2023 Tennessee Code › Title 8 - PUBLIC OFFICERS AND EMPLOYEES (§§ 8-1-101 — 65-168) › Chapter 35 - RETIREMENT-MEMBERSHIP (§§ 8-35-101 — 8-35-504) › Part 2 - LOCAL GOVERNMENTAL UNITS (§§ 8-35-201 — 8-35-256) › Section 8-35-206 - Contributions

(a)
(1)
The actuary of the retirement system shall compute the rates of contribution payable by employers on behalf of their employees who become members under this part by an actuarial valuation in a manner similar to that provided by chapter 37, part 3 of this title; provided, that the contribution rate as determined by the actuary for any employer who begins participating on or after July 1, 1983, shall be determined in a manner so as to amortize the accrued liabilities created on account of such participation over a period of time as established by the board of trustees, such period not to exceed thirty (30) years from the date of participation.
(2)
Effective July 1, 1979, the liability for cost-of-living benefits is to be included in the computation of normal and accrued liability contribution rates payable by the employers.
(b)
Each such employer shall make a special accrued liability contribution on account of the participation of its employees in the retirement system which shall be determined by an actuarial valuation of the employer's share of the accrued liability on account of the employees of such employer who elected to become members.
(c)
In determining the accrued liability on account of the employees of any such employer, the actuary shall exclude the value of benefits which may become payable with respect to any period of service as a state employer prior to the employer's participation in the retirement system.
(d)
(1)
The special accrued liability contribution shall be subject to such adjustments as may be necessary on account of any additional prior service credits awarded to employees of such employer or changes in provisions relating to such employees.
(2)
The expense of making such initial valuation shall be assessed against and paid by the employer on whose account it is necessary.
(3)
The board of trustees may require that a new study be performed if the political subdivision does not begin participation within six (6) months after the effective date of the initial actuarial study. Such employer shall be responsible for the cost of any additional studies.
(e)
In addition, the employer shall pay a pro rata share of the cost-of-living contribution allocated on the basis of the amount of retirement allowances payable on account of retired employees of the employer or determined on such other equitable basis as the board of trustees may prescribe.
(f)
The contributions so computed, together with a pro rata share of the cost of the administration of the retirement system, based upon the payroll of the employees, shall be certified by the board to the chief fiscal officer of the employer. The amount so certified shall be a charge against the employer.
(g)
The chief fiscal officer of such employer shall pay to the state treasurer the amount certified by the board as payable under this section, and the state treasurer shall credit such amounts, when paid, to the appropriate funds of the retirement system.
(h)
Notwithstanding any other law to the contrary, any employer that desires to participate in the retirement system on or after July 1, 2016, shall, as a condition of participating, pay its accrued unfunded liability, if any, in a lump sum or through an increase in the employer's contribution rate for the next fiscal year (July 1 - June 30) following the adoption of the participation resolution by the employer. At the request of the employer, the state treasurer may, in the treasurer's sole discretion, allow the employer to amortize the accrued unfunded liability over a period of time not to exceed twenty (20) years from the date of participation.
(i)
(1)
A local government employer participating under this part that desires to establish a benefit improvement authorized under chapters 34-37 of this title shall pay the estimated increased pension liability created by the improvement; provided, however, that, in accordance with §
8-37-505
, the failure to pay the liability may result in the withholding of the liability amount, in whole or in part, from any state-shared taxes that are otherwise apportioned to the local government. The retirement system or the retirement system's actuary shall determine the estimated increase to the pension liability and to the associated contribution rate for the employer. The employer shall not establish a benefit improvement unless the employer's funded status in the retirement system will be seventy percent (70%) or more after implementation of the benefit improvement. For the purposes of this subdivision (i)(1), the employer's funded status is measured by the percentage funding of the employer's market value of assets divided by the actuarially accrued liability in accordance with rules, standards, guidelines, and interpretations established by the governmental accounting standards board. After the participating employer's approval of the benefit improvement by adoption of a resolution, the employer shall pay the estimated increased pension liability through one (1) of the following methods:
(A)
A lump sum;
(B)
An increase in the employer's contribution rate over the course of the fiscal year (July 1-June 30) following the adoption of the resolution by the employer; or
(C)
Amortizing the unfunded accrued liability over a period of time not to exceed ten (10) years from the date of the adoption of the resolution by the employer.
(2)
For benefit improvements funded pursuant to subdivisions (i)(1)(A) and (i)(1)(B), a former or current employee of the employer is not entitled to the benefit improvement until the estimated increased pension liability has been totally funded by the employer.
(3)
In the event the liability is amortized in accordance with subdivision (i)(1)(C), the benefit improvement must be available at the commencement of the amortization period.
(4)
For the purposes of this section, "benefit improvement" does not include the supplemental bridge benefit established pursuant to §
8-36-211
for members who are subject to mandatory retirement pursuant to §
8-36-205
.
Amended by 2023 Tenn. Acts, ch. 132, s 1, eff. 7/1/2023.
Amended by 2018 Tenn. Acts, ch. 736, s 6, eff. 4/18/2018.
Amended by 2016 Tenn. Acts, ch. 962, s 16, eff. 4/27/2016.
Acts 1972, ch. 814, § 10; 1978, ch. 741, § 8; T.C.A., § 8-3934(4)(a); Acts 1983, ch. 342, § 24; 1987, ch. 54, § 9; 2003 , ch. 12, § 5.