§ 517. Annuity reserve fund; pension accumulation fund. 1. The annuity
reserve fund shall be the fund from which shall be paid all annuities
and all benefits in lieu of annuities.

2. The pension accumulation fund shall be the fund in which shall be
accumulated all reserves for the payment of all benefits with the
exception of the annuities provided by the accumulated contributions of
members, and with the exception of supplemental retirement allowances
payable in accordance with section five hundred thirty-two of this
chapter. Contributions to and payments from the pension accumulation
fund shall be made as follows:

a. On account of each teacher who is a member of the retirement system
there shall be paid annually into the pension accumulation fund by
employers, a certain percentage of the earnable compensation of each of
such members of the retirement system to be known as the "normal
contribution" and a further percentage known as the "deficiency
contribution." The rates per centum of such contributions shall be fixed
on the basis of the liabilities of the retirement system as shown by
actuarial valuations.

b. On the basis of regular interest and of such mortality and other
tables as shall be adopted by the retirement board, the actuary engaged
by the retirement board to make each valuation required by this article
during the period over which the deficiency contribution is payable,
immediately after making such valuation, shall determine the uniform and
constant percentage of the earnable compensation of the average new
entrant, who is a contributor, which if contributed on the basis of the
compensation of such contributor throughout his entire period of active
service, would be sufficient to provide for the payment of a death
benefit payable on his account and to provide at the time of his
retirement the total amount of his pension reserve. The rate per centum
so determined shall be known as the "normal contribution" rate. After
the deficiency contribution has ceased to be payable, the normal
contribution shall be the rate per centum of the earnable salary of all
contributors obtained by deducting from the total liabilities of the
pension fund the amount of the funds in hand to the credit of that fund
and dividing the remainder by one per centum of the present value of the
prospective future salaries of all contributors as computed on the basis
of the mortality and service tables adopted by the retirement board and
on the basis of regular interest. The normal rate of contribution shall
be determined by the actuary after each valuation and shall continue in
force until a new valuation and certification.

c. The actuary engaged by the retirement board shall compute the rate
per centum of the total compensation of all contributors during the
preceding school year which is equivalent to four per centum of the
amount of the total pension liability on account of all contributors and
beneficiaries not dischargeable by the aforesaid normal contribution
made on account of such contributors during the remainder of their
active service. The contribution derived by deductions at the rate per
centum, so determined or at a rate increased therefrom as hereinafter
provided shall be known as the "deficiency contribution." On the basis
of the actuarial valuation as of the thirtieth day of June, nineteen
hundred fifty-seven, the actuary shall determine the amount of the
pension liability which is not dischargeable by the funds in hand and
the present value of the normal and deficiency contributions otherwise
payable. Such pension liability shall be known as the special
deficiency. The actuary shall determine the annual payment which if made
in each fiscal year commencing with the year beginning the first day of
July, nineteen hundred fifty-eight, for a period of thirty years will
provide for such special deficiency and the per centum of the total
compensation of all contributors during the preceding school year which
is equivalent to such annual payment shall be known as the special
deficiency contribution rate. Notwithstanding anything to the contrary
in this chapter, the special deficiency contribution rate for use in
determining the annual payments to be made in each fiscal year
commencing with the year beginning with the first day of July, nineteen
hundred sixty, shall be increased to liquidate the total unfunded
special deficiency adjusted to include the prospective deficit in the
annuity reserve fund as shown by the valuation as of the thirtieth day
of June, nineteen hundred fifty-nine in the period originally set, and
until the special deficiency so increased has been liquidated an annual
contribution at the increased special deficiency rate but not less than
the annual payment determined on the basis of the valuation as of the
thirtieth day of June, nineteen hundred fifty-nine, shall be made by
employers in addition to the regular normal and deficiency
contributions.

d. The total amount payable annually by all employers into the pension
accumulation fund shall be certified by the retirement board to the
commissioner of education and such amount shall equal the sum of the
rates per centum known as the normal contribution rate and the
deficiency contribution rate of the total compensation earnable by all
contributors during the preceding school year, provided that the amount
of each annual deficiency contribution shall be at least three per
centum greater than the preceding annual payment. The aggregate of all
such payments by employers shall be sufficient, when combined with the
amounts in the pension accumulation fund, to provide the pensions
payable out of the fund during the year then current, and if not, the
additional amount so required shall be collected by means of an
increased contribution which shall continue in force for the period of
one year, anything to the contrary notwithstanding.

e. The deficiency contribution shall be discontinued as soon as the
accumulated reserve in the pension accumulation fund shall equal the
present value, as actuarially computed and approved by the retirement
board, of the total liability of such fund less the present value,
computed on the basis of the normal contribution rate then in force, of
the normal contributions to be received on account of teachers who are
at that time contributors.

f. Any other provision of law to the contrary notwithstanding,
beginning with the valuation for the fiscal year ending June thirtieth,
nineteen hundred seventy, the actuarial valuation of the liabilities,
required by subdivision five of section five hundred eight of this
article, shall be made on the following basis:

1. On the basis of the valuation rate of interest and of such
mortality and other tables as have been adopted by the retirement board,
the actuary shall determine, as of June thirtieth, nineteen hundred
seventy, the additional accrued liability which exists as of that date,
on account of service rendered prior to that date, by reason of
legislation enacted during the years nineteen hundred sixty-eight,
nineteen hundred sixty-nine and nineteen hundred seventy, affecting
article eleven of the education law. The actuary shall then determine a
schedule of annual contributions which will amortize such additional
accrued liability and interest thereon over a period of twenty-five
years. Such interest shall be at the rate of four and one-half per cent
during the first ten years beginning July first, nineteen hundred
seventy and at the rate of four per cent thereafter, compounded
annually. Each contribution after the first shall equal one hundred four
per cent of the preceding contribution. Each year, the actuary shall
determine a rate of contribution which is equivalent to the amount of
the contribution next due in accordance with the aforesaid schedule.
However, in no event shall such rate of contribution be less than the
rate of contribution determined in the first year in accordance with the
provisions of this subdivision. The amount of the contribution produced
by such rate which is in excess of the amount required according to the
aforesaid schedule shall be added to the contingency reserve. Such
contingency reserve shall be maintained in the pension accumulation fund
for the purpose of providing for such future strengthening of the
retirement system's reserve basis as the retirement board, upon the
recommendation of its actuary, deems appropriate.

2. On the basis of the valuation rate of interest and of such
mortality and other tables as have been adopted by the retirement board,
the actuary shall compute the rate of normal contribution in the
following manner. From the total actuarial liabilities as of each
valuation date, there shall be deducted the sum of the funds in hand and
the present value of the remaining contributions still to be paid under
the provisions of sub-paragraph one of this paragraph. The remainder
shall be divided by one per cent of the present value of the prospective
future salaries of all members of the system, to obtain the rate of
normal contribution.

3. Notwithstanding any other provision of law to the contrary, for
contributions determined on the basis of the June thirtieth, nineteen
hundred sixty-eight valuation and subsequent annual valuations, the
payment of employer contributions pursuant to section five hundred nine
of this article shall be discontinued and the lump sum actuarial cost
attributable to the purchase of prior service, as authorized therein,
shall be included in the actuarial liabilities used for the
determination of the rate of normal contribution.

4. The retirement board is hereby empowered to re-establish employer
contribution rates based upon the annual valuation as of June thirtieth,
nineteen hundred sixty-eight.

g. All pensions with the exception of those payable to new entrants
shall be paid from the pension accumulation fund and benefits provided
under section five hundred twelve, subdivision b, paragraph two and
section five hundred fourteen shall be paid from the pension
accumulation fund.

h. Upon the retirement of a new entrant, an amount equal to his
pension reserve shall be transferred from the pension accumulation fund
to the pension reserve fund.

i. The retirement board from time to time shall transfer from the
pension accumulation fund to the annuity reserve fund such amounts as
are necessary under this article.