In each State system, there is: an accumulation fund; an annuity savings fund; and an expense fund. 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.

The following are obligations of the State: the payment of all allowances and other benefits payable under this Division II; the creation and maintenance of reserves in the accumulation funds of the several systems; and the crediting of regular interest to the annuity savings funds of the several systems. The assets of the several systems shall be used to pay the obligations of the State specified in this section. 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.

The Board of Trustees shall credit to the accumulation fund of each State system: all employer contributions to the State system; all interest, dividends, and other income derived from the assets of the State system; and amounts transferred under § 21–311(c) or (d) of this subtitle. 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. 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. 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. 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.

In this section the following words have the meanings indicated. 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. “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: a clerk; a helping teacher; a principal; a superintendent; a supervisor; or a teacher. “Local employer” means a county board of education or the Baltimore City Board of School Commissioners. “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. “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. 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: the aggregate annual earnable compensation of the State members of that State system; and 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. 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: the entry–age actuarial cost method; and actuarial assumptions adopted by the Board of Trustees. For the purpose of making the determinations required under this section: 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 the Teachers’ Retirement System and the Teachers’ Pension System shall be considered together as one State system. 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. For fiscal years 2013 through 2016, each local employer shall pay to the Board of Trustees its local share, which shall be equal to the following amounts: Local              Fiscal      Fiscal     Fiscal     Fiscal Employer              Year      Year     Year     Year 2013      2014     2015     2016 Allegany         1,487,742     1,885,754 2,412,465 2,773,677 Anne Arundel     11,493,684     14,568,567 18,637,716 21,428,297 Baltimore City     12,922,862     16,380,092 20,955,217 24,092,793 Baltimore          15,755,802      19,970,922 25,549,002 29,374,395 Calvert          2,835,938     3,594,631 4,598,648 5,287,193 Caroline              793,934     1,006,334 1,287,413 1,480,175 Carroll          4,005,782     5,077,441 6,495,621 7,468,196 Cecil          2,459,819     3,117,889 3,988,747 4,585,973 Charles         3,936,516     4,989,645 6,383,304 7,339,061 Dorchester         656,543     832,186 1,064,625 1,224,028 Frederick         5,893,461     7,470,128 9,556,610 10,987,499 Garrett         664,714     842,544 1,077,874 1,239,262 Harford         5,529,741     7,009,102 8,966,815 10,309,396 Howard         9,821,066     12,448,477 15,925,463 18,309,945 Kent          366,147     464,102 593,730 682,628 Montgomery      27,227,553     34,511,689 44,151,153      50,761,802 Prince George’s      19,554,579     24,785,979 31,708,954 36,456,662 Queen Anne’s      1,105,527     1,401,286 1,792,679 2,061,093 St. Mary’s         2,485,697     3,150,691 4,030,711 4,634,220 Somerset         480,124     608,570 778,550 895,121 Talbot             628,456     796,586 1,019,080 1,171,665 Washington      3,094,113     3,921,875 5,017,294 5,768,522 Wicomico         2,173,593     2,755,091 3,524,616 4,052,348 Worcester         1,271,561     1,611,739 2,061,914 2,370,640 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. 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. 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: County Government Allegany    1,139,988 Anne Arundel    13,344,016 Baltimore City    12,041,167 Baltimore    15,122,563 Calvert    2,284,705 Caroline    785,750 Carroll    3,661,920 Cecil    1,963,691 Charles    3,900,924 Dorchester    794,625 Frederick    7,899,429 Garrett    428,865 Harford    5,297,751 Howard    9,696,329 Kent    255,179 Montgomery    28,754,528 Prince George’s    18,675,337 Queen Anne’s    973,835 St. Mary’s    2,205,319 Somerset    442,575 Talbot    651,179 Washington    3,279,909 Wicomico    2,379,362 Worcester     1,049,543 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. 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. 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. 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. For each State system, the normal contribution rate equals the fraction that has: as its numerator, the sum of the normal contributions determined under this subsection; and as its denominator, the aggregate annual earnable compensation of the State members of the State system. Beginning July 1, 2023, each year the Board of Trustees shall set contribution rates for each State system that shall amortize: all unfunded liabilities or surpluses accrued as of June 30, 2023, over the time remaining until June 30, 2039; and any new unfunded liabilities or surpluses that have accrued from July 1 of the preceding fiscal year over closed periods of: 15 years for experience gains and losses; 25 years for the effect of changes in actuarial assumptions and methods; at least 10 but not exceeding 15 years for the effect of any new legislation; and 5 years for accrued liability resulting from legislation providing incentives for the early retirement of State employees. 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. 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.

In this section, “employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System. 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: the aggregate annual earnable compensation of those members; and 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. Each fiscal year, in addition to the amounts required to be paid under paragraph (1) of this subsection, a participating governmental unit shall pay: the special accrued liability contribution required by § 21–305.3 of this subtitle; any withdrawal liability contribution required by § 21–305.5 of this subtitle; an amount equal to 5% of the aggregate earnable compensation of its employees who are members of the Employees’ Retirement System; and any annual deficit payment required under § 21–305.4(c) of this subtitle. 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. 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: the entry–age actuarial cost method; actuarial assumptions adopted by the Board of Trustees; and the asset valuation method recommended by the actuary and adopted by the Board of Trustees. 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. The actuary shall compute the contributions payable under this section. 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.

In this section, “employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System. 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. Except as provided in subsection (d) of this section, the normal contribution rate for participating governmental units equals the fraction that has: as its numerator, the sum of the normal contributions determined under this section; and as its denominator, the aggregate annual earnable compensation of the members of the employees’ systems who are employees of participating governmental units. On the recommendation of the actuary, the Board of Trustees may adjust the normal contribution rate to reflect: experience gains and losses; the effect of changes in actuarial assumptions; and the effect of legislation enacted after July 1, 1980.

In this section, “employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System. 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. Each year the Board of Trustees shall set contribution rates for each State system that shall amortize: all unfunded liabilities or surpluses accrued as of June 30, 2016, over 100 years; all unfunded liabilities or surpluses accrued as of June 30, 2017, over 40 years; all unfunded liabilities or surpluses accrued as of June 30, 2018, over 35 years; all unfunded liabilities or surpluses accrued as of June 30, 2019, over 30 years; all unfunded liabilities or surpluses accrued as of June 30, 2020, over 25 years; all unfunded liabilities or surpluses accrued as of June 30, 2021, over 22 years; all unfunded liabilities or surpluses accrued as of June 30, 2022, over 20 years; and 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: experience gains and losses; the effect of changes in actuarial assumptions; and the effect of legislation effective on or after July 1, 2023.

In this section the following words have the meanings indicated. “Employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System. “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. Each participating governmental unit shall make a special accrued liability contribution on account of its participation in the employees’ systems. 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. 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: 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 any cash and securities transferred to the Employees’ Pension System in accordance with § 31–113(e) of this article. Subject to the approval of the Board of Trustees, a participating governmental unit may liquidate its unfunded special accrued liability: over a period not to exceed 40 years; or subject to the actuary’s concurrence, by means of annual payments other than level annual payments. 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. 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.

In this section the following words have the meanings indicated. “Deficit” means, as to any participating governmental unit, the lesser of: 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 40% of the aggregate annual earnable compensation of the participating governmental unit as of June 30, 1995. “Employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System. “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. “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. The actuary shall determine the surplus allocable to a participating governmental unit as of June 30, 1995, based on an actuarial valuation. The surplus of a participating governmental unit may not be less than zero. 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. 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. The actuary shall determine the deficit allocable to a participating governmental unit as of June 30, 1995, based on an actuarial valuation. 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. 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. 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. A participating governmental unit that elects to prepay a portion of the deficit: may not prepay less than the greater of $100,000 or 10% of the outstanding balance of the deficit as of the payment date; may not make more than 2 additional payments during any fiscal year; and 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. 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.

In this section the following words have the meanings indicated. “Complement of the participant funding ratio” is a ratio equal to 100% minus the participant funding ratio, and may not be less than zero. “Employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System. “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. “Noncontributory system funding ratio” means the ratio determined by the actuary as provided under subsection (e) of this section. “Participant funding ratio” means the ratio determined under subsection (d) of this section. “Transition amount” means the amount determined by the actuary as provided under subsection (i) of this section. 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. 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. 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. 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. 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. 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. The participant funding ratio shall be a fraction that has: 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 as its denominator, the actuarial liabilities of the participating governmental units. 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: the special accrued liability attributable to each participating governmental unit under § 21–305.3 of this subtitle; the deficit allocated to each participating governmental unit under § 21–305.4(c) of this subtitle; and the withdrawal liability contribution attributable to each participating governmental unit under subsection (h) of this section; and 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. This subsection applies to a noncontributory participating governmental unit. 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. The noncontributory system funding ratio shall be a fraction that has: 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 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. 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: the special accrued liability attributable to each participating governmental unit under § 21–305.3 of this subtitle; the deficit allocated to each participating governmental unit under § 21–305.4(c) of this subtitle; and the withdrawal liability contribution attributable to each participating governmental unit under subsection (h) of this section; and 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. 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. 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. 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. 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%. 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%. Any assets computed under paragraph (3), (4), or (5) of this subsection shall be reduced by the sum of: the outstanding balance of the deficit allocable to the participating governmental unit as of the effective date of withdrawal; the outstanding balance of the special accrued liability contribution allocable to the participating governmental unit as of the effective date of withdrawal; and any transition amount as determined under subsection (i) of this section. This subsection applies to a noncontributory participating governmental unit. 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. 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. 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%. 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%. Any assets computed under paragraph (3), (4), or (5) of this subsection shall be reduced by the sum of: the outstanding balance of the deficit allocable to the noncontributory participating governmental unit as of the effective date of withdrawal; the outstanding balance of the special accrued liability contribution allocable to the noncontributory participating governmental unit as of the effective date of withdrawal; and any transition amount as determined under subsection (i) of this section. The withdrawal liability contribution of a participating governmental unit shall be computed by the actuary as provided in this subsection. The actuary shall: 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 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. The amount determined under paragraph (2) of this subsection may not be less than zero. 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. Subject to the approval of the Board of Trustees and the actuary’s concurrence, a participating governmental unit: may liquidate the withdrawal liability contribution by means of level annual payments or over a term of less than 25 years; or prepay all or a portion of the withdrawal liability contribution. This section applies only to a participating governmental unit with a deficit as determined under § 21–305.4(c) of this subtitle. The transition amount of a participating governmental unit shall be computed by the actuary as provided in this subsection. 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: the participating governmental unit elects to withdraw from the employees’ systems as of June 30, 1995; the employees of the withdrawing participating governmental unit who are members of the Employees’ Retirement System elect to remain in the employees’ systems; and the employees of the withdrawing participating governmental unit who are members of the Employees’ Pension System elect to withdraw from the employees’ systems. The pre–June 30, 1995 status of a participating governmental unit is an amount equal to the difference between: 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 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. The post–June 30, 1995 status of a participating governmental unit is an amount equal to the difference between: 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 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. 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: the post–June 30, 1995 status of the participating governmental unit as determined under paragraph (4) of this subsection; and the pre–June 30, 1995 status of the participating governmental unit as determined under paragraph (3) of this subsection. The transition amount of a participating governmental unit may not be less than zero. 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. 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: any transition amount allocable to a participating governmental unit; and the outstanding balance of the transition amount each year.

In this section the following words have the meanings indicated. “Employees’ systems” means the Employees’ Pension System and the Employees’ Retirement System. “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: firefighters; law enforcement personnel; or subject to the approval of the Board of Trustees, a homogeneous unit of at least 10 employees. This section applies only to a participating governmental unit that elects a partial withdrawal from participation in the employees’ systems. 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. As of the effective date of the partial 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; and 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. 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. On the recommendation of the actuary, the Board of Trustees shall adopt regulations that set forth the method for: computing the assets allocable to the employees of a participating governmental unit who elect to withdraw from the employees’ systems; computing the withdrawal liability contribution of the participating governmental unit; and 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.

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: the aggregate annual earnable compensation of those members; and the sum of the normal contribution rate and the accrued liability contribution rate, as determined under this section. Each fiscal year, in addition to the amounts required to be paid under paragraph (1) of this subsection, a participating governmental unit shall pay: the special accrued liability contribution required by subsection (d) of this section; and any withdrawal liability contribution required by subsection (e) of this section. 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: the entry-age actuarial cost method; actuarial assumptions adopted by the Board of Trustees; and the asset valuation method recommended by the actuary and adopted by the Board of Trustees. The actuary shall compute the contributions payable under this section. 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. 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. 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: as its numerator, the sum of the normal contributions determined under this subsection; and as its denominator, the aggregate annual earnable compensation of the members of the Local Fire and Police System. On the recommendation of the actuary, the Board of Trustees may adjust the normal contribution rate determined under this section to provide for: experience gains and losses; the effect of changes in actuarial assumptions; and the effect of legislation enacted after July 1, 1989. 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: the assets in the accumulation fund and the annuity savings fund of the Local Fire and Police System; and the present value of future normal contributions, future special accrued liability contributions, future withdrawal liability contributions, and future member contributions. On the recommendation of the actuary, the Board of Trustees may adjust the accrued liability contribution rate to reflect: experience gains and losses; the effect of changes in actuarial assumptions; and the effect of legislation enacted after July 1, 1989. 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. 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. 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. 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: 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 any cash and securities transferred to the Local Fire and Police System from the local pension system on or before December 31, 2004. Subject to the approval of the Board of Trustees, a participating governmental unit may liquidate its unfunded special accrued liability: over a period not to exceed 40 years; or subject to the actuary’s concurrence, by means of annual payments other than level annual payments. 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. In this subsection the following words have the meanings indicated. “Active participant funding ratio” means the ratio determined by the actuary as provided under paragraph (3) of this subsection. “Complement of the active participant funding ratio” is a ratio equal to 1 minus the active participant funding ratio. 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. 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. 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. The active participant funding ratio shall be a fraction, not to exceed 1, that has: 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 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. 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. 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. 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. 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. 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. The Board of Trustees shall transfer to the Employees’ Pension System: 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 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: any benefit payments attributable to the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees; and the actual investment experience based on the actuarial valuation of assets. A transfer made under paragraph (2) of this subsection shall be completed on or before December 31, 2005. 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. 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. 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: 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 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: any benefit payments attributable to the former vested members, retirees, or surviving beneficiaries of deceased members, former vested members, or retirees; and the actual investment experience based on the actuarial valuation of assets. 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. 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.

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: the aggregate annual earnable compensation of those members; and the sum of the normal contribution rate and the accrued liability contribution rate, as determined under this section. Each fiscal year, in addition to the amounts required to be paid under paragraph (1) of this subsection, a participating governmental unit shall pay: the special accrued liability contribution required by subsection (d) of this section; and any withdrawal liability contribution required by subsection (e) of this section. 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: the entry–age actuarial cost method; actuarial assumptions adopted by the Board of Trustees; and the asset valuation method recommended by the actuary and adopted by the Board of Trustees. The actuary shall compute the contributions payable under this section. 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. 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. 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: as its numerator, the sum of the normal contributions determined under this subsection; and as its denominator, the aggregate annual earnable compensation of the members of the Law Enforcement Officers’ Pension System. On the recommendation of the actuary, the Board of Trustees may adjust the normal contribution rate determined under this section to provide for: experience gains and losses; the effect of changes in actuarial assumptions; and the effect of legislation enacted after July 1, 1999. 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: the assets in the accumulation fund and the annuity savings fund of the Law Enforcement Officers’ Pension System; and the present value of future normal contributions, future special accrued liability contributions, future withdrawal liability contributions, and future member contributions. On the recommendation of the actuary, the Board of Trustees may adjust the accrued liability contribution rate to reflect: experience gains and losses; the effect of changes in actuarial assumptions; and the effect of legislation enacted after July 1, 1999. 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. 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. 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. 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: 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 any cash and securities transferred to the Law Enforcement Officers’ Pension System in accordance with § 31–2A–05(c) of this article. Subject to the approval of the Board of Trustees, a participating governmental unit may liquidate its unfunded special accrued liability: over a period not to exceed 40 years; or subject to the actuary’s concurrence, by means of annual payments other than level annual payments. 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. In this subsection the following words have the meanings indicated. “Active participant funding ratio” means the ratio determined by the actuary as provided under paragraph (3) of this subsection. “Complement of the active participant funding ratio” is a ratio equal to 1 minus the active participant funding ratio. 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. 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. 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. 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. The active participant funding ratio shall be a fraction, not to exceed 1, that has: 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 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. 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: the special accrued liability attributable to the participating governmental units under subsection (d) of this section; and the withdrawal liability attributable to the participating governmental units under paragraph (5) of this subsection. 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. 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. 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. The withdrawal liability contribution of a participating governmental unit shall be computed by the actuary as provided in this paragraph. 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. The amount determined under subparagraph (ii) of this paragraph may not be less than zero. 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. Subject to the approval of the Board of Trustees and the actuary’s concurrence, a participating governmental unit may: liquidate the withdrawal liability contribution by means of level annual payments or over a term of less than 25 years; or prepay all or a portion of the withdrawal liability contribution.

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: the aggregate annual earnable compensation of those members; and the sum of the normal contribution rate and the accrued liability contribution rate, as determined under this section. Each fiscal year, in addition to the amounts required to be paid under paragraph (1) of this subsection, a participating governmental unit shall pay: the special accrued liability contribution required by subsection (d) of this section; and any withdrawal liability contribution required by subsection (e) of this section. 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: the entry–age actuarial cost method; actuarial assumptions adopted by the Board of Trustees; and the asset valuation method recommended by the actuary and adopted by the Board of Trustees. The actuary shall compute the contributions payable under this section. 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. 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. Except as provided in paragraph (3) of this subsection, the normal contribution rate for the Correctional Officers’ Retirement System equals the fraction that has: as its numerator, the sum of the normal contributions determined under this subsection; and as its denominator, the aggregate annual earnable compensation of the members of the Correctional Officers’ Retirement System. On the recommendation of the actuary, the Board of Trustees may adjust the normal contribution rate determined under this section to provide for: experience gains and losses; the effect of changes in actuarial assumptions; and the effect of legislation enacted after July 1, 2006. 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: the assets in the accumulation fund and the annuity savings fund of the Correctional Officers’ Retirement System; and the present value of future normal contributions, future special accrued liability contributions, future withdrawal liability contributions, and future member contributions. On the recommendation of the actuary, the Board of Trustees may adjust the accrued liability contribution rate to reflect: experience gains and losses; the effect of changes in actuarial assumptions; and the effect of legislation enacted after July 1, 2006. 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. 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. 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. 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: 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 any cash and securities transferred to the Correctional Officers’ Retirement System in accordance with § 31–2B–05(c) of this article. Subject to the approval of the Board of Trustees, a participating governmental unit may liquidate its unfunded special accrued liability: over a period not to exceed 40 years; or subject to the actuary’s concurrence, by means of annual payments other than level annual payments. 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. In this subsection the following words have the meanings indicated. “Active participant funding ratio” means the ratio determined by the actuary as provided under paragraph (3) of this subsection. “Complement of the active participant funding ratio” is a ratio equal to 1 minus the active participant funding ratio. 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. 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. 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. 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. The active participant funding ratio shall be a fraction, not to exceed 1, that has: 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 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. 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: the special accrued liability attributable to the participating governmental units under subsection (d) of this section; and the withdrawal liability attributable to the participating governmental units under paragraph (5) of this subsection. 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. 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. 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. The withdrawal liability contribution of a participating governmental unit shall be computed by the actuary as provided in this paragraph. 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. The amount determined under subparagraph (ii) of this paragraph may not be less than zero. 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. Subject to the approval of the Board of Trustees and the actuary’s concurrence, a participating governmental unit may: liquidate the withdrawal liability contribution by means of level annual payments or over a term of less than 25 years; or prepay all or a portion of the withdrawal liability contribution.

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: 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 deduct from the compensation payable to the member and pay to the Board of Trustees or the Central Payroll Bureau the required member contributions. 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. 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. 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. 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. 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. 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. 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. The University System of Maryland: 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 may prepay all or a portion of the increase in the accrued liability in accordance with a calculation approved by the Board of Trustees. 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. The Medical System: 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 may prepay all or a portion of the increase in the accrued liability in accordance with a calculation approved by the Board of Trustees. 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. 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. 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. 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. 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. In this section, “elected or appointed official” means an individual who is employed as: a State’s attorney; a sheriff; a county treasurer; a county commissioner; an orphans’ court judge; a bingo board member; or a liquor and license board member. 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. 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. 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. 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: pay an amount equal to the product of multiplying: the aggregate annual earnable compensation of those members; and the normal contribution rate otherwise paid by the State for members of the Employees’ Retirement System and the Employees’ Pension System; 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 remit to the Employees’ Retirement System or the Employees’ Pension System the contributions required to be paid by its employees. 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: as calculated by the actuary of the State Retirement and Pension System; and in accordance with paragraphs (3) and (4) of this subsection. The participant funding ratio for the Injured Workers’ Insurance Fund shall be a fraction that has: 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 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. 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.

On or before December 1 of each year, the Board of Trustees shall: 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 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. The Governor shall include in the budget bill: 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; 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 any additional amount required to be in the budget bill under § 3–501(c)(2)(ii) of this article. 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. 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. 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. 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. 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. 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. 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. On the receipt of the warrant of the Comptroller, the State Treasurer immediately shall transfer to the appropriate State system the amounts due. 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. The applicable percentage under subparagraph (i) of this paragraph is the lesser of: the State’s contribution percentage for the Teachers’ Retirement System and the Teachers’ Pension System, as certified by the Board of Trustees; or 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. The amount determined under paragraph (1) of this subsection shall be: included in the budget estimate for the State Library Agency; certified by the State Librarian to the State Comptroller; and paid to Montgomery County as provided in this subsection. The Comptroller shall issue a warrant or warrants to the State Treasurer for the amount to be paid Montgomery County under this subsection. On the receipt of the warrant of the Comptroller, the State Treasurer shall pay to the treasurer of Montgomery County the amount due. 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.

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. Each year, the Board of Trustees shall certify to the chief fiscal officer of each participating governmental unit: the normal contribution rates, accrued liability contribution rates, special accrued liability contribution rate, and withdrawal liability contribution rate for the participating governmental unit; and any amount payable by the participating governmental unit for a magistrate under § 21–307(b) of this subtitle. Each participating governmental unit shall: 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 levy and collect those amounts in the same manner as any other tax. 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. A participating governmental unit that does not pay the amounts certified under this subsection within the time required is liable for: a penalty of 10% of the amount due; and interest on delinquent amounts at 10% a year until payment. 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. 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. 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.

In this section the following words have the meanings indicated. “Local employee” has the meaning stated in § 21–304 of this subtitle. “Local employer” has the meaning stated in § 21–304 of this subtitle. 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. 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. 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. 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: 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 shall pay to the Board of Trustees the delinquent amounts, including interest, withheld under this paragraph. 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.

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. 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. 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. 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. 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: exercise the right of setoff against any money due or coming due to the delinquent county government; and 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. 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.

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. 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. 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. If the Maryland Environmental Service does not pay the amounts certified under this section within the time required, it is liable for: a penalty of 10% of the amount due; and interest on delinquent amounts at 10% a year until payment. 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. 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. 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.

The Board of Trustees shall credit to each member’s individual account in the annuity savings fund of the appropriate State system: the member contributions of the member as provided in this Division II; and regular interest on the accumulated contributions of the member as provided in this Division II. 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: are withdrawn by the member or former member; or if a member or former member dies, are paid to the member’s or former member’s estate or designated beneficiary. 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. 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. 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.

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. 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. 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. 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. Each member is deemed to agree to make the member contributions required by this Division II and to have received full compensation. 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. 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.

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. 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. The member contributions under subsection (b) of this section: 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; shall reduce the compensation of the member in an amount that equals the member contribution picked up by the employer; may not be included as gross income of the member until the pickup amounts are distributed or made available to the member; 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 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.

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. Each year the Board of Trustees shall certify the member contribution rates to the chief fiscal officer of each participating employer. 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. As each payroll is paid and in a manner that the Board of Trustees prescribes each participating employer shall: 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 submit to the State Retirement Agency supporting payroll data required by the State Retirement Agency in a format specified by the State Retirement Agency. 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: a penalty of 10% of the member contributions due; interest on delinquent member contributions at 10% a year until paid; a $250 penalty for each payroll for which the supporting data is not submitted; and 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. 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. 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. 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.

The Board of Trustees shall credit to the expense fund of each State system its pro rata share of: 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; 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 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. The Board of Trustees shall pay from the expense fund of each State system its pro rata share of: the administrative and operational expenses of the Board of Trustees and the State Retirement Agency, in accordance with the annual State budget; the amounts as authorized by the Board of Trustees necessary for investment management services, including personnel and operational expenses of the Investment Division; and 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. 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. 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. 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. 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. 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. 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. The Board of Trustees may combine the expense funds of the several systems for budgetary and administrative efficiency. 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. The report required under subparagraph (i) of this paragraph shall include the amount of carried interest on any assets of the system. 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.