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Substitute Senate Bill No. 643

Public Act No. 02-118

AN ACT INCREASING THE AMOUNT OF UNAPPROPRIATED SURPLUS TRANSFERRED TO THE BUDGET RESERVE FUND.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsection (a) of section 4-30a of the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2002):

(a) After the accounts for the General Fund have been closed for each fiscal year and the Comptroller has determined the amount of unappropriated surplus in said fund, after any amounts required by provision of law to be transferred for other purposes have been deducted, the amount of such surplus shall be transferred by the State Treasurer to a special fund to be known as the Budget Reserve Fund. When the amount in said fund equals [five per cent] seven and one-half per cent of the net General Fund appropriations for the fiscal year in progress, no further transfers shall be made by the Treasurer to said fund and the amount of such surplus in excess of that transferred to said fund shall be deemed to be appropriated to the State Employees Retirement Fund, in addition to the contributions required pursuant to section 5-156a, but not exceeding five per cent of the unfunded past service liability of the system as set forth in the most recent actuarial valuation certified by the Retirement Commission. Such surplus in excess of the amounts transferred to the Budget Reserve Fund and the state employees retirement system shall be deemed to be appropriated for: (1) Redeeming prior to maturity any outstanding indebtedness of the state selected by the Treasurer in the best interests of the state; (2) purchasing outstanding indebtedness of the state in the open market at such prices and on such terms and conditions as the Treasurer shall determine to be in the best interests of the state for the purpose of extinguishing or defeasing such debt; (3) providing for the defeasance of any outstanding indebtedness of the state selected by the Treasurer in the best interests of the state by irrevocably placing with an escrow agent in trust an amount to be used solely for, and sufficient to satisfy, scheduled payments of both interest and principal on such indebtedness; or (4) any combination of these methods. Pending the use or application of such amount for the payment of interest and principal, such amount may be invested in (A) direct obligations of the United States government, including state and local government treasury securities that the United States Treasury issues specifically to provide state and local governments with required cash flows at yields that do not exceed Internal Revenue Service arbitrage limits, (B) obligations guaranteed by the United States government, and (C) securities backed by United States government obligations as collateral and for which interest and principal payments on the collateral generally flow immediately through to the security holder.

Approved June 7, 2002