(a) There is established the Connecticut Teachers' Retirement Fund Bonds Special Capital Reserve Fund, which shall contain any moneys required by law to be deposited in the fund, including, but not limited to, deposits from the Connecticut Lottery Corporation in accordance with section 12-812. The purpose of the fund shall be to provide, and it is determined that such fund does provide, adequate provision for the protection of the holders of bonds of the state issued pursuant to section 10-183qq and any bonds refunding such bonds. The fund shall secure the payment of the principal of and interest on such bonds and shall be held in trust for the benefit of the holders of the bonds secured thereby, separate and apart from other funds of the state. During any period when any bonds secured by the fund remain outstanding, amounts on deposit in the fund shall not be commingled with other state funds and the state shall have no claim to or against, or interest in, the fund, except as hereinafter provided. Amounts in such fund shall be deposited in a separate account or accounts in a trust company or bank having the powers of a trust company within the state, which shall serve as the trustee of the fund. The Treasurer shall enter into an agreement with such trust company or bank in accordance with the provisions of this section, sections 10-183b, 10-183z, 10-183ww, 12-801, 12-806 and 12-812 and section 90 of public act 19-117*.
(b) The moneys held in the Connecticut Teachers' Retirement Fund Bonds Special Capital Reserve Fund, except as provided in this section, shall be pledged to payment on bonds secured by the fund and shall be used solely for the payment of the principal of bonds secured by the fund as such bonds become due by reason of maturity or sinking fund redemption, the purchase of such bonds, the payment of interest on such bonds and the payment of any redemption premium required to be paid when such bonds are redeemed prior to maturity. In the event the state has not otherwise timely made available moneys to pay principal or interest due on such bonds, the Treasurer shall direct the trustee of the fund to transfer from the fund to the paying agent for such bonds the amount necessary to timely pay such principal or interest then due. Except for the payment of the principal of bonds secured by the fund as such bonds become due and the payment of interest on such bonds, no moneys shall be withdrawn from the fund in such amount as would reduce the amount on deposit in the fund to less than the required minimum capital reserve. The pledge made by the state pursuant to this section shall be valid and binding from the time when the pledge is made. The lien of such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the state, irrespective of whether the parties have notice of the claims. Notwithstanding any provision of the Uniform Commercial Code, no instrument by which such pledge is created need be recorded or filed. Any moneys so pledged and later received by the state shall be subject immediately to the lien of the pledge without any physical delivery thereof or further act and such lien shall have priority over all other liens. For the purpose of evaluation of such fund, obligations acquired as an investment shall be valued at market. For purposes of this section, “required minimum capital reserve” means the maximum amount of principal and interest becoming due on bonds of the state issued pursuant to section 10-183qq, and any bonds refunding such bonds then outstanding, by reason of maturity or a required sinking fund installment in any succeeding fiscal year.
(c) The amounts payable from the Connecticut Lottery Corporation into such fund as provided in section 12-812 shall be sufficient for the payment of the principal of and interest on the bonds secured by the Connecticut Teachers' Retirement Fund Bonds Special Capital Reserve Fund when due, whether at maturity or by mandatory sinking fund installments.
(d) The Treasurer shall certify to the Governor, the Teachers' Retirement Board and the president of the Connecticut Lottery Corporation the amount on deposit in the Connecticut Teachers' Retirement Fund Bonds Special Capital Reserve Fund when such amount first equals or exceeds the required minimum capital reserve. Whenever the amount on deposit in the fund is in excess of the required minimum capital reserve, the Treasurer may direct the trustee for the fund to remit to the Treasurer for deposit into the General Fund any amount in excess of the required minimum capital reserve.
(e) The Connecticut Teachers' Retirement Fund Bonds Special Capital Reserve Fund shall terminate and, upon direction of the Treasurer, any moneys remaining therein shall be transferred to the Budget Reserve Fund, established in section 4-30a: (1) Upon payment in full of the principal and interest on all bonds secured by the fund; (2) if there has been deposited in an irrevocable trust for the benefit of the holders of the bonds secured by the fund either (A) moneys in an amount that shall be sufficient to pay, when due, the principal of and interest on such bonds, and any redemption premium required to be paid when such bonds are redeemed prior to maturity, or (B) noncallable and nonprepayable direct obligations of, or obligations the timely payment of principal of and interest on which are unconditionally guaranteed by, the United States of America, the principal of and the interest on which when due, without reinvestment, will provide moneys that together with the moneys, if any, deposited with the trustee at the same time, shall be sufficient to pay when due the principal of and interest on such bonds, and any redemption premium required to be paid when such bonds are redeemed prior to maturity; (3) if the amount of the annual required contribution to the fund for the Connecticut teachers' retirement system is determined in accordance with the provisions of subsection (b) of section 10-183l and section 10-183z, as such sections were in effect on April 30, 2008; or (4) if the Teachers' Retirement Board fails to approve the credited interest percentage for member accounts and return assumption in accordance with subsection (a) of section 10-183ww.
(f) Pending the use or application of amounts in the fund, moneys in the fund may be invested and reinvested at the direction of the Treasurer in such obligations, securities and investments as are set forth in subsection (f) of section 3-20 and in participation certificates in the Short Term Investment Fund created under section 3-27a.
(g) The state pledges to the holders of the bonds of the state issued pursuant to section 10-183qq, and any bonds refunding such bonds, that the state shall not limit or alter the rights of such holders under this section or reduce the transfer or deposit of moneys into the fund pursuant to section 10-183ww or section 12-812 until all such bonds are fully paid or until provision for the payment of such bonds has been made as provided in subdivision (2) of subsection (e) of this section, provided nothing contained in this section shall preclude such limitation, alteration or reduction if adequate provision is made by law for the protection of the holders of such bonds.
(P.A. 19-117, S. 82.)
*Note: Section 90 of public act 19-117 is special in nature and therefore has not been codified but remains in full force and effect according to its terms.
History: P.A. 19-117 effective June 26, 2019.