> <level label="iv"> <text>a conspiracy or attempt to commit a crime described under item (i), (ii), or (iii) of this paragraph; or</text> </level> <level label="v"> <text>a crime in which a crime described under item (i), (ii), (iii), or (iv) of this paragraph is an element.</text> </level> </level> <level label="2"> <text>A person may not knowingly allow another person to serve as a fiduciary in violation of paragraph (1) of this subsection.</text> </level> </level> <level label="b"> <text>Any person who intentionally violates subsection (a) of this section is guilty of a misdemeanor and on conviction is subject to a fine not exceeding $10,000 or imprisonment not exceeding 1 year or both.</text> </level> <level label="c"> <text>For the purposes of this section, a person is deemed to be convicted on the later of:</text> <level label="1"> <text>the date of judgment of the trial court; or</text> </level> <level label="2"> <text>the date of the final sustaining of judgment on appeal.</text> </level> </level> <level label="d"> <text>A fiduciary may be removed for a violation of subsection (a) of this section.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-210" title_number="21" title_name="State Retirement and Pension System" subtitle_number="2" subtitle_name="Fiduciary Responsibilities"> <level label="a"> <text>Except as provided in subsection (c) of this section, the State shall purchase a bond for each fiduciary in the form and amount determined by the State Treasurer under § 5–108 of the State Government Article, in consultation with the Board of Trustees.</text> </level> <level label="b"> <level label="1"> <text>Unless a fiduciary is bonded as required by subsection (a) of this section, the fiduciary may not exercise custody or control of any assets of a State system.</text> </level> <level label="2"> <text>A fiduciary may not allow another fiduciary to act in violation of paragraph (1) of this subsection.</text> </level> </level> <level label="c"> <level label="1"> <text>The State may satisfy the requirement for a bond under subsection (a) of this section by purchasing an insurance policy.</text> </level> <level label="2"> <text>The State Treasurer, in consultation with the Board of Trustees, shall determine the type and amount of coverage provided by a policy purchased under paragraph (1) of this subsection.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-301" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>In each State system, there is:</text> <level label="1"> <text>an accumulation fund;</text> </level> <level label="2"> <text>an annuity savings fund; and</text> </level> <level label="3"> <text>an expense fund.</text> </level> </level> <level label="b"> <text>The Board of Trustees shall credit the assets of each State system to the appropriate fund of the State system according to the purpose for which the assets are held.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-302" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>The following are obligations of the State:</text> <level label="1"> <text>the payment of all allowances and other benefits payable under this Division II;</text> </level> <level label="2"> <text>the creation and maintenance of reserves in the accumulation funds of the several systems; and</text> </level> <level label="3"> <text>the crediting of regular interest to the annuity savings funds of the several systems.</text> </level> </level> <level label="b"> <text>The assets of the several systems shall be used to pay the obligations of the State specified in this section.</text> </level> <level label="c"> <text>Each fiscal year the State shall pay to the accumulation fund of each State system at least an amount that when combined with the amount in the accumulation fund of the system is sufficient to provide the allowances and other benefits payable out of the fund during that fiscal year.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-303" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>The Board of Trustees shall credit to the accumulation fund of each State system:</text> <level label="1"> <text>all employer contributions to the State system;</text> </level> <level label="2"> <text>all interest, dividends, and other income derived from the assets of the State system; and</text> </level> <level label="3"> <text>amounts transferred under § 21–311(c) or (d) of this subtitle.</text> </level> </level> <level label="b"> <text>The Board of Trustees shall pay from the accumulation fund of a State system all benefits payable under that State system except for benefits payable from the annuity savings fund of that State system.</text> </level> <level label="c"> <level label="1"> <text>Each year the Board of Trustees shall transfer from the accumulation fund of each State system to each member’s account in the annuity savings fund of that State system regular interest on the account as provided in this Division II.</text> </level> <level label="2"> <text>If a retiree who has retired because of disability is restored to membership, the Board of Trustees shall transfer from the accumulation fund of the appropriate State system to the annuity savings fund of that State system an amount equal to the remaining portion of the retiree’s annuity reserve.</text> </level> </level> <level label="d"> <text>Each year, the Board of Trustees shall transfer from the accumulation fund of each State system to the expense fund of that system the amounts required by § 21–315 of this subtitle.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-304" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>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.</text> </level> <level label="3"> <text>“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:</text> <level label="i"> <text>a clerk;</text> </level> <level label="ii"> <text>a helping teacher;</text> </level> <level label="iii"> <text>a principal;</text> </level> <level label="iv"> <text>a superintendent;</text> </level> <level label="v"> <text>a supervisor; or</text> </level> <level label="vi"> <text>a teacher.</text> </level> </level> <level label="4"> <text>“Local employer” means a county board of education or the Baltimore City Board of School Commissioners.</text> </level> <level label="5"> <text>“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.</text> </level> <level label="6"> <text>“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.</text> </level> </level> <level label="b"> <level label="1"> <text>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:</text> <level label="i"> <text>the aggregate annual earnable compensation of the State members of that State system; and</text> </level> <level label="ii"> <text>the sum of the normal contribution rate and the accrued liability contribution rate for State members of that State system, as determined under this section.</text> </level> </level> <level label="2"> <text>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:</text> <level label="i"> <text>the entry–age actuarial cost method; and</text> </level> <level label="ii"> <text>actuarial assumptions adopted by the Board of Trustees.</text> </level> </level> <level label="3"> <text>For the purpose of making the determinations required under this section:</text> <level label="i"> <text>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</text> </level> <level label="ii"> <text>the Teachers’ Retirement System and the Teachers’ Pension System shall be considered together as one State system.</text> </level> </level> <level label="4"> <level label="i"> <text>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.</text> </level> <level label="ii"> <text>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:</text> <text>Local Fiscal Fiscal Fiscal Fiscal</text> <text>Employer Year Year Year Year</text> <text>2013 2014 2015 2016</text> <text>Allegany 1,487,742 1,885,754 2,412,465 2,773,677</text> <text>Anne Arundel 11,493,684 14,568,567 18,637,716 21,428,297</text> <text>Baltimore City 12,922,862 16,380,092 20,955,217 24,092,793</text> <text>Baltimore 15,755,802 19,970,922 25,549,002 29,374,395</text> <text>Calvert 2,835,938 3,594,631 4,598,648 5,287,193</text> <text>Caroline 793,934 1,006,334 1,287,413 1,480,175</text> <text>Carroll 4,005,782 5,077,441 6,495,621 7,468,196</text> <text>Cecil 2,459,819 3,117,889 3,988,747 4,585,973</text> <text>Charles 3,936,516 4,989,645 6,383,304 7,339,061</text> <text>Dorchester 656,543 832,186 1,064,625 1,224,028</text> <text>Frederick 5,893,461 7,470,128 9,556,610 10,987,499</text> <text>Garrett 664,714 842,544 1,077,874 1,239,262</text> <text>Harford 5,529,741 7,009,102 8,966,815 10,309,396</text> <text>Howard 9,821,066 12,448,477 15,925,463 18,309,945</text> <text>Kent 366,147 464,102 593,730 682,628</text> <text>Montgomery 27,227,553 34,511,689 44,151,153 50,761,802</text> <text>Prince George’s 19,554,579 24,785,979 31,708,954 36,456,662</text> <text>Queen Anne’s 1,105,527 1,401,286 1,792,679 2,061,093</text> <text>St. Mary’s 2,485,697 3,150,691 4,030,711 4,634,220</text> <text>Somerset 480,124 608,570 778,550 895,121</text> <text>Talbot 628,456 796,586 1,019,080 1,171,665</text> <text>Washington 3,094,113 3,921,875 5,017,294 5,768,522</text> <text>Wicomico 2,173,593 2,755,091 3,524,616 4,052,348</text> <text>Worcester 1,271,561 1,611,739 2,061,914 2,370,640</text> </level> <level label="iii"> <text>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.</text> </level> </level> <level label="5"> <text>Except as provided in paragraph (6) of this subsection, 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.</text> </level> <level label="6"> <level label="i"> <text>Subject to § 21–309.2 of this subtitle and as provided under subparagraph (ii) of this paragraph, beginning in fiscal year 2027, each county government shall pay to the Board of Trustees the following amounts:</text> <text>County</text> <text>Government</text> <text>Allegany 1,139,988</text> <text>Anne Arundel 13,344,016</text> <text>Baltimore City 12,041,167</text> <text>Baltimore 15,122,563</text> <text>Calvert 2,284,705</text> <text>Caroline 785,750</text> <text>Carroll 3,661,920</text> <text>Cecil 1,963,691</text> <text>Charles 3,900,924</text> <text>Dorchester 794,625</text> <text>Frederick 7,899,429</text> <text>Garrett 428,865</text> <text>Harford 5,297,751</text> <text>Howard 9,696,329</text> <text>Kent 255,179</text> <text>Montgomery 28,754,528</text> <text>Prince George’s 18,675,337</text> <text>Queen Anne’s 973,835</text> <text>St. Mary’s 2,205,319</text> <text>Somerset 442,575</text> <text>Talbot 651,179</text> <text>Washington 3,279,909</text> <text>Wicomico 2,379,362</text> <text>Worcester 1,049,543</text> </level> <level label="ii"> <level label="1"> <text>For fiscal year 2026, each county government shall pay to the Board of Trustees on or before January 1, 2026, the amount required under subparagraph (i) of this paragraph.</text> </level> <level label="2"> <text>Beginning in fiscal year 2027, each county government shall pay to the Board of Trustees on or before each September 1 the amount required under subparagraph (i) of this paragraph.</text> </level> </level> <level label="iii"> <text>Each fiscal year, the amounts paid under subparagraph (i) of this paragraph shall reduce the obligations of the State with respect to the Teachers’ Pension System and the Teachers’ Retirement System by the same amounts.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>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.</text> </level> <level label="2"> <text>For each State system, the normal contribution rate equals the fraction that has:</text> <level label="i"> <text>as its numerator, the sum of the normal contributions determined under this subsection; and</text> </level> <level label="ii"> <text>as its denominator, the aggregate annual earnable compensation of the State members of the State system.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>Beginning July 1, 2023, each year the Board of Trustees shall set contribution rates for each State system that shall amortize:</text> <level label="i"> <text>all unfunded liabilities or surpluses accrued as of June 30, 2023, over the time remaining until June 30, 2039; and</text> </level> <level label="ii"> <text>any new unfunded liabilities or surpluses that have accrued from July 1 of the preceding fiscal year over closed periods of:</text> <level label="1"> <text>15 years for experience gains and losses;</text> </level> <level label="2"> <text>25 years for the effect of changes in actuarial assumptions and methods;</text> </level> <level label="3"> <text>at least 10 but not exceeding 15 years for the effect of any new legislation; and</text> </level> <level label="4"> <text>5 years for accrued liability resulting from legislation providing incentives for the early retirement of State employees.</text> </level> </level> </level> <level label="2"> <text>On recommendation of the system’s actuary, for the purpose of mitigating tail volatility in the annual contribution rate, the Board of Trustees may adjust the period of amortization under paragraph (1)(ii) of this subsection for liabilities or surpluses accrued in any fiscal year.</text> </level> </level> <level label="e"> <text>The Board of Trustees may not certify contribution rates under this section that would result in a contribution rate below the normal cost, as determined by the system’s actuary.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-305" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>In this section, “employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System.</text> </level> <level label="b"> <level label="1"> <text>Each fiscal year, on behalf of its employees who are members of one of the employees’ systems, a participating governmental unit shall pay an amount equal to or greater than the product of multiplying:</text> <level label="i"> <text>the aggregate annual earnable compensation of those members; and</text> </level> <level label="ii"> <text>the sum of the normal contribution rate and the accrued liability contribution rate, as determined under §§ 21–305.1 and 21–305.2 of this subtitle.</text> </level> </level> <level label="2"> <text>Each fiscal year, in addition to the amounts required to be paid under paragraph (1) of this subsection, a participating governmental unit shall pay:</text> <level label="i"> <text>the special accrued liability contribution required by § 21–305.3 of this subtitle;</text> </level> <level label="ii"> <text>any withdrawal liability contribution required by § 21–305.5 of this subtitle;</text> </level> <level label="iii"> <text>an amount equal to 5% of the aggregate earnable compensation of its employees who are members of the Employees’ Retirement System; and</text> </level> <level label="iv"> <text>any annual deficit payment required under § 21–305.4(c) of this subtitle.</text> </level> </level> <level label="3"> <text>Each fiscal year, a participating governmental unit shall reduce the amounts required to be paid under paragraphs (1) and (2) of this subsection by any annual credit allowed to the participating governmental unit under § 21–305.4(b) of this subtitle.</text> </level> </level> <level label="c"> <level label="1"> <text>The amount determined under subsection (b) of this section for the employees’ systems shall be based on an actuarial determination of the amounts that are required to preserve the integrity of the accumulation fund of the employees’ systems, using:</text> <level label="i"> <text>the entry–age actuarial cost method;</text> </level> <level label="ii"> <text>actuarial assumptions adopted by the Board of Trustees; and</text> </level> <level label="iii"> <text>the asset valuation method recommended by the actuary and adopted by the Board of Trustees.</text> </level> </level> <level label="2"> <text>Except as provided in subsection (b)(2)(iii) of this section, for the purpose of making the determinations required under this section, the Employees’ Retirement System and the Employees’ Pension System shall be considered together as one State system.</text> </level> </level> <level label="d"> <text>The actuary shall compute the contributions payable under this section.</text> </level> <level label="e"> <text>The amounts computed under this section are a charge against the participating governmental unit to be paid in accordance with § 21–309 of this subtitle.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-305.1" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>In this section, “employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System.</text> </level> <level label="b"> <text>As part of each actuarial valuation, the actuary shall determine the normal contributions, net of member contributions, on account of members of the employees’ systems who are employees of participating governmental units.</text> </level> <level label="c"> <text>Except as provided in subsection (d) of this section, the normal contribution rate for participating governmental units equals the fraction that has:</text> <level label="1"> <text>as its numerator, the sum of the normal contributions determined under this section; and</text> </level> <level label="2"> <text>as its denominator, the aggregate annual earnable compensation of the members of the employees’ systems who are employees of participating governmental units.</text> </level> </level> <level label="d"> <text>On the recommendation of the actuary, the Board of Trustees may adjust the normal contribution rate to reflect:</text> <level label="1"> <text>experience gains and losses;</text> </level> <level label="2"> <text>the effect of changes in actuarial assumptions; and</text> </level> <level label="3"> <text>the effect of legislation enacted after July 1, 1980.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-305.2" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>In this section, “employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System.</text> </level> <level label="b"> <text>As part of each actuarial valuation, the actuary shall determine the accrued liability contributions on account of members of the employees’ systems who are employees of participating governmental units.</text> </level> <level label="c"> <text>Each year the Board of Trustees shall set contribution rates for each State system that shall amortize:</text> <level label="1"> <text>all unfunded liabilities or surpluses accrued as of June 30, 2016, over 100 years;</text> </level> <level label="2"> <text>all unfunded liabilities or surpluses accrued as of June 30, 2017, over 40 years;</text> </level> <level label="3"> <text>all unfunded liabilities or surpluses accrued as of June 30, 2018, over 35 years;</text> </level> <level label="4"> <text>all unfunded liabilities or surpluses accrued as of June 30, 2019, over 30 years;</text> </level> <level label="5"> <text>all unfunded liabilities or surpluses accrued as of June 30, 2020, over 25 years;</text> </level> <level label="6"> <text>all unfunded liabilities or surpluses accrued as of June 30, 2021, over 22 years;</text> </level> <level label="7"> <text>all unfunded liabilities or surpluses accrued as of June 30, 2022, over 20 years; and</text> </level> <level label="8"> <text>beginning July 1, 2023, any new unfunded liabilities or surpluses that have accrued from July 1 of the preceding fiscal year over the time remaining until June 30, 2041, to reflect:</text> <level label="i"> <text>experience gains and losses;</text> </level> <level label="ii"> <text>the effect of changes in actuarial assumptions; and</text> </level> <level label="iii"> <text>the effect of legislation effective on or after July 1, 2023.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-305.3" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System.</text> </level> <level label="3"> <text>“Special accrued liability” means, as to any participating governmental unit, the liability of the employees’ systems on account of the employees of the participating governmental unit who elect to become members under § 23–204(a) of this article.</text> </level> </level> <level label="b"> <text>Each participating governmental unit shall make a special accrued liability contribution on account of its participation in the employees’ systems.</text> </level> <level label="c"> <text>The special accrued liability contribution shall be determined by an actuarial valuation of the special accrued liability as of the date of approval of participation by the legislative body of the participating governmental unit.</text> </level> <level label="d"> <text>Except as provided in subsection (e) of this section, the annual special accrued liability contribution of each participating governmental unit shall be the level annual payment that is sufficient to liquidate, over 25 years beginning on the date of approval by the legislative body of the participating governmental unit, the amount by which the special accrued liability of the participating governmental unit exceeds the sum of:</text> <level label="1"> <text>the present value, as of the date of approval, of future normal contributions, future accrued liability contributions, future contributions for members of the Employees’ Retirement System required under § 21–305(b)(2)(iii) of this subtitle, future member contributions on behalf of or by members who are employees of the participating governmental unit; and</text> </level> <level label="2"> <text>any cash and securities transferred to the Employees’ Pension System in accordance with § 31–113(e) of this article.</text> </level> </level> <level label="e"> <text>Subject to the approval of the Board of Trustees, a participating governmental unit may liquidate its unfunded special accrued liability:</text> <level label="1"> <text>over a period not to exceed 40 years; or</text> </level> <level label="2"> <text>subject to the actuary’s concurrence, by means of annual payments other than level annual payments.</text> </level> </level> <level label="f"> <text>A participating governmental unit may prepay the special accrued liability in whole or in part at any time with interest at the annual rate established by the Board of Trustees as of the date of payment.</text> </level> <level label="g"> <text>The expense of making the initial special accrued liability actuarial valuation shall be assessed against and paid by the participating governmental unit on whose account it is necessary.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-305.4" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Deficit” means, as to any participating governmental unit, the lesser of:</text> <level label="i"> <text>the amount, as of June 30, 1995, by which the present value of the accrued benefit of the employees of the participating governmental unit who are members of the Employees’ Retirement System exceeds the actuarial value of the assets to the credit of the participating governmental unit in the Employees’ Retirement System; or</text> </level> <level label="ii"> <text>40% of the aggregate annual earnable compensation of the participating governmental unit as of June 30, 1995.</text> </level> </level> <level label="3"> <text>“Employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System.</text> </level> <level label="4"> <text>“Required employer contribution” means the amount payable each fiscal year under § 21-305(b)(1) and (2)(i) and (iii) of this subtitle by a participating governmental unit.</text> </level> <level label="5"> <text>“Surplus” means, as to any participating governmental unit, the amount, as of June 30, 1995, by which the actuarial value of the assets to the credit of the participating governmental unit in the employees’ systems exceeds the present value of the future benefits of the employees of the participating governmental unit who are members of the employees’ systems.</text> </level> </level> <level label="b"> <level label="1"> <text>The actuary shall determine the surplus allocable to a participating governmental unit as of June 30, 1995, based on an actuarial valuation.</text> </level> <level label="2"> <text>The surplus of a participating governmental unit may not be less than zero.</text> </level> <level label="3"> <text>The annual credit of a participating governmental unit shall be the amount that is sufficient to amortize over a 25-year term commencing on July 1, 1995, the surplus allocated to a participating governmental unit as of June 30, 1995, by means of an annual credit that increases each year based on the actuarial assumptions adopted by the Board of Trustees on the recommendation of the actuary.</text> </level> <level label="4"> <text>Each fiscal year, a participating governmental unit’s required employer contribution shall be reduced by the annual credit of the participating governmental unit, but not below zero.</text> </level> </level> <level label="c"> <level label="1"> <text>The actuary shall determine the deficit allocable to a participating governmental unit as of June 30, 1995, based on an actuarial valuation.</text> </level> <level label="2"> <level label="i"> <text>Except as provided in subparagraph (ii) of this paragraph, the annual deficit payment of a participating governmental unit shall be the payment that is sufficient to liquidate over a 25-year term beginning as of July 1, 1995, the deficit allocated to the participating governmental unit by means of annual payments that increase each year based on the actuarial assumptions adopted by the Board of Trustees on the recommendation of the actuary.</text> </level> <level label="ii"> <text>If, as of July 1, 1995, the annual deficit payment of a participating governmental unit increases the participating governmental unit’s required contribution by more than 2% of the aggregate annual earnable compensation of the participating governmental unit as of July 1, 1995, the participating governmental unit may liquidate the deficit over a 40-year term beginning as of July 1, 1995.</text> </level> </level> <level label="3"> <level label="i"> <text>Subject to subparagraph (ii) of this paragraph, with the concurrence of the Board of Trustees, a participating governmental unit may prepay all or a portion of the deficit.</text> </level> <level label="ii"> <text>A participating governmental unit that elects to prepay a portion of the deficit:</text> <level label="1"> <text>may not prepay less than the greater of $100,000 or 10% of the outstanding balance of the deficit as of the payment date;</text> </level> <level label="2"> <text>may not make more than 2 additional payments during any fiscal year; and</text> </level> <level label="3"> <text>shall be liable for payment of the expenses incurred by the agency for the actuary to recalculate the annual deficit payments required under § 21-305(b)(2)(iv) of this subtitle.</text> </level> </level> </level> </level> <level label="d"> <text>On the recommendation of the actuary, the Board of Trustees shall adopt regulations that are necessary to carry out this section, and that set forth the amount of any surplus or deficit allocable to a participating governmental unit as of June 30, 1995.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-305.5" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Complement of the participant funding ratio” is a ratio equal to 100% minus the participant funding ratio, and may not be less than zero.</text> </level> <level label="3"> <text>“Employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System.</text> </level> <level label="4"> <text>“Noncontributory participating governmental unit” means a participating governmental unit that did not elect to provide its employees with the contributory pension benefit or the Alternate Contributory Pension Selection as provided in § 31–116 of this article.</text> </level> <level label="5"> <text>“Noncontributory system funding ratio” means the ratio determined by the actuary as provided under subsection (e) of this section.</text> </level> <level label="6"> <text>“Participant funding ratio” means the ratio determined under subsection (d) of this section.</text> </level> <level label="7"> <text>“Transition amount” means the amount determined by the actuary as provided under subsection (i) of this section.</text> </level> </level> <level label="b"> <text>This section applies only to a participating governmental unit that on or after July 1, 2001, elects to withdraw from participation in the employees’ systems and transfer to a local pension system all employees of the participating governmental unit who consent to the withdrawal.</text> </level> <level label="c"> <level label="1"> <text>On and after the date of a participating governmental unit’s withdrawal from the employees’ systems under § 31–302(1) of this article, the participating governmental unit and its employees are not required to make any further contributions to the employees’ systems for those employees who elect to withdraw from the employees’ systems.</text> </level> <level label="2"> <text>As of the effective date of withdrawal, the participating governmental unit shall continue to make any contributions required under § 21–305(b)(1) and (2) of this subtitle on behalf of those employees who do not elect to withdraw from the employees’ systems.</text> </level> <level label="3"> <text>As of the effective date of withdrawal of a participating governmental unit, the Board of Trustees shall transfer to the administrative board of the local pension system the assets that are allocable to the employees of the participating governmental unit who elect to withdraw from the employees’ systems as determined under either subsection (f) or (g) of this section.</text> </level> </level> <level label="d"> <level label="1"> <text>This subsection applies to a participating governmental unit that elected to provide its employees with the contributory pension benefit or the Alternate Contributory Pension Selection as provided in § 31–116 of this article.</text> </level> <level label="2"> <text>As of June 30 of each fiscal year, the actuary shall determine the participant funding ratio for the participating governmental units as provided in this subsection.</text> </level> <level label="3"> <text>The participant funding ratio shall be a fraction that has:</text> <level label="i"> <text>as its numerator, the assets to the credit of the participating governmental units in the accumulation fund and the annuity savings fund of the employees’ systems as adjusted under paragraph (4) of this subsection; and</text> </level> <level label="ii"> <text>as its denominator, the actuarial liabilities of the participating governmental units.</text> </level> </level> <level label="4"> <text>The assets to the credit of the participating governmental units as of the valuation date shall be:</text> <level label="i"> <text>increased by the sum of the outstanding balances of:</text> <level label="1"> <text>the special accrued liability attributable to each participating governmental unit under § 21–305.3 of this subtitle;</text> </level> <level label="2"> <text>the deficit allocated to each participating governmental unit under § 21–305.4(c) of this subtitle; and</text> </level> <level label="3"> <text>the withdrawal liability contribution attributable to each participating governmental unit under subsection (h) of this section; and</text> </level> </level> <level label="ii"> <text>decreased by the sum of the outstanding balances of the surplus allocated to each participating governmental unit under § 21–305.4(b) of this subtitle.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>This subsection applies to a noncontributory participating governmental unit.</text> </level> <level label="2"> <text>As of June 30 of each fiscal year, the actuary shall determine the noncontributory system funding ratio for the noncontributory participating governmental units as provided in this subsection.</text> </level> <level label="3"> <text>The noncontributory system funding ratio shall be a fraction that has:</text> <level label="i"> <text>as its numerator, the assets to the credit of the participating governmental units in the accumulation fund and the annuity savings fund of the employees’ systems as adjusted under paragraph (4) of this subsection; and</text> </level> <level label="ii"> <text>as its denominator, the actuarial liabilities of the participating governmental units calculated as if all of the participating governmental units are noncontributory participating governmental units.</text> </level> </level> <level label="4"> <text>The assets to the credit of the participating governmental units as of the valuation date shall be:</text> <level label="i"> <text>increased by the sum of the outstanding balances of:</text> <level label="1"> <text>the special accrued liability attributable to each participating governmental unit under § 21–305.3 of this subtitle;</text> </level> <level label="2"> <text>the deficit allocated to each participating governmental unit under § 21–305.4(c) of this subtitle; and</text> </level> <level label="3"> <text>the withdrawal liability contribution attributable to each participating governmental unit under subsection (h) of this section; and</text> </level> </level> <level label="ii"> <text>decreased by the sum of the outstanding balances of the surplus allocated to each participating governmental unit under § 21–305.4(b) of this subtitle.</text> </level> </level> </level> <level label="f"> <level label="1"> <text>This subsection applies to a participating governmental unit that elected to provide its employees with the contributory pension benefit or the Alternate Contributory Pension Selection as provided in § 31–116 of this article.</text> </level> <level label="2"> <text>The assets that are allocable to the employees of a participating governmental unit who elect to withdraw from the employees’ systems shall be computed by the actuary as provided in this subsection.</text> </level> <level label="3"> <text>If the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit is less than 100%, the actuary shall multiply the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit by the actuarial liability allocable to the employees of the participating governmental unit who elect to withdraw.</text> </level> <level label="4"> <text>If the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit is 100% or greater and less than 110%, the actuary shall multiply the actuarial liability allocable to the employees of the participating governmental unit who elect to withdraw by 100%.</text> </level> <level label="5"> <text>If the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit is 110% or greater, the actuary shall multiply the actuarial liability allocable to the employees of the participating governmental unit who elect to withdraw by the difference between the participant funding ratio and 10%.</text> </level> <level label="6"> <text>Any assets computed under paragraph (3), (4), or (5) of this subsection shall be reduced by the sum of:</text> <level label="i"> <text>the outstanding balance of the deficit allocable to the participating governmental unit as of the effective date of withdrawal;</text> </level> <level label="ii"> <text>the outstanding balance of the special accrued liability contribution allocable to the participating governmental unit as of the effective date of withdrawal; and</text> </level> <level label="iii"> <text>any transition amount as determined under subsection (i) of this section.</text> </level> </level> </level> <level label="g"> <level label="1"> <text>This subsection applies to a noncontributory participating governmental unit.</text> </level> <level label="2"> <text>The assets that are allocable to the employees of a noncontributory participating governmental unit who elect to withdraw from the employees’ systems shall be computed by the actuary as provided in this subsection.</text> </level> <level label="3"> <text>If the noncontributory system funding ratio for the fiscal year preceding the effective date of withdrawal of the noncontributory participating governmental unit is less than 100%, the actuary shall multiply the noncontributory system funding ratio for the fiscal year preceding the effective date of withdrawal of the noncontributory participating governmental unit by the actuarial liability allocable to the employees of the noncontributory participating governmental unit who elect to withdraw.</text> </level> <level label="4"> <text>If the noncontributory system funding ratio for the fiscal year preceding the effective date of withdrawal of the noncontributory participating governmental unit is 100% or greater and less than 110%, the actuary shall multiply the actuarial liability allocable to the employees of the noncontributory participating governmental unit who elect to withdraw by 100%.</text> </level> <level label="5"> <text>If the noncontributory system funding ratio for the fiscal year preceding the effective date of withdrawal of the noncontributory participating governmental unit is 110% or greater, the actuary shall multiply the actuarial liability allocable to the employees of the noncontributory participating governmental unit who elect to withdraw by the difference between the noncontributory system funding ratio and 10%.</text> </level> <level label="6"> <text>Any assets computed under paragraph (3), (4), or (5) of this subsection shall be reduced by the sum of:</text> <level label="i"> <text>the outstanding balance of the deficit allocable to the noncontributory participating governmental unit as of the effective date of withdrawal;</text> </level> <level label="ii"> <text>the outstanding balance of the special accrued liability contribution allocable to the noncontributory participating governmental unit as of the effective date of withdrawal; and</text> </level> <level label="iii"> <text>any transition amount as determined under subsection (i) of this section.</text> </level> </level> </level> <level label="h"> <level label="1"> <text>The withdrawal liability contribution of a participating governmental unit shall be computed by the actuary as provided in this subsection.</text> </level> <level label="2"> <text>The actuary shall:</text> <level label="i"> <text>multiply the complement of the participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit by the actuarial liability allocable to the employees of the participating governmental unit who elect to remain members of the employees’ systems; and</text> </level> <level label="ii"> <text>reduce the amount determined under subparagraph (i) of this paragraph by the outstanding balance of the surplus allocable to the participating governmental unit as of the effective date of withdrawal.</text> </level> </level> <level label="3"> <text>The amount determined under paragraph (2) of this subsection may not be less than zero.</text> </level> <level label="4"> <level label="i"> <text>Except as provided in subparagraph (ii) of this paragraph, the annual withdrawal liability contribution of a participating governmental unit shall be the annual payment that is sufficient to liquidate, over not more than 25 years, the withdrawal liability contribution by means of annual payments that increase each year based on the actuarial assumptions adopted by the Board of Trustees on the recommendation of the actuary.</text> </level> <level label="ii"> <text>Subject to the approval of the Board of Trustees and the actuary’s concurrence, a participating governmental unit:</text> <level label="1"> <text>may liquidate the withdrawal liability contribution by means of level annual payments or over a term of less than 25 years; or</text> </level> <level label="2"> <text>prepay all or a portion of the withdrawal liability contribution.</text> </level> </level> </level> </level> <level label="i"> <level label="1"> <text>This section applies only to a participating governmental unit with a deficit as determined under § 21–305.4(c) of this subtitle.</text> </level> <level label="2"> <text>The transition amount of a participating governmental unit shall be computed by the actuary as provided in this subsection.</text> </level> <level label="3"> <text>The actuary shall determine the pre–June 30, 1995 status and the post–June 30, 1995 status of a participating governmental unit using the assumptions that:</text> <level label="i"> <text>the participating governmental unit elects to withdraw from the employees’ systems as of June 30, 1995;</text> </level> <level label="ii"> <text>the employees of the withdrawing participating governmental unit who are members of the Employees’ Retirement System elect to remain in the employees’ systems; and</text> </level> <level label="iii"> <text>the employees of the withdrawing participating governmental unit who are members of the Employees’ Pension System elect to withdraw from the employees’ systems.</text> </level> </level> <level label="4"> <text>The pre–June 30, 1995 status of a participating governmental unit is an amount equal to the difference between:</text> <level label="i"> <text>the assets transferable to a participating governmental unit that are allocable to the employees of the participating governmental unit who elect to withdraw from the employees’ systems as determined by the actuary applying the provisions of former § 21–305(f) of this subtitle as of June 30, 1995; and</text> </level> <level label="ii"> <text>the withdrawal liability of a participating governmental unit that is attributable to the employees of the participating governmental unit who elect to remain members of the employees’ systems as determined by the actuary applying the provisions of former § 21–305(f) of this subtitle as of June 30, 1995.</text> </level> </level> <level label="5"> <text>The post–June 30, 1995 status of a participating governmental unit is an amount equal to the difference between:</text> <level label="i"> <text>the assets transferable to a participating governmental unit that are allocable to the employees who elect to withdraw from the employees’ systems as determined under subsection (d) of this section as of June 30, 1995; and</text> </level> <level label="ii"> <text>the withdrawal liability of a participating governmental unit that is attributable to the employees of the participating governmental unit who elect to remain in the employees’ systems as determined under subsection (f) of this section as of June 30, 1995.</text> </level> </level> <level label="6"> <level label="i"> <text>Subject to subparagraph (ii) of this paragraph, the transition amount of a participating governmental unit is the amount determined by the actuary as of June 30, 1995, equal to the difference between:</text> <level label="1"> <text>the post–June 30, 1995 status of the participating governmental unit as determined under paragraph (4) of this subsection; and</text> </level> <level label="2"> <text>the pre–June 30, 1995 status of the participating governmental unit as determined under paragraph (3) of this subsection.</text> </level> </level> <level label="ii"> <text>The transition amount of a participating governmental unit may not be less than zero.</text> </level> </level> <level label="7"> <text>As of June 30 of each fiscal year, the transition amount of a participating governmental unit shall decrease by writing down the transition amount in equal annual installments over the 25–year term beginning on July 1, 1995.</text> </level> <level label="8"> <text>On the recommendation of the actuary, the Board of Trustees shall adopt regulations that are necessary to carry out this section, and that set forth a schedule reflecting:</text> <level label="i"> <text>any transition amount allocable to a participating governmental unit; and</text> </level> <level label="ii"> <text>the outstanding balance of the transition amount each year.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-305.6" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System.</text> </level> <level label="3"> <text>“Partial withdrawal” means that a participating governmental unit elects to withdraw from participation in the employees’ systems and transfer to a local pension system any of the following groups of employees of the participating governmental unit who consent to the withdrawal:</text> <level label="i"> <text>firefighters;</text> </level> <level label="ii"> <text>law enforcement personnel; or</text> </level> <level label="iii"> <text>subject to the approval of the Board of Trustees, a homogeneous unit of at least 10 employees.</text> </level> </level> </level> <level label="b"> <text>This section applies only to a participating governmental unit that elects a partial withdrawal from participation in the employees’ systems.</text> </level> <level label="c"> <level label="1"> <text>On and after the date of a participating governmental unit’s partial withdrawal from the employees’ systems, the participating governmental unit and its employees are not required to make any further contributions to the employees’ systems for those employees who elect to withdraw from the employees’ systems.</text> </level> <level label="2"> <text>As of the effective date of the partial withdrawal, the participating governmental unit shall continue:</text> <level label="i"> <text>to make any contributions required under § 21-305(b)(1) and (2) of this subtitle on behalf of those employees who do not elect to withdraw from the employees’ systems; and</text> </level> <level label="ii"> <text>to reduce the amounts required to be paid under § 21-305(b)(1) and (2) of this subtitle by any annual credit allowed to the participating governmental unit under § 21-305.4(b) of this subtitle.</text> </level> </level> <level label="3"> <text>As of the effective date of the partial withdrawal, the Board of Trustees shall transfer to the administrative board of the local pension system the assets that are allocable to the employees of the participating governmental unit who elect to withdraw from the employees’ systems as determined under subsection (d) of this section.</text> </level> </level> <level label="d"> <text>On the recommendation of the actuary, the Board of Trustees shall adopt regulations that set forth the method for:</text> <level label="1"> <text>computing the assets allocable to the employees of a participating governmental unit who elect to withdraw from the employees’ systems;</text> </level> <level label="2"> <text>computing the withdrawal liability contribution of the participating governmental unit; and</text> </level> <level label="3"> <text>determining the portion of any surplus as determined under § 21-305.4(b) of this subtitle, deficit as determined under § 21-305.4(c) of this subtitle, or transition amount as determined under § 21-305.5(i) of this subtitle that is available to the participating governmental unit as of the effective date of the partial withdrawal to compute the assets allocable to the withdrawing employees and the withdrawal liability contribution.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-306" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>Each fiscal year, on behalf of its employees who are members of the Local Fire and Police System, a participating governmental unit shall pay an amount equal to or greater than the product of multiplying:</text> <level label="i"> <text>the aggregate annual earnable compensation of those members; and</text> </level> <level label="ii"> <text>the sum of the normal contribution rate and the accrued liability contribution rate, as determined under this section.</text> </level> </level> <level label="2"> <text>Each fiscal year, in addition to the amounts required to be paid under paragraph (1) of this subsection, a participating governmental unit shall pay:</text> <level label="i"> <text>the special accrued liability contribution required by subsection (d) of this section; and</text> </level> <level label="ii"> <text>any withdrawal liability contribution required by subsection (e) of this section.</text> </level> </level> <level label="3"> <text>The amounts determined under paragraphs (1) and (2) of this subsection shall be based on an actuarial determination of the amounts that are required to preserve the integrity of the accumulation fund of the Local Fire and Police System, using:</text> <level label="i"> <text>the entry-age actuarial cost method;</text> </level> <level label="ii"> <text>actuarial assumptions adopted by the Board of Trustees; and</text> </level> <level label="iii"> <text>the asset valuation method recommended by the actuary and adopted by the Board of Trustees.</text> </level> </level> <level label="4"> <text>The actuary shall compute the contributions payable under this section.</text> </level> <level label="5"> <text>The amounts computed under this section are a charge against the participating governmental unit to be paid in accordance with § 21-309 of this subtitle.</text> </level> </level> <level label="b"> <level label="1"> <text>As part of each actuarial valuation, the actuary shall determine the normal contributions, net of member contributions, on account of members of the Local Fire and Police System.</text> </level> <level label="2"> <text>Except as provided in paragraph (3) of this subsection, the normal contribution rate for the Local Fire and Police System equals the fraction that has:</text> <level label="i"> <text>as its numerator, the sum of the normal contributions determined under this subsection; and</text> </level> <level label="ii"> <text>as its denominator, the aggregate annual earnable compensation of the members of the Local Fire and Police System.</text> </level> </level> <level label="3"> <text>On the recommendation of the actuary, the Board of Trustees may adjust the normal contribution rate determined under this section to provide for:</text> <level label="i"> <text>experience gains and losses;</text> </level> <level label="ii"> <text>the effect of changes in actuarial assumptions; and</text> </level> <level label="iii"> <text>the effect of legislation enacted after July 1, 1989.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>The accrued liability contribution rate for the Local Fire and Police System shall be computed as the percent of the aggregate earnable compensation of the members of the Local Fire and Police System that is sufficient to liquidate over 40 years beginning July 1, 1989, the amount, as of June 30, 1989, by which the total liabilities of the Local Fire and Police System exceeded the sum of:</text> <level label="i"> <text>the assets in the accumulation fund and the annuity savings fund of the Local Fire and Police System; and</text> </level> <level label="ii"> <text>the present value of future normal contributions, future special accrued liability contributions, future withdrawal liability contributions, and future member contributions.</text> </level> </level> <level label="2"> <text>On the recommendation of the actuary, the Board of Trustees may adjust the accrued liability contribution rate to reflect:</text> <level label="i"> <text>experience gains and losses;</text> </level> <level label="ii"> <text>the effect of changes in actuarial assumptions; and</text> </level> <level label="iii"> <text>the effect of legislation enacted after July 1, 1989.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>In this subsection, “special accrued liability” means, as to any participating governmental unit, the liability of the Local Fire and Police System on account of the employees of the participating governmental unit who elect to become members under § 28–202(b) of this article.</text> </level> <level label="2"> <text>Each participating governmental unit shall make a special accrued liability contribution on account of the participation of its employees in the Local Fire and Police System.</text> </level> <level label="3"> <text>The special accrued liability contribution shall be determined by an actuarial valuation of the special accrued liability as of the date of approval of participation by the legislative body of the participating governmental unit.</text> </level> <level label="4"> <text>Except as provided in paragraph (5) of this subsection, the annual special accrued liability contribution of each participating governmental unit shall be the level annual payment that is sufficient to liquidate, over 25 years beginning on the date of approval by the legislative body of the participating governmental unit, the amount by which the special accrued liability of the participating governmental unit exceeds the sum of:</text> <level label="i"> <text>the present value, as of the date of approval, of future normal contributions, future accrued liability contributions, and future member contributions on behalf of or by members who are employees of the participating governmental unit; and</text> </level> <level label="ii"> <text>any cash and securities transferred to the Local Fire and Police System from the local pension system on or before December 31, 2004.</text> </level> </level> <level label="5"> <text>Subject to the approval of the Board of Trustees, a participating governmental unit may liquidate its unfunded special accrued liability:</text> <level label="i"> <text>over a period not to exceed 40 years; or</text> </level> <level label="ii"> <text>subject to the actuary’s concurrence, by means of annual payments other than level annual payments.</text> </level> </level> <level label="6"> <text>The expense of making the initial special accrued liability actuarial valuation shall be assessed against and paid by the participating governmental unit on whose account it is necessary.</text> </level> </level> <level label="e"> <level label="1"> <level label="i"> <text>In this subsection the following words have the meanings indicated.</text> </level> <level label="ii"> <text>“Active participant funding ratio” means the ratio determined by the actuary as provided under paragraph (3) of this subsection.</text> </level> <level label="iii"> <text>“Complement of the active participant funding ratio” is a ratio equal to 1 minus the active participant funding ratio.</text> </level> </level> <level label="2"> <level label="i"> <text>On and after the date of a participating governmental unit’s withdrawal from the Local Fire and Police System under § 31–302 of this article, the participating governmental unit and its employees are not required to make any further contributions to the Local Fire and Police System.</text> </level> <level label="ii"> <text>As of the effective date of withdrawal of a participating governmental unit from the Local Fire and Police System, the Board of Trustees shall transfer to the administrative board of the local pension system the assets that are allocable to the employees of the participating governmental unit as determined under paragraph (4) of this subsection.</text> </level> </level> <level label="3"> <level label="i"> <text>As of June 30 of each fiscal year, the actuary shall determine the active participant funding ratio for the participating governmental units as provided in this section.</text> </level> <level label="ii"> <text>The active participant funding ratio shall be a fraction, not to exceed 1, that has:</text> <level label="1"> <text>as its numerator, the assets to the credit of the participating governmental units in the accumulation fund and the annuity savings fund of the Local Fire and Police System as adjusted under subparagraph (iii) of this paragraph, decreased by the sum of the actuarial liabilities allocable to retirees of the Local Fire and Police System who retired from the service of the participating governmental unit and the designated beneficiaries of those retirees, former members of the Local Fire and Police System who are eligible for a vested allowance who separated from employment with the participating governmental unit, and members of the Local Fire and Police System who separated from employment with the participating governmental unit but who may become eligible to receive prior eligibility service credit under § 28–303 of this article; and</text> </level> <level label="2"> <text>as its denominator, the actuarial liabilities that are allocable to the employees of the participating governmental units who are members of the Local Fire and Police System.</text> </level> </level> <level label="iii"> <text>The assets to the credit of the participating governmental units as of the valuation date shall be increased by the outstanding balance of the special accrued liability attributable to the participating governmental units under subsection (d) of this section.</text> </level> </level> <level label="4"> <level label="i"> <text>The assets that are allocable to the employees of a participating governmental unit who withdraw from the Local Fire and Police System shall be computed by the actuary as provided in this paragraph.</text> </level> <level label="ii"> <text>The actuary shall first multiply the active participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit by the actuarial liability allocable to the employees of the participating governmental unit who withdraw.</text> </level> <level label="iii"> <text>The actuary shall reduce the amount determined under subparagraph (ii) of this paragraph by the outstanding balance of the special accrued liability contribution attributable to the participating governmental unit as of the effective date of withdrawal.</text> </level> </level> </level> <level label="f"> <level label="1"> <text>This subsection only applies to a former vested member, retiree, or surviving beneficiary of a deceased member, former vested member, or retiree, who while a member of the Local Fire and Police System was employed by a participating governmental unit that withdrew from the Local Fire and Police System on or before December 31, 2004.</text> </level> <level label="2"> <text>The Board of Trustees shall transfer to the Employees’ Pension System:</text> <level label="i"> <text>the liabilities allocable to the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees that are accrued on or before June 30, 2005, as determined by an actuarial valuation of these liabilities as of June 30, 2005, based on assumptions that will be used in the actuarial valuation of the several systems as of June 30, 2005; and</text> </level> <level label="ii"> <text>the actuarial value of assets for the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees that is equal to the liabilities as of the date their employer withdrew from the Local Fire and Police System adjusted to reflect:</text> <level label="1"> <text>any benefit payments attributable to the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees; and</text> </level> <level label="2"> <text>the actual investment experience based on the actuarial valuation of assets.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>A transfer made under paragraph (2) of this subsection shall be completed on or before December 31, 2005.</text> </level> <level label="ii"> <text>After the transfer has been completed, the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees shall become former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees of the Employees’ Pension System.</text> </level> </level> </level> <level label="g"> <level label="1"> <text>This subsection applies only to a former vested member, retiree, or surviving beneficiary of a deceased member, former vested member, or retiree, who while a member of the Local Fire and Police System was employed by a participating governmental unit participating in the Local Fire and Police System on or after June 30, 2005.</text> </level> <level label="2"> <text>If a participating governmental unit withdraws from the Local Fire and Police System on or after June 30, 2005, as provided under § 31-302 of this article, the Board of Trustees shall transfer to the Employees’ Pension System:</text> <level label="i"> <text>the liabilities allocable to the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees that are accrued on or before the date the participating governmental unit elects to withdraw, as determined by an actuarial valuation of these liabilities as of the date the participating governmental unit elects to withdraw, based on assumptions that will be used in the actuarial valuation of the several systems as of the date the participating governmental unit elects to withdraw; and</text> </level> <level label="ii"> <text>the actuarial value of assets for the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees that is equal to the liabilities as of the date the participating governmental unit elects to withdraw from the Local Fire and Police System adjusted to reflect:</text> <level label="1"> <text>any benefit payments attributable to the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees; and</text> </level> <level label="2"> <text>the actual investment experience based on the actuarial valuation of assets.</text> </level> </level> </level> <level label="3"> <level label="i"> <text>A transfer made under paragraph (2) of this subsection shall be completed within 1 year of the date the participating governmental unit elects to withdraw.</text> </level> <level label="ii"> <text>After the transfer has been completed, the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees shall become former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees of the Employees’ Pension System.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-306.1" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>Each fiscal year, on behalf of its employees who are members of the Law Enforcement Officers’ Pension System, a participating governmental unit shall pay an amount equal to or greater than the product of multiplying:</text> <level label="i"> <text>the aggregate annual earnable compensation of those members; and</text> </level> <level label="ii"> <text>the sum of the normal contribution rate and the accrued liability contribution rate, as determined under this section.</text> </level> </level> <level label="2"> <text>Each fiscal year, in addition to the amounts required to be paid under paragraph (1) of this subsection, a participating governmental unit shall pay:</text> <level label="i"> <text>the special accrued liability contribution required by subsection (d) of this section; and</text> </level> <level label="ii"> <text>any withdrawal liability contribution required by subsection (e) of this section.</text> </level> </level> <level label="3"> <text>The amounts determined under paragraphs (1) and (2) of this subsection shall be based on an actuarial determination of the amounts that are required to preserve the integrity of the accumulation fund of the Law Enforcement Officers’ Pension System, using:</text> <level label="i"> <text>the entry–age actuarial cost method;</text> </level> <level label="ii"> <text>actuarial assumptions adopted by the Board of Trustees; and</text> </level> <level label="iii"> <text>the asset valuation method recommended by the actuary and adopted by the Board of Trustees.</text> </level> </level> <level label="4"> <text>The actuary shall compute the contributions payable under this section.</text> </level> <level label="5"> <text>The amounts computed under this section are a charge against the participating governmental unit to be paid in accordance with § 21–309 of this subtitle.</text> </level> </level> <level label="b"> <level label="1"> <text>As part of each actuarial valuation, the actuary shall determine the normal contributions, net of member contributions, on account of members of the Law Enforcement Officers’ Pension System.</text> </level> <level label="2"> <text>Except as provided in paragraph (3) of this subsection, the normal contribution rate for the Law Enforcement Officers’ Pension System equals the fraction that has:</text> <level label="i"> <text>as its numerator, the sum of the normal contributions determined under this subsection; and</text> </level> <level label="ii"> <text>as its denominator, the aggregate annual earnable compensation of the members of the Law Enforcement Officers’ Pension System.</text> </level> </level> <level label="3"> <text>On the recommendation of the actuary, the Board of Trustees may adjust the normal contribution rate determined under this section to provide for:</text> <level label="i"> <text>experience gains and losses;</text> </level> <level label="ii"> <text>the effect of changes in actuarial assumptions; and</text> </level> <level label="iii"> <text>the effect of legislation enacted after July 1, 1999.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>The accrued liability contribution rate for the Law Enforcement Officers’ Pension System shall be computed as the percent of the aggregate earnable compensation of the members of the Law Enforcement Officers’ Pension System that is sufficient to liquidate over 40 years beginning July 1, 1999, the amount, as of June 30, 1999, by which the total liabilities of the Law Enforcement Officers’ Pension System exceeded the sum of:</text> <level label="i"> <text>the assets in the accumulation fund and the annuity savings fund of the Law Enforcement Officers’ Pension System; and</text> </level> <level label="ii"> <text>the present value of future normal contributions, future special accrued liability contributions, future withdrawal liability contributions, and future member contributions.</text> </level> </level> <level label="2"> <text>On the recommendation of the actuary, the Board of Trustees may adjust the accrued liability contribution rate to reflect:</text> <level label="i"> <text>experience gains and losses;</text> </level> <level label="ii"> <text>the effect of changes in actuarial assumptions; and</text> </level> <level label="iii"> <text>the effect of legislation enacted after July 1, 1999.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>In this subsection, “special accrued liability” means, as to any participating governmental unit, the liability of the Law Enforcement Officers’ Pension System on account of the employees of the participating governmental unit who elect to become members under § 26–202(b) of this article.</text> </level> <level label="2"> <text>Each participating governmental unit shall make a special accrued liability contribution on account of the participation of its employees in the Law Enforcement Officers’ Pension System.</text> </level> <level label="3"> <text>The special accrued liability contribution shall be determined by an actuarial valuation of the special accrued liability as of the date of approval of participation by the legislative body of the participating governmental unit.</text> </level> <level label="4"> <text>Except as provided in paragraph (5) of this subsection, the annual special accrued liability contribution of each participating governmental unit shall be the level annual payment that is sufficient to liquidate, over 25 years beginning on the date of approval by the legislative body of the participating governmental unit, the amount by which the special accrued liability of the participating governmental unit exceeds the sum of:</text> <level label="i"> <text>the present value, as of the date of approval, of future normal contributions, future accrued liability contributions, and future member contributions on behalf of or by members who are employees of the participating governmental unit; and</text> </level> <level label="ii"> <text>any cash and securities transferred to the Law Enforcement Officers’ Pension System in accordance with § 31–2A–05(c) of this article.</text> </level> </level> <level label="5"> <text>Subject to the approval of the Board of Trustees, a participating governmental unit may liquidate its unfunded special accrued liability:</text> <level label="i"> <text>over a period not to exceed 40 years; or</text> </level> <level label="ii"> <text>subject to the actuary’s concurrence, by means of annual payments other than level annual payments.</text> </level> </level> <level label="6"> <text>The expense of making the initial special accrued liability actuarial valuation shall be assessed against and paid by the participating governmental unit on whose account it is necessary.</text> </level> </level> <level label="e"> <level label="1"> <level label="i"> <text>In this subsection the following words have the meanings indicated.</text> </level> <level label="ii"> <text>“Active participant funding ratio” means the ratio determined by the actuary as provided under paragraph (3) of this subsection.</text> </level> <level label="iii"> <text>“Complement of the active participant funding ratio” is a ratio equal to 1 minus the active participant funding ratio.</text> </level> </level> <level label="2"> <level label="i"> <text>On and after the date of a participating governmental unit’s withdrawal from the Law Enforcement Officers’ Pension System under § 31–302 of this article, the participating governmental unit and its employees are not required to make any further contributions to the Law Enforcement Officers’ Pension System for those employees who elect to withdraw from the Law Enforcement Officers’ Pension System.</text> </level> <level label="ii"> <text>As of the effective date of withdrawal, the participating governmental unit shall continue to make any contributions required under subsection (a) of this section on behalf of those employees who do not elect to withdraw from the Law Enforcement Officers’ Pension System.</text> </level> <level label="iii"> <text>As of the effective date of withdrawal of a participating governmental unit from the Law Enforcement Officers’ Pension System, the Board of Trustees shall transfer to the administrative board of the local pension system the assets that are allocable to the employees of the participating governmental unit who elect to withdraw from the Law Enforcement Officers’ Pension System as determined under paragraph (4) of this subsection.</text> </level> </level> <level label="3"> <level label="i"> <text>As of June 30 of each fiscal year, the actuary shall determine the active participant funding ratio for the participating governmental units as provided in this section.</text> </level> <level label="ii"> <text>The active participant funding ratio shall be a fraction, not to exceed 1, that has:</text> <level label="1"> <text>as its numerator, the assets to the credit of the participating governmental units in the accumulation fund and the annuity savings fund of the Law Enforcement Officers’ Pension System as adjusted under subparagraph (iii) of this paragraph, decreased by the sum of the actuarial liabilities allocable to retirees of the Law Enforcement Officers’ Pension System who retired from the service of the participating governmental unit and the designated beneficiaries of those retirees, former members of the Law Enforcement Officers’ Pension System who are eligible for a vested allowance who separated from employment with the participating governmental unit, and members of the Law Enforcement Officers’ Pension System who separated from employment with the participating governmental unit but who may become eligible to receive prior eligibility service credit under § 26–304 of this article; and</text> </level> <level label="2"> <text>as its denominator, the actuarial liabilities that are allocable to the employees of the participating governmental units who are members of the Law Enforcement Officers’ Pension System.</text> </level> </level> <level label="iii"> <text>The assets to the credit of the participating governmental units as of the valuation date shall be increased by the sum of the outstanding balances of:</text> <level label="1"> <text>the special accrued liability attributable to the participating governmental units under subsection (d) of this section; and</text> </level> <level label="2"> <text>the withdrawal liability attributable to the participating governmental units under paragraph (5) of this subsection.</text> </level> </level> </level> <level label="4"> <level label="i"> <text>The assets that are allocable to the employees of a participating governmental unit who elect to withdraw from the Law Enforcement Officers’ Pension System shall be computed by the actuary as provided in this paragraph.</text> </level> <level label="ii"> <text>The actuary shall first multiply the active participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit by the actuarial liability allocable to the employees of the participating governmental unit who elect to withdraw.</text> </level> <level label="iii"> <text>The actuary shall reduce the amount determined under subparagraph (ii) of this paragraph by the outstanding balance of the special accrued liability contribution attributable to the participating governmental unit as of the effective date of withdrawal.</text> </level> </level> <level label="5"> <level label="i"> <text>The withdrawal liability contribution of a participating governmental unit shall be computed by the actuary as provided in this paragraph.</text> </level> <level label="ii"> <text>The actuary shall multiply the complement of the active participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit by the actuarial liability allocable to the employees of the participating governmental unit who elect to remain members of the Law Enforcement Officers’ Pension System.</text> </level> <level label="iii"> <text>The amount determined under subparagraph (ii) of this paragraph may not be less than zero.</text> </level> <level label="iv"> <text>Except as provided in subparagraph (v) of this paragraph, the annual withdrawal liability contribution of a participating governmental unit shall be the annual payment that is sufficient to liquidate, over not more than 25 years, the withdrawal liability contribution by means of annual payments that increase each year based on the actuarial assumptions adopted by the Board of Trustees on the recommendation of the actuary.</text> </level> <level label="v"> <text>Subject to the approval of the Board of Trustees and the actuary’s concurrence, a participating governmental unit may:</text> <level label="1"> <text>liquidate the withdrawal liability contribution by means of level annual payments or over a term of less than 25 years; or</text> </level> <level label="2"> <text>prepay all or a portion of the withdrawal liability contribution.</text> </level> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-306.2" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>Each fiscal year, on behalf of its employees who are members of the Correctional Officers’ Retirement System, a participating governmental unit shall pay an amount equal to or greater than the product of multiplying:</text> <level label="i"> <text>the aggregate annual earnable compensation of those members; and</text> </level> <level label="ii"> <text>the sum of the normal contribution rate and the accrued liability contribution rate, as determined under this section.</text> </level> </level> <level label="2"> <text>Each fiscal year, in addition to the amounts required to be paid under paragraph (1) of this subsection, a participating governmental unit shall pay:</text> <level label="i"> <text>the special accrued liability contribution required by subsection (d) of this section; and</text> </level> <level label="ii"> <text>any withdrawal liability contribution required by subsection (e) of this section.</text> </level> </level> <level label="3"> <text>The amounts determined under paragraphs (1) and (2) of this subsection shall be based on an actuarial determination of the amounts that are required to preserve the integrity of the accumulation fund of the Correctional Officers’ Retirement System, using:</text> <level label="i"> <text>the entry–age actuarial cost method;</text> </level> <level label="ii"> <text>actuarial assumptions adopted by the Board of Trustees; and</text> </level> <level label="iii"> <text>the asset valuation method recommended by the actuary and adopted by the Board of Trustees.</text> </level> </level> <level label="4"> <text>The actuary shall compute the contributions payable under this section.</text> </level> <level label="5"> <text>The amounts computed under this section are a charge against the participating governmental unit to be paid in accordance with § 21–309 of this subtitle.</text> </level> </level> <level label="b"> <level label="1"> <text>As part of each actuarial valuation, the actuary shall determine the normal contributions, net of member contributions, on account of members of the Correctional Officers’ Retirement System.</text> </level> <level label="2"> <text>Except as provided in paragraph (3) of this subsection, the normal contribution rate for the Correctional Officers’ Retirement System equals the fraction that has:</text> <level label="i"> <text>as its numerator, the sum of the normal contributions determined under this subsection; and</text> </level> <level label="ii"> <text>as its denominator, the aggregate annual earnable compensation of the members of the Correctional Officers’ Retirement System.</text> </level> </level> <level label="3"> <text>On the recommendation of the actuary, the Board of Trustees may adjust the normal contribution rate determined under this section to provide for:</text> <level label="i"> <text>experience gains and losses;</text> </level> <level label="ii"> <text>the effect of changes in actuarial assumptions; and</text> </level> <level label="iii"> <text>the effect of legislation enacted after July 1, 2006.</text> </level> </level> </level> <level label="c"> <level label="1"> <text>The accrued liability contribution rate for the Correctional Officers’ Retirement System shall be computed as the percent of the aggregate earnable compensation of the members of the Correctional Officers’ Retirement System that is sufficient to liquidate over 40 years beginning July 1, 2006, the amount, as of June 30, 2006, by which the total liabilities of the Correctional Officers’ Retirement System exceeded the sum of:</text> <level label="i"> <text>the assets in the accumulation fund and the annuity savings fund of the Correctional Officers’ Retirement System; and</text> </level> <level label="ii"> <text>the present value of future normal contributions, future special accrued liability contributions, future withdrawal liability contributions, and future member contributions.</text> </level> </level> <level label="2"> <text>On the recommendation of the actuary, the Board of Trustees may adjust the accrued liability contribution rate to reflect:</text> <level label="i"> <text>experience gains and losses;</text> </level> <level label="ii"> <text>the effect of changes in actuarial assumptions; and</text> </level> <level label="iii"> <text>the effect of legislation enacted after July 1, 2006.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>In this subsection, “special accrued liability” means, as to any participating governmental unit, the liability of the Correctional Officers’ Retirement System on account of the employees of the participating governmental unit who elect to become members under § 25–202(b) of this article.</text> </level> <level label="2"> <text>Each participating governmental unit shall make a special accrued liability contribution on account of the participation of its employees in the Correctional Officers’ Retirement System.</text> </level> <level label="3"> <text>The special accrued liability contribution shall be determined by an actuarial valuation of the special accrued liability as of the date of approval of participation by the legislative body of the participating governmental unit.</text> </level> <level label="4"> <text>Except as provided in paragraph (5) of this subsection, the annual special accrued liability contribution of each participating governmental unit shall be the level annual payment that is sufficient to liquidate, over 25 years beginning on the date of approval by the legislative body of the participating governmental unit, the amount by which the special accrued liability of the participating governmental unit exceeds the sum of:</text> <level label="i"> <text>the present value, as of the date of approval, of future normal contributions, future accrued liability contributions, and future member contributions on behalf of or by members who are employees of the participating governmental unit; and</text> </level> <level label="ii"> <text>any cash and securities transferred to the Correctional Officers’ Retirement System in accordance with § 31–2B–05(c) of this article.</text> </level> </level> <level label="5"> <text>Subject to the approval of the Board of Trustees, a participating governmental unit may liquidate its unfunded special accrued liability:</text> <level label="i"> <text>over a period not to exceed 40 years; or</text> </level> <level label="ii"> <text>subject to the actuary’s concurrence, by means of annual payments other than level annual payments.</text> </level> </level> <level label="6"> <text>The expense of making the initial special accrued liability actuarial valuation shall be assessed against and paid by the participating governmental unit on whose account it is necessary.</text> </level> </level> <level label="e"> <level label="1"> <level label="i"> <text>In this subsection the following words have the meanings indicated.</text> </level> <level label="ii"> <text>“Active participant funding ratio” means the ratio determined by the actuary as provided under paragraph (3) of this subsection.</text> </level> <level label="iii"> <text>“Complement of the active participant funding ratio” is a ratio equal to 1 minus the active participant funding ratio.</text> </level> </level> <level label="2"> <level label="i"> <text>On and after the date of a participating governmental unit’s withdrawal from the Correctional Officers’ Retirement System under § 31–302 of this article, the participating governmental unit and its employees are not required to make any further contributions to the Correctional Officers’ Retirement System for those employees who elect to withdraw from the Correctional Officers’ Retirement System.</text> </level> <level label="ii"> <text>As of the effective date of withdrawal, the participating governmental unit shall continue to make any contributions required under subsection (a) of this section on behalf of those employees who do not elect to withdraw from the Correctional Officers’ Retirement System.</text> </level> <level label="iii"> <text>As of the effective date of withdrawal of a participating governmental unit from the Correctional Officers’ Retirement System, the Board of Trustees shall transfer to the administrative board of the local pension system the assets that are allocable to the employees of the participating governmental unit who elect to withdraw from the Correctional Officers’ Retirement System as determined under paragraph (4) of this subsection.</text> </level> </level> <level label="3"> <level label="i"> <text>As of June 30 of each fiscal year, the actuary shall determine the active participant funding ratio for the participating governmental units as provided in this section.</text> </level> <level label="ii"> <text>The active participant funding ratio shall be a fraction, not to exceed 1, that has:</text> <level label="1"> <text>as its numerator, the assets to the credit of the participating governmental units in the accumulation fund and the annuity savings fund of the Correctional Officers’ Retirement System as adjusted under subparagraph (iii) of this paragraph, decreased by the sum of the actuarial liabilities allocable to retirees of the Correctional Officers’ Retirement System who retired from the service of the participating governmental unit and the designated beneficiaries of those retirees, former members of the Correctional Officers’ Retirement System who are eligible for a vested allowance who separated from employment with the participating governmental unit, and members of the Correctional Officers’ Retirement System who separated from employment with the participating governmental unit but who may become eligible to receive prior eligibility service credit under § 25–306.1 of this article; and</text> </level> <level label="2"> <text>as its denominator, the actuarial liabilities that are allocable to the employees of the participating governmental units who are members of the Correctional Officers’ Retirement System.</text> </level> </level> <level label="iii"> <text>The assets to the credit of the participating governmental units as of the valuation date shall be increased by the sum of the outstanding balances of:</text> <level label="1"> <text>the special accrued liability attributable to the participating governmental units under subsection (d) of this section; and</text> </level> <level label="2"> <text>the withdrawal liability attributable to the participating governmental units under paragraph (5) of this subsection.</text> </level> </level> </level> <level label="4"> <level label="i"> <text>The assets that are allocable to the employees of a participating governmental unit who elect to withdraw from the Correctional Officers’ Retirement System shall be computed by the actuary as provided in this paragraph.</text> </level> <level label="ii"> <text>The actuary shall first multiply the active participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit by the actuarial liability allocable to the employees of the participating governmental unit who elect to withdraw.</text> </level> <level label="iii"> <text>The actuary shall reduce the amount determined under subparagraph (ii) of this paragraph by the outstanding balance of the special accrued liability contribution attributable to the participating governmental unit as of the effective date of withdrawal.</text> </level> </level> <level label="5"> <level label="i"> <text>The withdrawal liability contribution of a participating governmental unit shall be computed by the actuary as provided in this paragraph.</text> </level> <level label="ii"> <text>The actuary shall multiply the complement of the active participant funding ratio for the fiscal year preceding the effective date of withdrawal of the participating governmental unit by the actuarial liability allocable to the employees of the participating governmental unit who elect to remain members of the Correctional Officers’ Retirement System.</text> </level> <level label="iii"> <text>The amount determined under subparagraph (ii) of this paragraph may not be less than zero.</text> </level> <level label="iv"> <text>Except as provided in subparagraph (v) of this paragraph, the annual withdrawal liability contribution of a participating governmental unit shall be the annual payment that is sufficient to liquidate, over not more than 25 years, the withdrawal liability contribution by means of annual payments that increase each year based on the actuarial assumptions adopted by the Board of Trustees on the recommendation of the actuary.</text> </level> <level label="v"> <text>Subject to the approval of the Board of Trustees and the actuary’s concurrence, a participating governmental unit may:</text> <level label="1"> <text>liquidate the withdrawal liability contribution by means of level annual payments or over a term of less than 25 years; or</text> </level> <level label="2"> <text>prepay all or a portion of the withdrawal liability contribution.</text> </level> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-307" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>For a permanent employee of a board of supervisors of elections who is a member of the Employees’ Retirement System or the Employees’ Pension System, the county where the member is employed shall:</text> <level label="1"> <text>pay to the Board of Trustees or the Central Payroll Bureau the employer contributions otherwise required to be made by the State on behalf of the member; and</text> </level> <level label="2"> <text>deduct from the compensation payable to the member and pay to the Board of Trustees or the Central Payroll Bureau the required member contributions.</text> </level> </level> <level label="b"> <text>For the fiscal year beginning July 1, 2010, and each subsequent fiscal year, for a magistrate in chancery or a magistrate in juvenile causes who is eligible for benefits under the Judges’ Retirement System, the county where the magistrate serves shall pay to the Judges’ Retirement System the employer contributions required to be paid on behalf of the magistrate.</text> </level> <level label="c"> <text>For a member or retiree who transferred to the Teachers’ Retirement System of the State of Maryland from the Employees’ Retirement System of the City of Baltimore, the local system shall pay any excess of the amount to which the member or retiree would have been entitled under the provisions of the local system as they existed as of July 1, 1971, over the amount that is provided under this Division II.</text> </level> <level label="d"> <text>For an additional employee or agent of the State Racing Commission who is a member of the Employees’ Pension System, the licensees of the State Racing Commission shall pay the employer contributions otherwise required to be made by the State on behalf of the member in the manner that the licensees pay the salary for an additional employee or agent under the Maryland Horse Racing Act.</text> </level> <level label="e"> <text>For a member of the State Police Retirement System, the State shall pay the full cost of special death benefits under § 29–204 of this article.</text> </level> <level label="f"> <text>For an employee of the Maryland Environmental Service who is a member of the Employees’ Retirement System or the Employees’ Pension System, the Maryland Environmental Service shall pay to the Board of Trustees the employer contributions otherwise required to be made by the State on behalf of the member.</text> </level> <level label="g"> <text>For a court reporter for the Circuit Court for Charles County who is a member of the Employees’ Retirement System or the Employees’ Pension System, the County Commissioners of Charles County shall pay the employer contributions otherwise required to be made by the State on behalf of the member.</text> </level> <level label="h"> <level label="1"> <text>Except as provided in subsection (i) of this section, the University System of Maryland shall pay an annual accrued liability contribution equal to an amount that is sufficient to liquidate over not more than 5 years, the increase in the accrued liability by means of annual payments that increase each year based on actuarial assumptions adopted by the Board of Trustees on the recommendation of the actuary.</text> </level> <level label="2"> <text>The University System of Maryland:</text> <level label="i"> <text>shall pay to the Board of Trustees the amount required under this subsection on July 1 of each year until the increase in the accrued liability is paid in full; and</text> </level> <level label="ii"> <text>may prepay all or a portion of the increase in the accrued liability in accordance with a calculation approved by the Board of Trustees.</text> </level> </level> </level> <level label="i"> <level label="1"> <text>The Medical System, as defined in § 13–301(k) of the Education Article, shall pay an annual accrued liability contribution equal to an amount that is sufficient to liquidate, over not more than 5 years, the increase in the accrued liability determined under § 21–304(d)(2) of this subtitle that is attributable to the retirement of Medical System university personnel, as defined in § 13–301(q) of the Education Article, by means of annual payments that increase each year based on actuarial assumptions adopted by the Board of Trustees on the recommendation of the actuary.</text> </level> <level label="2"> <text>The Medical System:</text> <level label="i"> <text>shall pay to the Board of Trustees the amount required under this subsection on July 1 of each year until the increase in the accrued liability is paid in full; and</text> </level> <level label="ii"> <text>may prepay all or a portion of the increase in the accrued liability in accordance with a calculation approved by the Board of Trustees.</text> </level> </level> </level> <level label="j"> <level label="1"> <text>For each employee who is subject to the contributory pension benefit, Frederick County shall pay the additional liabilities that result from the contributory pension benefit according to a schedule of amortization that is subject to the approval of the Board of Trustees.</text> </level> <level label="2"> <text>For each employee who is subject to the Alternate Contributory Pension Selection under Title 23, Subtitle 2, Part III of this article, Frederick County shall pay the additional liabilities that result from the Alternate Contributory Pension Selection according to a schedule of amortization that is subject to the approval of the Board of Trustees.</text> </level> </level> <level label="k"> <text>For each employee of a participating governmental unit that initially elects to provide its employees with the contributory pension benefit between July 1, 2002 and December 31, 2002, inclusive, the participating governmental unit shall pay the additional liabilities that result from the contributory pension benefit according to any increase in the normal cost percentage plus a schedule of amortization that is subject to the approval of the Board of Trustees.</text> </level> <level label="l"> <text>For each employee of a participating governmental unit that initially elects to provide its employees with the Alternate Contributory Pension Selection between July 1, 2006, and June 30, 2007, inclusive, the participating governmental unit shall pay the additional liabilities that result from the Alternate Contributory Pension Selection according to any increase in the normal cost percentage plus a schedule of amortization that is subject to the approval of the Board of Trustees.</text> </level> <level label="m"> <text>For each employee of the Maryland Transit Administration who is a member of the Law Enforcement Officers’ Pension System, the Maryland Transit Administration shall pay to the Board of Trustees the employer contributions otherwise required to be made by the State on behalf of the member.</text> </level> <level label="n"> <level label="1"> <text>In this section, “elected or appointed official” means an individual who is employed as:</text> <level label="i"> <text>a State’s attorney;</text> </level> <level label="ii"> <text>a sheriff;</text> </level> <level label="iii"> <text>a county treasurer;</text> </level> <level label="iv"> <text>a county commissioner;</text> </level> <level label="v"> <text>an orphans’ court judge;</text> </level> <level label="vi"> <text>a bingo board member; or</text> </level> <level label="vii"> <text>a liquor and license board member.</text> </level> </level> <level label="2"> <text>For the fiscal year beginning July 1, 2009, and each subsequent fiscal year, on behalf of the elected or appointed officials of each county who are members of the Employees’ Retirement System, the Employees’ Pension System, or the Law Enforcement Officers’ Pension System, the county where each elected or appointed official is employed shall pay the employer contributions otherwise required to be made by the State on behalf of the member.</text> </level> </level> <level label="o"> <level label="1"> <text>For the fiscal year beginning July 1, 2009, and each subsequent fiscal year, for a deputy sheriff employed by the Baltimore City Sheriff’s Department who is a member of the Law Enforcement Officers’ Pension System, Baltimore City shall pay the employer contributions otherwise required to be made by the State on behalf of the member.</text> </level> <level label="2"> <text>For the fiscal year beginning July 1, 2010, and each subsequent fiscal year, for an employee of the Baltimore City Sheriff’s Department who is a member of the Employees’ Retirement System or the Employees’ Pension System, Baltimore City shall pay the employer contributions otherwise required to be made by the State on behalf of the member.</text> </level> </level> <level label="p"> <level label="1"> <text>On and after October 1, 2013, on behalf of its employees who are members of the Employees’ Retirement System or the Employees’ Pension System, the Injured Workers’ Insurance Fund shall:</text> <level label="i"> <text>pay an amount equal to the product of multiplying:</text> <level label="1"> <text>the aggregate annual earnable compensation of those members; and</text> </level> <level label="2"> <text>the normal contribution rate otherwise paid by the State for members of the Employees’ Retirement System and the Employees’ Pension System;</text> </level> </level> <level label="ii"> <text>pay an additional amount equal to 5% of the aggregate annual earnable compensation of its employees who are members of the Employees’ Retirement System; and</text> </level> <level label="iii"> <text>remit to the Employees’ Retirement System or the Employees’ Pension System the contributions required to be paid by its employees.</text> </level> </level> <level label="2"> <text>Beginning on or before December 31, 2013, and each year thereafter, in addition to the amounts required to be paid under paragraph (1) of this subsection, the Injured Workers’ Insurance Fund shall pay a withdrawal liability contribution:</text> <level label="i"> <text>as calculated by the actuary of the State Retirement and Pension System; and</text> </level> <level label="ii"> <text>in accordance with paragraphs (3) and (4) of this subsection.</text> </level> </level> <level label="3"> <text>The participant funding ratio for the Injured Workers’ Insurance Fund shall be a fraction that has:</text> <level label="i"> <text>as its numerator, the market value of assets for the Employees’ Retirement System and the Employees’ Pension System reported in the June 30, 2013, annual actuarial valuation for the State; and</text> </level> <level label="ii"> <text>as its denominator, the entry age actuarial accrued liability for the Employees’ Retirement System and the Employees’ Pension System reported in the June 30, 2013, annual actuarial valuation for the State.</text> </level> </level> <level label="4"> <text>The withdrawal liability contribution of the Injured Workers’ Insurance Fund shall be the complement of the participant funding ratio for the Fund multiplied by the entry age actuarial accrued liability for the Fund based on data submitted as of October 1, 2013, for the Fund.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-308" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>On or before December 1 of each year, the Board of Trustees shall:</text> <level label="i"> <text>certify to the Governor and the Secretary of Budget and Management the rates to be used to determine the amounts to be paid by the State to the accumulation fund of each of the several systems during the next fiscal year, including a separate certification of the normal contribution rate for the Teachers’ Retirement System and the Teachers’ Pension System; and</text> </level> <level label="ii"> <text>provide to the Secretary of Budget and Management a statement of the total amount to be paid by the State as determined under § 21–304 of this subtitle to the Teachers’ Retirement System and the Teachers’ Pension System expressed as a percentage of the payroll of all members of those State systems.</text> </level> </level> <level label="2"> <text>The Governor shall include in the budget bill:</text> <level label="i"> <text>the total amount of the State’s contribution to each State system as ascertained based on the rates certified by the Board of Trustees under paragraph (1) of this subsection;</text> </level> <level label="ii"> <text>the additional amounts as ascertained under subsection (d) of this section for the State’s payment to the professional and clerical employees of the Department of Public Libraries of Montgomery County who are members of the Employees’ Retirement System of Montgomery County and are excluded from membership in the Teachers’ Retirement System or the Teachers’ Pension System; and</text> </level> <level label="iii"> <text>any additional amount required to be in the budget bill under § 3–501(c)(2)(ii) of this article.</text> </level> </level> <level label="3"> <level label="i"> <text>For each of fiscal years 2016 through 2024, in addition to the annual required contribution required under paragraph (2) of this subsection, the Governor shall include in the budget bill a supplemental contribution of $75,000,000.</text> </level> <level label="ii"> <text>For fiscal year 2025, in addition to the annual required contribution required under paragraph (2) of this subsection, the Governor shall include in the budget bill a supplemental contribution of $50,000,000.</text> </level> </level> </level> <level label="b"> <level label="1"> <level label="i"> <text>As to members of the several systems whose compensation is paid by the State, the Comptroller shall compute the amounts to be charged to the appropriation of each unit as the unit’s share of retirement costs for its employees.</text> </level> <level label="ii"> <text>The Comptroller shall make the computation under subparagraph (i) of this paragraph using the total rates of contributions as set by the actuary under § 21-304 of this subtitle.</text> </level> </level> <level label="2"> <text>As to members of the Teachers’ Retirement System or the Teachers’ Pension System whose compensation is not paid by the State, on September 30, December 31, May 31, and April 15 of each year, the State Department of Education and the Maryland Higher Education Commission shall certify to the Comptroller 25% of the amount appropriated in the budget of those units for employer contributions.</text> </level> </level> <level label="c"> <level label="1"> <text>As payrolls are paid, the Comptroller shall issue a warrant or warrants to the State Treasurer in the amounts to be charged under subsection (b)(1) of this section against the budgets of the units.</text> </level> <level label="2"> <text>On or before October 1, January 1, June 1, and April 16 of each year, the Comptroller shall issue a warrant or warrants to the State Treasurer for the amounts certified to the Comptroller under subsection (b)(2) of this section.</text> </level> <level label="3"> <text>On the receipt of the warrant of the Comptroller, the State Treasurer immediately shall transfer to the appropriate State system the amounts due.</text> </level> </level> <level label="d"> <level label="1"> <level label="i"> <text>The State Librarian shall determine the amount that equals the applicable percentage as determined under subparagraph (ii) of this paragraph of the payroll of the professional and clerical employees of the Department of Public Libraries of Montgomery County who are members of the Employees’ Retirement System of Montgomery County and are excluded from membership in the Teachers’ Retirement System or the Teachers’ Pension System.</text> </level> <level label="ii"> <text>The applicable percentage under subparagraph (i) of this paragraph is the lesser of:</text> <level label="1"> <text>the State’s contribution percentage for the Teachers’ Retirement System and the Teachers’ Pension System, as certified by the Board of Trustees; or</text> </level> <level label="2"> <text>the percentage of the payroll of its employees that Montgomery County has contributed to the Employees’ Retirement System of Montgomery County, as determined by an actuarial valuation.</text> </level> </level> </level> <level label="2"> <text>The amount determined under paragraph (1) of this subsection shall be:</text> <level label="i"> <text>included in the budget estimate for the State Library Agency;</text> </level> <level label="ii"> <text>certified by the State Librarian to the State Comptroller; and</text> </level> <level label="iii"> <text>paid to Montgomery County as provided in this subsection.</text> </level> </level> <level label="3"> <text>The Comptroller shall issue a warrant or warrants to the State Treasurer for the amount to be paid Montgomery County under this subsection.</text> </level> <level label="4"> <text>On the receipt of the warrant of the Comptroller, the State Treasurer shall pay to the treasurer of Montgomery County the amount due.</text> </level> </level> <level label="e"> <text>For each nonclerical and nonprofessional former Community College of Baltimore employee who chose to remain a member of the Baltimore City Retirement Plan, the State shall contribute annually to the Baltimore City Retirement Plan on behalf of the employee an amount equal to the lesser of the contribution the State would otherwise have made on behalf of each employee of the State to the Employees’ Pension System or the rate required for the Baltimore City Retirement Plan.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-309" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>In this section, “participating governmental unit” includes a county required to pay the employer contribution or part of the employer contribution under § 21-307 of this subtitle.</text> </level> <level label="b"> <text>Each year, the Board of Trustees shall certify to the chief fiscal officer of each participating governmental unit:</text> <level label="1"> <text>the normal contribution rates, accrued liability contribution rates, special accrued liability contribution rate, and withdrawal liability contribution rate for the participating governmental unit; and</text> </level> <level label="2"> <text>any amount payable by the participating governmental unit for a magistrate under § 21–307(b) of this subtitle.</text> </level> </level> <level label="c"> <text>Each participating governmental unit shall:</text> <level label="1"> <text>include an amount determined based on the rates certified by the Board of Trustees as payable by the participating governmental unit under this section in the next budget, appropriation, or levy of the participating governmental unit after the certification by the Board of Trustees; and</text> </level> <level label="2"> <text>levy and collect those amounts in the same manner as any other tax.</text> </level> </level> <level label="d"> <level label="1"> <text>Except as provided in paragraph (3) of this subsection, within 30 days after receiving the certification by the Board of Trustees of the amount payable by the participating governmental unit under this section, the proper fiscal officer of each participating governmental unit shall pay that amount to the Board of Trustees.</text> </level> <level label="2"> <text>A participating governmental unit that does not pay the amounts certified under this subsection within the time required is liable for:</text> <level label="i"> <text>a penalty of 10% of the amount due; and</text> </level> <level label="ii"> <text>interest on delinquent amounts at 10% a year until payment.</text> </level> </level> <level label="3"> <text>The Secretary of the Board of Trustees may allow a grace period for payment of the amounts certified under this section not to exceed 10 calendar days.</text> </level> <level label="4"> <text>On notification by the Secretary of the Board of Trustees that a delinquency exists, the State Comptroller immediately shall exercise the right of setoff against any money due or coming due to the delinquent participating governmental unit.</text> </level> </level> <level label="e"> <text>On receipt of the payments from the fiscal officer of each participating governmental unit, the Board of Trustees shall credit these amounts to the accumulation fund of the appropriate State system.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-309.1" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <level label="1"> <text>In this section the following words have the meanings indicated.</text> </level> <level label="2"> <text>“Local employee” has the meaning stated in § 21–304 of this subtitle.</text> </level> <level label="3"> <text>“Local employer” has the meaning stated in § 21–304 of this subtitle.</text> </level> </level> <level label="b"> <text>On or before December 1 of each year, the Board of Trustees shall determine and certify the amounts payable by each local employer under § 21–304(b)(4) of this subtitle for the next fiscal year.</text> </level> <level label="c"> <text>On or before October 1, January 1, April 16, and June 1 of each fiscal year, each local employer shall pay to the Board of Trustees 25% of the amount of the charges certified to the local employer by the Board of Trustees under subsection (b) of this section.</text> </level> <level label="d"> <level label="1"> <text>The Secretary of the Board of Trustees may allow a grace period not to exceed 10 calendar days for payment of the amounts certified under this section.</text> </level> <level label="2"> <text>If a local employer does not pay the amounts required under this section within the time required, on notification by the Secretary of the Board of Trustees that a delinquency exists, the State Comptroller immediately:</text> <level label="i"> <text>shall withhold the delinquent amounts, including interest on the delinquent amounts at a rate of 7.75% a year, from any installment due the local employer from the General State School Fund; and</text> </level> <level label="ii"> <text>shall pay to the Board of Trustees the delinquent amounts, including interest, withheld under this paragraph.</text> </level> </level> </level> <level label="e"> <text>On receipt of the payments from each local employer or the State Comptroller, the Board of Trustees shall credit these amounts to the accumulation fund of the appropriate State system.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-309.2" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>For purposes of making determinations under this section, the Teachers’ Pension System and the Teachers’ Retirement System shall be considered together as one State system.</text> </level> <level label="b"> <level label="1"> <text>For fiscal year 2026, each county government shall pay to the Board of Trustees on or before January 1, 2026, the amount specified for that county government under § 21–304(b)(6) of this subtitle.</text> </level> <level label="2"> <text>Beginning in fiscal year 2027, each county government shall pay to the Board of Trustees on or before each September 1 the amount specified for that county government under § 21–304(b)(6) of this subtitle.</text> </level> </level> <level label="c"> <level label="1"> <text>The Secretary of the Board of Trustees may allow a grace period not to exceed 10 calendar days for payment of the amounts certified under this section.</text> </level> <level label="2"> <text>If a county government does not pay the amounts required under this section within the time required, on notification by the Secretary of the Board of Trustees that a delinquency exists, the State Comptroller immediately shall:</text> <level label="i"> <text>exercise the right of setoff against any money due or coming due to the delinquent county government; and</text> </level> <level label="ii"> <text>pay to the Board of Trustees the delinquent amounts, including interest on the delinquent amounts at a rate of 7.75% a year, withheld in accordance with this paragraph.</text> </level> </level> </level> <level label="d"> <text>On receipt of the payments from each county government or the State Comptroller, the Board of Trustees shall credit the amounts received to the accumulation funds of the Teachers’ Pension System and the Teachers’ Retirement System.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-310" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>Each year, the Board of Trustees shall certify to the Maryland Environmental Service the State’s normal contribution rate and the State’s accrued liability contribution rate and the amounts payable under § 21–307(f) of this subtitle.</text> </level> <level label="b"> <level label="1"> <text>The Maryland Environmental Service shall pay to the Board of Trustees the amount of the charges certified to the Maryland Environmental Service by the Board of Trustees under subsection (a) of this section.</text> </level> <level label="2"> <text>Within 30 days after receiving the certification by the Board of Trustees, the Maryland Environmental Service shall pay that amount to the Board of Trustees.</text> </level> <level label="3"> <text>If the Maryland Environmental Service does not pay the amounts certified under this section within the time required, it is liable for:</text> <level label="i"> <text>a penalty of 10% of the amount due; and</text> </level> <level label="ii"> <text>interest on delinquent amounts at 10% a year until payment.</text> </level> </level> <level label="4"> <text>The Secretary of the Board of Trustees may allow a grace period for payment of the amounts certified under this section not to exceed 10 calendar days.</text> </level> <level label="5"> <text>On notification by the Secretary of the Board of Trustees that a delinquency exists, the State Comptroller immediately shall exercise the right of setoff against any money due or coming due to the Maryland Environmental Service.</text> </level> </level> <level label="c"> <text>On receipt of the payments from the Maryland Environmental Service, the Board of Trustees shall credit these amounts to the accumulation fund of the appropriate State system.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-311" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>The Board of Trustees shall credit to each member’s individual account in the annuity savings fund of the appropriate State system:</text> <level label="1"> <text>the member contributions of the member as provided in this Division II; and</text> </level> <level label="2"> <text>regular interest on the accumulated contributions of the member as provided in this Division II.</text> </level> </level> <level label="b"> <text>From the annuity savings fund of the appropriate system, the Board of Trustees shall pay the accumulated contributions of a member or former member that, as provided in this Division II:</text> <level label="1"> <text>are withdrawn by the member or former member; or</text> </level> <level label="2"> <text>if a member or former member dies, are paid to the member’s or former member’s estate or designated beneficiary.</text> </level> </level> <level label="c"> <text>When a member retires or a former member commences to receive a vested allowance, the Board of Trustees shall transfer the member’s or former member’s accumulated contributions from the annuity savings fund of the appropriate State system to the accumulation fund of that system.</text> </level> <level label="d"> <level label="1"> <text>If a former member is not eligible to receive a vested allowance under Title 29, Subtitle 3 of this article, when the former member’s membership ends, the Board of Trustees shall transfer the former member’s accumulated contributions from the annuity savings fund of the appropriate State system to the accumulation fund of that system.</text> </level> <level label="2"> <text>If accumulated contributions of a former member are transferred to the accumulation fund under paragraph (1) of this subsection, at the request of the former member, the Board of Trustees shall return the accumulated contributions to the former member from the accumulation fund.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-312" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>To determine the earnable compensation of a member in a payroll period, the Board of Trustees may deem that the rate of annual compensation payable to the member on the first day of the payroll period continues throughout the payroll period.</text> </level> <level label="b"> <text>The Board of Trustees may omit member contributions for a period less than a full payroll period for an individual who was not a member on the first day of the payroll period.</text> </level> <level label="c"> <text>To facilitate the making of member contributions, the Board of Trustees may modify the member contribution required of any member by an amount not exceeding 0.1% of the annual earnable compensation on the basis of which the member contribution is to be made.</text> </level> <level label="d"> <level label="1"> <text>The member contributions provided for under this Division II shall be made notwithstanding any resulting reduction in the actual compensation received below the minimum compensation provided for by law for a member.</text> </level> <level label="2"> <text>Each member is deemed to agree to make the member contributions required by this Division II and to have received full compensation.</text> </level> <level label="3"> <text>Except for the benefits provided under this Division II, payment of compensation less any member contribution is a complete discharge of all claims for services rendered by an employee during the time covered by the payment.</text> </level> </level> <level label="e"> <text>If a member does not make the member contributions required by this Division II, on retirement, the member’s retirement allowance shall be reduced by the actuarial equivalent of the missed accumulated contributions, including regular interest on those contributions at the statutory rate earned on member contributions in the member’s system, compounded annually.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-313" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>In this section, “approved employer” means a participating employer who adopts a resolution and follows procedures as prescribed by the Board of Trustees for an employer pickup program in accordance with § 414(h)(2) of the Internal Revenue Code.</text> </level> <level label="b"> <text>The State or other approved employer of a member shall pick up, within the meaning of § 414(h)(2) of the Internal Revenue Code, the member contributions required by this Division II.</text> </level> <level label="c"> <text>The member contributions under subsection (b) of this section:</text> <level label="1"> <text>are designated as employee contributions to be picked up by the employing unit within the meaning of § 414(h)(2) of the Internal Revenue Code and shall be treated as employer contributions in determining tax treatment under that section;</text> </level> <level label="2"> <text>shall reduce the compensation of the member in an amount that equals the member contribution picked up by the employer;</text> </level> <level label="3"> <text>may not be included as gross income of the member until the pickup amounts are distributed or made available to the member;</text> </level> <level label="4"> <text>shall be paid by the State or other approved employer from the same source of funds that is used to pay compensation to the member; and</text> </level> <level label="5"> <text>for purposes of this Division II, shall be treated in the same manner and to the same extent as member contributions made before establishment of the employer pickup program.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-314" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>Each participating employer shall submit to the Board of Trustees a statement that shows the name, date of birth, occupational title, duties, compensation, length of service, and other information that the Board of Trustees requires regarding employees or former employees of the participating employer.</text> </level> <level label="b"> <text>Each year the Board of Trustees shall certify the member contribution rates to the chief fiscal officer of each participating employer.</text> </level> <level label="c"> <level label="1"> <text>In this subsection, “compensation” means a member’s earnable compensation as provided in § 20–101 of this article and includes the amount earned by the member for all pay periods ending during a calendar year even if an amount is paid to the member after December 31 of the calendar year.</text> </level> <level label="2"> <text>As each payroll is paid and in a manner that the Board of Trustees prescribes each participating employer shall:</text> <level label="i"> <text>certify to the Board of Trustees, and the proper fiscal officer of the participating employer shall pay to the Board of Trustees, the member contributions deducted from the compensation of each member employed by the participating employer or made under an employer pickup program; and</text> </level> <level label="ii"> <text>submit to the State Retirement Agency supporting payroll data required by the State Retirement Agency in a format specified by the State Retirement Agency.</text> </level> </level> </level> <level label="d"> <level label="1"> <text>A participating employer that does not pay the member contributions certified under this section and submit the supporting payroll data to the Board of Trustees as each payroll is paid and in a manner prescribed by the Board of Trustees is liable for:</text> <level label="i"> <text>a penalty of 10% of the member contributions due;</text> </level> <level label="ii"> <text>interest on delinquent member contributions at 10% a year until paid;</text> </level> <level label="iii"> <text>a $250 penalty for each payroll for which the supporting data is not submitted; and</text> </level> <level label="iv"> <text>interest on the penalty assessed under item (iii) of this paragraph at 10% per year if the penalty is not paid by the date certified by the State Retirement Agency.</text> </level> </level> <level label="2"> <text>The Secretary of the Board of Trustees may allow a grace period for payment of the amounts due or submission of supporting payroll data as required under this section not to exceed 10 working days.</text> </level> <level label="3"> <text>On notification by the Secretary of the Board of Trustees that a delinquency exists, the State Comptroller immediately shall set off the delinquent amount against any money due or coming due to the delinquent participating employer.</text> </level> </level> <level label="e"> <text>On receipt of the payments from the participating employer, the Board of Trustees shall credit the amounts to the individual account of the member, from whose compensation the member contribution is made, in the annuity savings fund of the appropriate system.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-315" title_number="21" title_name="State Retirement and Pension System" subtitle_number="3" subtitle_name="Funding"> <level label="a"> <text>The Board of Trustees shall credit to the expense fund of each State system its pro rata share of:</text> <level label="1"> <text>the amount attributable to the administrative and operational expenses of the Board of Trustees and the State Retirement Agency as certified by the Board of Trustees under § 21–125 of this title;</text> </level> <level label="2"> <text>the amounts authorized by the Board of Trustees under this section for investment management services, including personnel and operational expenses of the Investment Division; and</text> </level> <level label="3"> <text>the amount authorized by the Board of Trustees to implement a closing agreement with the Internal Revenue Service regarding former members of the Employees’ Retirement System or the Teachers’ Retirement System who elected to become members of or participate in those State systems under former Article 73B, §§ 2–206 and 3–206 of the Code.</text> </level> </level> <level label="b"> <level label="1"> <text>The Board of Trustees shall pay from the expense fund of each State system its pro rata share of:</text> <level label="i"> <text>the administrative and operational expenses of the Board of Trustees and the State Retirement Agency, in accordance with the annual State budget;</text> </level> <level label="ii"> <text>the amounts as authorized by the Board of Trustees necessary for investment management services, including personnel and operational expenses of the Investment Division; and</text> </level> <level label="iii"> <text>the amounts as authorized by the Board of Trustees necessary to implement a closing agreement with the Internal Revenue Service regarding former members of the Employees’ Retirement System or the Teachers’ Retirement System who elected to become members of or participate in those State systems under former Article 73B, §§ 2–206 and 3–206 of the Code.</text> </level> </level> <level label="2"> <text>The amounts for the personnel and operational expenses of the Investment Division shall be paid out of the accumulation fund of each State system on a pro rata basis.</text> </level> </level> <level label="c"> <text>Each year the Board of Trustees shall estimate the amount, not exceeding 0.22% of active member payroll, retiree benefits, and former member compensation, necessary for the administrative and operational expenses of the Board of Trustees and the State Retirement Agency.</text> </level> <level label="d"> <level label="1"> <text>Each quarter of the fiscal year the Board of Trustees shall estimate one–fourth of an amount, not exceeding 0.5% of the market value as of the last day of the preceding quarter of invested assets that are externally managed exclusive of assets invested in real estate or alternative investments, necessary to procure and retain investment management services other than external real estate or alternative investment management services.</text> </level> <level label="2"> <text>The Board of Trustees is not limited in the amount of investment manager fees that the Board of Trustees may pay as necessary for external real estate or alternative investment management services.</text> </level> </level> <level label="e"> <level label="1"> <text>The amounts estimated under subsection (c) of this section shall be paid into the expense funds of the several systems during the ensuing year on a pro rata basis according to the total membership of each system.</text> </level> <level label="2"> <text>The amounts estimated under subsection (d) of this section shall be paid into the expense funds of the several systems during the ensuing year on a pro rata basis according to the total assets held by each system.</text> </level> </level> <level label="f"> <text>The Board of Trustees may combine the expense funds of the several systems for budgetary and administrative efficiency.</text> </level> <level label="g"> <level label="1"> <level label="i"> <text>On or before December 31 of each year, the Board of Trustees shall report to the General Assembly the actual amount spent for investment management services during the preceding fiscal year.</text> </level> <level label="ii"> <text>The report required under subparagraph (i) of this paragraph shall include the amount of carried interest on any assets of the system.</text> </level> </level> <level label="2"> <text>On or before December 31 each year, the Board of Trustees shall report to the General Assembly the actual amount spent for Investment Division operations during the preceding fiscal year.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-401" title_number="21" title_name="State Retirement and Pension System" subtitle_number="4" subtitle_name="Optional Forms of Allowance"> <level label="a"> <level label="1"> <text>Subject to paragraph (2) of this subsection, instead of the basic allowance provided under the State system of a member, the member may elect a reduced allowance to be paid as one of the options under § 21–403 of this subtitle.</text> </level> <level label="2"> <text>Paragraph (1) of this subsection applies to a member of:</text> <level label="i"> <text>the Law Enforcement Officers’ Pension System or State Police Retirement System only if, at retirement, the member does not have a spouse; and</text> </level> <level label="ii"> <text>the Judges’ Retirement System only if, at retirement, the member does not have a spouse or a child who is under the age of 26 years or is disabled.</text> </level> </level> </level> <level label="b"> <text>To elect an optional form of allowance, a member shall:</text> <level label="1"> <text>complete the appropriate form that the Board of Trustees provides; and</text> </level> <level label="2"> <text>file the form with the Board of Trustees before the first allowance payment normally becomes due.</text> </level> </level> <level label="c"> <text>A member who has elected an optional form of allowance may change the election only if the member notifies the Board of Trustees before the first allowance payment normally becomes due.</text> </level> <level label="d"> <text>If a member dies before the effective date of retirement, the Board of Trustees shall pay the benefits payable on the member’s behalf as if the member had not elected an optional form of allowance.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-402" title_number="21" title_name="State Retirement and Pension System" subtitle_number="4" subtitle_name="Optional Forms of Allowance"> <level label="a"> <text>Each optional form of allowance shall be the actuarial equivalent of the basic allowance under the State system of a member.</text> </level> <level label="b"> <level label="1"> <text>Subject to paragraph (2) of this subsection, for an optional form of allowance providing for payment to a designated beneficiary for life, the designated beneficiary must be an individual.</text> </level> <level label="2"> <text>If the designated beneficiary is a minor or an individual with a disability, the allowance may be paid into a trust for the benefit of the individual.</text> </level> <level label="3"> <text>A member who elects to receive a reduced optional allowance under § 21-403 of this subtitle may designate an individual other than the member’s child as the member’s designated beneficiary.</text> </level> </level> <level label="c"> <level label="1"> <text>This subsection applies to a member who selects an optional form of allowance as provided in § 21-403(b) or (e) of this subtitle.</text> </level> <level label="2"> <text>If a member designates a beneficiary other than the member’s spouse or disabled child as defined under § 72(m)(7) of the Internal Revenue Code, a member may not designate a beneficiary who is more than 10 years younger than the member.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-403" title_number="21" title_name="State Retirement and Pension System" subtitle_number="4" subtitle_name="Optional Forms of Allowance"> <level label="a"> <level label="1"> <text>Under Option 1, if a retiree dies before receiving payments equal to the actuarial equivalent present value of the retiree’s basic allowance computed at the time of retirement, the Board of Trustees shall pay the balance as a single payment:</text> <level label="i"> <text>to the designated beneficiary; or</text> </level> <level label="ii"> <text>if there is no designated beneficiary, to the retiree’s estate.</text> </level> </level> <level label="2"> <level label="i"> <text>At the time of retirement, a member may designate more than one beneficiary for the optional benefit provided in paragraph (1) of this subsection.</text> </level> <level label="ii"> <text>If, at the time of retirement, a member does designate more than one beneficiary for the optional benefit provided in paragraph (1) of this subsection, the single payment will be paid in equal shares to each of the designated beneficiaries.</text> </level> </level> </level> <level label="b"> <text>Under Option 2, when a retiree dies, the Board of Trustees shall pay the retiree’s reduced allowance to the designated beneficiary for the designated beneficiary’s life.</text> </level> <level label="c"> <text>Under Option 3, when a retiree dies, the Board of Trustees shall pay 50% of the retiree’s reduced allowance to the designated beneficiary for the designated beneficiary’s life.</text> </level> <level label="d"> <level label="1"> <text>Under Option 4, if a retiree dies before receiving payments equal to the value of the retiree’s accumulated contributions at the time of retirement, the Board of Trustees shall pay the balance as a single payment:</text> <level label="i"> <text>to the designated beneficiary; or</text> </level> <level label="ii"> <text>if there is no designated beneficiary, to the retiree’s estate.</text> </level> </level> <level label="2"> <level label="i"> <text>At the time of retirement, a member may designate more than one beneficiary for the optional benefit provided in paragraph (1) of this subsection.</text> </level> <level label="ii"> <text>If, at the time of retirement, a member does designate more than one beneficiary for the optional benefit provided in paragraph (1) of this subsection, the single payment will be paid in equal shares to each of the designated beneficiaries.</text> </level> </level> </level> <level label="e"> <level label="1"> <text>Subject to paragraph (2) of this subsection, under Option 5, when a retiree dies, the Board of Trustees shall pay the retiree’s reduced allowance to the designated beneficiary for the designated beneficiary’s life.</text> </level> <level label="2"> <text>If the designated beneficiary dies before the retiree, then:</text> <level label="i"> <text>beginning in the month following the date of death of the designated beneficiary, the Board of Trustees shall pay the retiree the basic allowance; or</text> </level> <level label="ii"> <level label="1"> <text>the retiree may designate a new beneficiary in accordance with § 21–404 of this subtitle; and</text> </level> <level label="2"> <text>the Board of Trustees shall pay the retiree an allowance as provided in § 21–404(e)(2) of this subtitle.</text> </level> </level> </level> </level> <level label="f"> <level label="1"> <text>Subject to paragraph (2) of this subsection, under Option 6, when a retiree dies, the Board of Trustees shall pay 50% of the retiree’s reduced allowance to the designated beneficiary for the designated beneficiary’s life.</text> </level> <level label="2"> <text>If the designated beneficiary dies before the retiree, then:</text> <level label="i"> <text>beginning in the month following the date of death of the designated beneficiary, the Board of Trustees shall pay the retiree the basic allowance; or</text> </level> <level label="ii"> <level label="1"> <text>the retiree may designate a new beneficiary in accordance with § 21–404 of this subtitle; and</text> </level> <level label="2"> <text>the Board of Trustees shall pay the retiree an allowance as provided in § 21–404(e)(2) of this subtitle.</text> </level> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-404" title_number="21" title_name="State Retirement and Pension System" subtitle_number="4" subtitle_name="Optional Forms of Allowance"> <level label="a"> <text>This section does not apply to the Judges’ Retirement System.</text> </level> <level label="b"> <text>To change a designated beneficiary, a retiree shall:</text> <level label="1"> <text>complete the appropriate form that the Board of Trustees provides; and</text> </level> <level label="2"> <text>file the form with the Board of Trustees.</text> </level> </level> <level label="c"> <text>Subject to subsections (d) and (e) of this section, if a retiree changes a designated beneficiary, the Board of Trustees shall recompute the allowance for the election based on the value of the balance in the retiree’s annuity reserve and pension reserve when the change is made.</text> </level> <level label="d"> <level label="1"> <text>This subsection applies only to a retiree who elected the optional form of allowance payable under § 21–403(b) (Option 2), § 21–403(c) (Option 3), § 21–403(e) (Option 5), or § 21–403(f) (Option 6) of this subtitle.</text> </level> <level label="2"> <text>A retiree may rescind a request to change the designated beneficiary and restore the retiree’s prior designation of beneficiary by sending written notice to the State Retirement Agency that is received by the State Retirement Agency before the second allowance payment normally becomes due after the change of beneficiary.</text> </level> <level label="3"> <text>A retiree who rescinds a change of designated beneficiary in a timely manner under paragraph (2) of this subsection shall receive, after the rescission, the allowance payable prior to the change of designated beneficiary, without retroactive adjustment of any allowance payment made while the rescinded designation of beneficiary was in effect.</text> </level> </level> <level label="e"> <level label="1"> <text>This subsection applies to a retiree if:</text> <level label="i"> <text>the retiree elected the optional form of allowance payable under § 21–403(e) (Option 5) or § 21–403(f) (Option 6) of this subtitle;</text> </level> <level label="ii"> <text>the retiree’s designated beneficiary dies before the retiree; and</text> </level> <level label="iii"> <text>after the death of the designated beneficiary, the retiree elects to change the designated beneficiary.</text> </level> </level> <level label="2"> <text>The Board of Trustees shall recompute the reduced allowance payable to a retiree and the retiree’s new designated beneficiary using:</text> <level label="i"> <text>the retiree’s basic allowance at the time of the new beneficiary designation;</text> </level> <level label="ii"> <text>the retiree’s age at the time of the new beneficiary designation; and</text> </level> <level label="iii"> <text>the age of the new designated beneficiary.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-405" title_number="21" title_name="State Retirement and Pension System" subtitle_number="4" subtitle_name="Optional Forms of Allowance"> <text>A retiree of the Judges’ Retirement System who has elected an optional form of an allowance under this subtitle may not change the designated beneficiary.</text> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-406" title_number="21" title_name="State Retirement and Pension System" subtitle_number="4" subtitle_name="Optional Forms of Allowance"> <level label="a"> <level label="1"> <text>If a designated beneficiary who is receiving payments for life dies on or before the 15th day of a month, the Board of Trustees may not pay any portion of the designated beneficiary’s allowance to the designated beneficiary’s estate for the month in which the death occurs.</text> </level> <level label="2"> <text>If a designated beneficiary who is receiving payments for life dies on or after the 16th day of a month, the Board of Trustees shall pay to the designated beneficiary’s estate the entire allowance due to the designated beneficiary for the month in which the death occurs.</text> </level> </level> <level label="b"> <level label="1"> <text>If a retiree dies on or before the 15th day of a month, the Board of Trustees may not pay any portion of the retiree’s allowance to the designated beneficiary or the retiree’s estate for the month in which the death occurs.</text> </level> <level label="2"> <text>If a retiree dies on or after the 16th day of a month, the Board of Trustees shall pay the entire allowance due to the retiree for the month in which the death occurs:</text> <level label="i"> <text>to the designated beneficiary; or</text> </level> <level label="ii"> <text>if there is no designated beneficiary, to the retiree’s estate.</text> </level> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-501" title_number="21" title_name="State Retirement and Pension System" subtitle_number="5" subtitle_name="Benefit Administration"> <level label="a"> <text>A retiree may elect to have the Board of Trustees deduct from the retiree’s allowance and pay for the retiree:</text> <level label="1"> <text>dues for an employee organization;</text> </level> <level label="2"> <text>payments to the State Employees’ Credit Union of Maryland, Inc.;</text> </level> <level label="3"> <text>all or part of a premium for:</text> <level label="i"> <text>insurance offered through an employee organization; or</text> </level> <level label="ii"> <text>State-approved medical insurance for retirees; or</text> </level> </level> <level label="4"> <text>any other deduction that the Board of Trustees allows by regulation, in the interest of members or retirees.</text> </level> </level> <level label="b"> <level label="1"> <text>A retiree who participates in medical insurance offered through a county may elect to have the Board of Trustees deduct from the retiree’s allowance and pay to the county all or part of the premium for locally approved medical insurance.</text> </level> <level label="2"> <text>Except for payments in accordance with paragraph (1) of this subsection, the State system or any unit of the State is not responsible for paying for medical insurance offered through a county.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-502" title_number="21" title_name="State Retirement and Pension System" subtitle_number="5" subtitle_name="Benefit Administration"> <level label="a"> <level label="1"> <text>Except as provided in paragraph (2) of this subsection, a person may not attach, execute, garnish, or otherwise seize any current or future benefit under this Division II or any money in a fund created under this Division II.</text> </level> <level label="2"> <text>In accordance with regulations adopted by the Board of Trustees, a court of competent jurisdiction may expressly order that a benefit under this Division II be assigned in a decree or order of alimony, child support, or divorce, or in a court–approved property settlement incident to a court decree or order.</text> </level> <level label="3"> <text>A court of competent jurisdiction may expressly order that a benefit under this Division II be assigned to a spouse, former spouse, child, or other dependent when an order of benefit forfeiture is issued in accordance with § 21–704 of this title.</text> </level> </level> <level label="b"> <text>An assignment under this section only applies to benefits paid after the Board of Trustees receives:</text> <level label="1"> <text>written notice of the court decree or order; and</text> </level> <level label="2"> <text>any additional information that the Board of Trustees requires.</text> </level> </level> <level label="c"> <text>The Board of Trustees is not liable for an improper payment to a person because the Board of Trustees did not receive written notice of a court decree or order.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-503" title_number="21" title_name="State Retirement and Pension System" subtitle_number="5" subtitle_name="Benefit Administration"> <text>The Board of Trustees shall offer counseling about retirement benefits:</text> <level label="1"> <text>to the members, former members, and retirees of each State system; and</text> </level> <level label="2"> <text>if a member, former member, or retiree consents, to an immediate family member.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-504" title_number="21" title_name="State Retirement and Pension System" subtitle_number="5" subtitle_name="Benefit Administration"> <level label="a"> <text>This section applies only to the:</text> <level label="1"> <text>Employees’ Pension System;</text> </level> <level label="2"> <text>Employees’ Retirement System;</text> </level> <level label="3"> <text>Teachers’ Pension System; and</text> </level> <level label="4"> <text>Teachers’ Retirement System.</text> </level> </level> <level label="b"> <text>The Board of Trustees shall adopt regulations to allow a public employee organization to obtain, for a reasonable fee, each year:</text> <level label="1"> <text>the name and last known address of each individual during the last year who became a retiree or commenced receiving a vested allowance;</text> </level> <level label="2"> <text>the name and last known address of each retiree or former member receiving a vested allowance who died in the last year; and</text> </level> <level label="3"> <text>any change in address in the last year of a retiree or former member receiving a vested allowance.</text> </level> </level> <level label="c"> <level label="1"> <text>Except as provided in § 21–128 of this title, before the release of a name, the Board of Trustees shall notify the individual of the provisions of this section.</text> </level> <level label="2"> <text>If an individual notifies the Board of Trustees that the individual does not want the individual’s name or address released to an employee organization, the Board of Trustees may not release the name or address.</text> </level> </level> <level label="d"> <text>An employee organization may not release any information that it receives under this section.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-505" title_number="21" title_name="State Retirement and Pension System" subtitle_number="5" subtitle_name="Benefit Administration"> <text>The Board of Trustees and the State Board of Trustees of the Maryland State Employees Supplemental Retirement Plans shall exchange information about participating employees of the optional defined contribution system as necessary to administer the system.</text> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-506" title_number="21" title_name="State Retirement and Pension System" subtitle_number="5" subtitle_name="Benefit Administration"> <level label="a"> <text>This section applies to a former member, retiree, or a beneficiary of a deceased former member or retiree of a State system who:</text> <level label="1"> <text>is entitled to a refund of accumulated contributions and has made no claim for those contributions; or</text> </level> <level label="2"> <text>is currently eligible to receive a vested allowance and has not filed an application for the vested allowance.</text> </level> </level> <level label="b"> <text>Notwithstanding any other provision of law, the State Retirement Agency may post the names of the individuals described in subsection (a) of this section and the names of the last participating employer of the former members or retirees on the State Retirement Agency’s website or otherwise publish the names of the individuals and employers for the purpose of notifying the individuals that they have unclaimed money held by the State Retirement Agency.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-601" title_number="21" title_name="State Retirement and Pension System" subtitle_number="6" subtitle_name="Eligible Rollover Distributions"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Direct rollover” means a payment by the State Retirement Agency directly to the eligible retirement plan specified by the participant, the surviving spouse of a participant, or the designated beneficiary of the participant.</text> </level> <level label="c"> <text>“Eligible retirement plan” means:</text> <level label="1"> <text>an individual retirement account described in § 408(a) of the Internal Revenue Code;</text> </level> <level label="2"> <text>an individual retirement annuity, other than an endowment contract, described in § 408(b) of the Internal Revenue Code;</text> </level> <level label="3"> <text>a qualified trust described in § 401(a) of the Internal Revenue Code that is exempt from tax under § 501(a) of the Internal Revenue Code;</text> </level> <level label="4"> <text>an annuity plan described in § 403(a) of the Internal Revenue Code;</text> </level> <level label="5"> <text>an annuity plan described in § 403(b) of the Internal Revenue Code;</text> </level> <level label="6"> <text>a deferred compensation plan described in § 457(b) of the Internal Revenue Code, or any successor provisions, that is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or a political subdivision of a state that agrees to account separately for amounts transferred into that plan; or</text> </level> <level label="7"> <text>effective January 1, 2008, a Roth Individual Retirement Account described in § 408A of the Internal Revenue Code.</text> </level> </level> <level label="d"> <level label="1"> <text>“Eligible rollover distribution” means a distribution:</text> <level label="i"> <text>on or after January 1, 1993, to a participant of all or any part of the balance to the credit of the participant in any State system;</text> </level> <level label="ii"> <text>on or after January 1, 2002, to the surviving spouse of a member, former member, or retiree, or to a spouse or former spouse who is an alternate payee under an eligible domestic relations order, as defined in § 414(p) of the Internal Revenue Code, of all or any part of the balance to the credit of the member, former member, retiree, or surviving spouse in any State system; or</text> </level> <level label="iii"> <text>on or after January 1, 2007, to the designated nonspouse beneficiary of a member, former member, or retiree of all or any part of the balance to the credit of the member, former member, retiree, or designated nonspouse beneficiary in any State system.</text> </level> </level> <level label="2"> <text>“Eligible rollover distribution” does not include:</text> <level label="i"> <text>any distribution that is one of a series of substantially equal periodic payments that are made at least annually for the life or life expectancy of the participant or the joint lives or joint life expectancies of the participant and the participant’s beneficiary;</text> </level> <level label="ii"> <text>any distribution that is one of a series of substantially equal periodic payments made for a specified period of at least 10 years;</text> </level> <level label="iii"> <text>any distribution that is required under § 401(a)(9) of the Internal Revenue Code;</text> </level> <level label="iv"> <text>any distribution that is reasonably expected to total less than $200 during the calendar year; or</text> </level> <level label="v"> <text>any other distribution that the Internal Revenue Service does not consider eligible for rollover treatment, including corrective distributions necessary to comply with the provisions of § 415 of the Internal Revenue Code.</text> </level> </level> <level label="3"> <level label="i"> <text>Effective January 1, 2002, a portion of a distribution will not fail to be an eligible rollover distribution merely because that portion consists of after–tax employee contributions that are not includible in gross income.</text> </level> <level label="ii"> <text>A portion of a distribution described in subparagraph (i) of this paragraph may be transferred only to:</text> <level label="1"> <text>an individual retirement account or annuity described in § 408(a) or (b) of the Internal Revenue Code;</text> </level> <level label="2"> <text>a qualified defined contribution plan described in § 401(a) of the Internal Revenue Code that agrees to account separately for amounts transferred to the account and earnings received as a result of the transferred amounts;</text> </level> <level label="3"> <text>on or after January 1, 2007, to a qualified defined benefit plan described in § 401(a) of the Internal Revenue Code or to an annuity contract described in § 403(b) of the Internal Revenue Code, that agrees to account separately for amounts transferred to the account and earnings received as a result of the transferred amounts; or</text> </level> <level label="4"> <text>on or after January 1, 2008, to a Roth IRA described in § 408 of the Internal Revenue Code.</text> </level> </level> <level label="iii"> <text>A transfer to an eligible retirement plan described in subparagraph (ii)2, 3, or 4 of this paragraph may be made only through a direct rollover.</text> </level> </level> </level> <level label="e"> <text>“Supplemental plan” means the Board of Trustees of the Maryland State Employees Supplemental Retirement Plans.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-602" title_number="21" title_name="State Retirement and Pension System" subtitle_number="6" subtitle_name="Eligible Rollover Distributions"> <level label="a"> <text>A participant may elect on the form the Board of Trustees requires to have all or any part of an eligible rollover distribution paid to an eligible retirement plan in a direct rollover.</text> </level> <level label="b"> <level label="1"> <text>If an eligible rollover distribution is payable to the designated spouse beneficiary of a member, former member, or retiree, the designated spouse beneficiary may elect to have all or any part of the eligible rollover distribution paid to an eligible retirement plan in a direct rollover.</text> </level> <level label="2"> <level label="i"> <text>A nonspouse designated beneficiary may roll over an eligible rollover distribution only to a traditional or Roth individual retirement account or individual retirement annuity established for the purpose of receiving the distribution.</text> </level> <level label="ii"> <text>A traditional or Roth individual retirement account or individual retirement annuity established under this paragraph shall be treated as an inherited individual retirement account or annuity within the meaning of § 408(d)(3)(C) of the Internal Revenue Code.</text> </level> </level> </level> <level label="c"> <text>A member who is eligible to participate in the plan administered by the supplemental plan under Title 35, Subtitle 5 of this article may elect to have all or any part of the eligible rollover distribution paid in a direct rollover to the plan in accordance with the regulations adopted by the supplemental plan.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-603" title_number="21" title_name="State Retirement and Pension System" subtitle_number="6" subtitle_name="Eligible Rollover Distributions"> <text>The Board of Trustees shall adopt regulations that are necessary to carry out this subtitle and that are consistent with the requirements of § 401(a)(31) and any other applicable sections of the Internal Revenue Code and the regulations under those sections.</text> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-604" title_number="21" title_name="State Retirement and Pension System" subtitle_number="6" subtitle_name="Eligible Rollover Distributions"> <text>Within a reasonable time before making an eligible rollover distribution, the Board of Trustees shall provide written notices as required under § 402(f) of the Internal Revenue Code.</text> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-701" title_number="21" title_name="State Retirement and Pension System" subtitle_number="7" subtitle_name="Forfeiture of Benefits"> <level label="a"> <text>In this subtitle the following words have the meanings indicated.</text> </level> <level label="b"> <text>“Domestic relations order” means an order issued in accordance with § 21–502(a)(2) of this title, § 414(p) of the Internal Revenue Code, and regulations adopted by the Board of Trustees that assigns a benefit to a spouse, former spouse, child, or other dependent of a public employee in connection with a decree or order of alimony, child support, or divorce.</text> </level> <level label="c"> <text>“Final adjudication” means adjudication by a trial court resulting in final disposition of all charges that constitute a qualifying crime.</text> </level> <level label="d"> <text>“Public employee” means an individual who:</text> <level label="1"> <text>is employed in a position listed in § 21–702 of this subtitle; and</text> </level> <level label="2"> <text>has been charged with a qualifying crime.</text> </level> </level> <level label="e"> <text>“Qualifying crime” means a felony:</text> <level label="1"> <text>that is committed in the course of a public employee’s duties and responsibilities;</text> </level> <level label="2"> <text>that is committed through the use of the public employee’s authority derived from the position of employment; and</text> </level> <level label="3"> <text>the commission of which results in, or is attempted to result in, gain, profit, or advantage for the public employee.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-702" title_number="21" title_name="State Retirement and Pension System" subtitle_number="7" subtitle_name="Forfeiture of Benefits"> <level label="a"> <text>This subtitle applies to an individual who:</text> <level label="1"> <text>is a member, former member, or retiree of the Employees’ Retirement System or the Employees’ Pension System; and</text> </level> <level label="2"> <text>has earned creditable service while employed as:</text> <level label="i"> <text>the Attorney General of the State;</text> </level> <level label="ii"> <text>the Comptroller of the State;</text> </level> <level label="iii"> <text>the Governor of the State;</text> </level> <level label="iv"> <text>the Lieutenant Governor of the State;</text> </level> <level label="v"> <text>the Secretary of State; or</text> </level> <level label="vi"> <text>the Treasurer of the State.</text> </level> </level> </level> <level label="b"> <text>This subtitle does not apply to any service earned before January 9, 2019.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-703" title_number="21" title_name="State Retirement and Pension System" subtitle_number="7" subtitle_name="Forfeiture of Benefits"> <level label="a"> <text>Benefits under this Division II of this article payable to a public employee are subject to forfeiture in whole or in part in accordance with this subtitle if the public employee is found guilty of, pleads guilty to, or enters a plea of nolo contendere to a qualifying crime.</text> </level> <level label="b"> <level label="1"> <text>Benefits under this Division II may not be forfeited or reduced if the Internal Revenue Service determines that the forfeiture or reduction will negatively affect or invalidate the tax qualified status of any of the several systems.</text> </level> <level label="2"> <text>If the Internal Revenue Service determines that the application of this subtitle would negatively affect or invalidate the tax qualified status of any of the several systems, any forfeiture of benefits that took place before the Internal Revenue Service’s determination shall be reversed in accordance with § 21–707 of this subtitle to the extent necessary to comply with the determination.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-704" title_number="21" title_name="State Retirement and Pension System" subtitle_number="7" subtitle_name="Forfeiture of Benefits"> <level label="a"> <text>If the final adjudication of charges results in conviction of a public employee, the public employee’s retirement allowance shall be forfeited in whole or in part in accordance with this section.</text> </level> <level label="b"> <level label="1"> <text>On conviction of a public employee, the Attorney General or State’s Attorney shall file a complaint in circuit court to forfeit the public employee’s benefits in whole or in part.</text> </level> <level label="2"> <text>Notice of the complaint filed under paragraph (1) of this subsection shall be served on:</text> <level label="i"> <text>the public employee;</text> </level> <level label="ii"> <text>any known spouse of the public employee;</text> </level> <level label="iii"> <text>any known dependents of the public employee;</text> </level> <level label="iv"> <text>the public employee’s designated beneficiaries;</text> </level> <level label="v"> <text>any former spouse who has been assigned benefits under an existing domestic relations order; and</text> </level> <level label="vi"> <text>the State Retirement Agency.</text> </level> </level> <level label="3"> <text>Notwithstanding § 4–312 of the General Provisions Article, on written request, the State Retirement Agency shall provide the Attorney General or State’s Attorney with available information from the retirement records of the public employee to assist the Attorney General or State’s Attorney in providing the notice required under this subsection.</text> </level> </level> <level label="c"> <text>The court shall enter an order requiring the forfeiture, in whole or in part, of the public employee’s benefits if the court finds by clear and convincing evidence that:</text> <level label="1"> <text>the public employee was convicted of a qualifying crime;</text> </level> <level label="2"> <text>the public employee was a member of the Employees’ Pension System or the Employees’ Retirement System; and</text> </level> <level label="3"> <text>the qualifying crime for which the public employee was convicted was committed while the public employee was an active member of the Employees’ Pension System or the Employees’ Retirement System.</text> </level> </level> <level label="d"> <text>Only service credit in the State system in which the public employee is a member when the qualifying crime is committed is eligible for forfeiture under this section.</text> </level> <level label="e"> <level label="1"> <text>An order requiring forfeiture of benefits shall indicate the amount of benefits to be forfeited.</text> </level> <level label="2"> <text>When determining the amount of benefits to be forfeited, the court shall consider:</text> <level label="i"> <text>the severity of the crime;</text> </level> <level label="ii"> <text>the amount of monetary loss suffered by the State, a county, a political subdivision, or a person as a result of the crime;</text> </level> <level label="iii"> <text>the degree of public trust placed in the public employee;</text> </level> <level label="iv"> <text>the financial needs and resources of the public employee;</text> </level> <level label="v"> <text>the financial needs and resources of the public employee’s spouse, children, or other dependents;</text> </level> <level label="vi"> <text>any interest in benefits of a former spouse established under an existing domestic relations order; and</text> </level> <level label="vii"> <text>any other factors the court determines relevant.</text> </level> </level> </level> <level label="f"> <level label="1"> <text>If the court enters an order requiring the forfeiture of benefits, the court may enter a domestic relations order that provides that some or all of the forfeited benefits be paid to a spouse, former spouse, child, or other dependent for purposes of child support, alimony, or marital property rights.</text> </level> <level label="2"> <text>When determining whether to enter a domestic relations order under paragraph (1) of this subsection, the court shall consider whether the public employee’s spouse, former spouse, children, or dependents were culpable or complicit in the commission of the qualifying crime.</text> </level> <level label="3"> <text>The court may not order benefits to be paid to a public employee’s spouse, former spouse, child, or other dependent in a manner that is inconsistent with the payment of benefits in the State system in which the public employee was a member.</text> </level> </level> <level label="g"> <level label="1"> <text>An order requiring a forfeiture of benefits issued under this section may not impair or alter an existing domestic relations order providing benefits to a former spouse of a public employee.</text> </level> <level label="2"> <text>A public employee’s interest in a benefit of a former spouse established by a domestic relations order may not be subject to a forfeiture or reduction under this subtitle.</text> </level> </level> <level label="h"> <text>Benefits available to a public employee as a beneficiary may not be subject to a forfeiture under this subtitle.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-705" title_number="21" title_name="State Retirement and Pension System" subtitle_number="7" subtitle_name="Forfeiture of Benefits"> <level label="a"> <text>If a public employee has retired before a forfeiture order is issued under § 21–704 of this subtitle, the Board of Trustees may recover from the public employee the amount of benefits paid to the public employee before the order.</text> </level> <level label="b"> <text>The recovery under subsection (a) of this section is limited to an amount equal to the benefits that would have been forfeited had the forfeiture order been issued before the public employee began receiving any benefits as a retiree.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-706" title_number="21" title_name="State Retirement and Pension System" subtitle_number="7" subtitle_name="Forfeiture of Benefits"> <level label="a"> <text>This section applies to a public employee who is not a retiree.</text> </level> <level label="b"> <text>Subject to subsection (c) of this section, a public employee may submit an application for retirement.</text> </level> <level label="c"> <text>If a public employee is eligible to apply for a retirement allowance, a public employee’s application for retirement benefits:</text> <level label="1"> <text>shall be considered submitted on the first day of the month after it is properly completed and submitted to the State Retirement Agency; and</text> </level> <level label="2"> <text>may not be processed by the State Retirement Agency unless and until the final adjudication of the charge that does not result in conviction.</text> </level> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-707" title_number="21" title_name="State Retirement and Pension System" subtitle_number="7" subtitle_name="Forfeiture of Benefits"> <level label="a"> <level label="1"> <text>On receipt of an order that reverses or overturns a conviction of a public employee, the court that issued a forfeiture order under § 21–704 of this subtitle shall rescind the forfeiture order and order the Board of Trustees to pay any benefits that are payable under this Division II of this article to the public employee.</text> </level> <level label="2"> <text>When a court rescinds a forfeiture order under paragraph (1) of this subsection, the court shall also rescind any domestic relations order entered in accordance with § 21–704(f) of this subtitle.</text> </level> </level> <level label="b"> <text>If a conviction of a public employee who was a retiree before the date of conviction is overturned:</text> <level label="1"> <text>the public employee’s benefits shall be restored back to the date the benefit payments ceased;</text> </level> <level label="2"> <text>the public employee’s allowance shall:</text> <level label="i"> <text>be paid beginning the month after the State Retirement Agency is notified that the conviction is overturned; and</text> </level> <level label="ii"> <text>include any cost–of–living adjustments that would have been made in the time between the conviction and the time benefit payments are restored; and</text> </level> </level> <level label="3"> <text>benefit payments that would have been made during the time from the date of conviction to the date the conviction is overturned shall be made to the public employee, less any payments made in accordance with a domestic relations order directing payment of benefits to a spouse, former spouse, child, or other dependent.</text> </level> </level> <level label="c"> <text>If a conviction of a public employee who was not a retiree before the date of conviction is overturned, the public employee may receive benefits in accordance with this Division II of this article.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-708" title_number="21" title_name="State Retirement and Pension System" subtitle_number="7" subtitle_name="Forfeiture of Benefits"> <level label="a"> <text>A public employee subject to a forfeiture order issued under § 21–704 of this subtitle is entitled to a return of the individual’s accumulated contributions on request under § 29–501 of this article.</text> </level> <level label="b"> <text>The public employee’s accumulated contributions shall be reduced by an amount equal to any benefit payments received by the public employee that would have been subject to forfeiture and have not been recovered by the Board of Trustees under § 21–705 of this subtitle.</text> </level> </section> <section article="gsp" article_name="State Personnel and Pensions" number="21-709" title_number="21" title_name="State Retirement and Pension System" subtitle_number="7" subtitle_name="Forfeiture of Benefits"> <text>The Board of Trustees shall adopt regulations to implement this subtitle.</text> </section>