Okla. Stat. tit. 70, § 70-17-207

not considered salary, fringe benefits or compensation – Allocation

of assets – Calculation of liability.

A. Participating institutions establishing an alternate

retirement plan pursuant to this act shall pay an initial funding

surcharge, and if applicable an additional funding surcharge to the

Teachers’ Retirement System of Oklahoma in an amount to amortize the

unfunded accrued liability of the members of the participating

institutions in the System.

B. The initial funding surcharge is intended to ensure

amortization of the unfunded accrued liability of the participating

institutions over a period of thirty (30) years or the amortization

period of the System. The initial funding surcharge shall equal two

and one-half percent (2.5%) of the regular annual compensation of

the electing employees and the eligible employees, who are not

participating in the System but who would have been mandated to

participate in the System under the laws and rules applicable to the

System in effect on June 30, 2004. The initial funding surcharge

but not the additional funding surcharge, if any, shall remain in

effect until the earlier of June 30, 2034, or the June 30th of the

year in which the unfunded accrued liability of the participating

institutions is reduced to zero.

C. In addition to the initial funding surcharge described

above, the participating institutions shall pay to the System an

additional funding surcharge, if required, in an amount necessary to

provide for amortization of the unfunded accrued liability of the

participating institutions over the applicable amortization period

of thirty (30) years, or the amortization period of the System, if

longer. The additional funding surcharge shall be reviewed and

adjusted in subsequent years based on changes in the assets and

liabilities of the membership in the System of the participating

institutions. The additional funding surcharge shall be determined

by the Board of Trustees of the System and the participating

institutions pursuant to the separate agreement of understanding

provided in subsection H of this section. Any change in the

additional funding surcharge indicated to be necessary by the annual

actuarial valuation shall be adopted by the Board of Trustees of the

System provided that such change shall become effective on July 1 of

the year following such annual valuation and the participating

institutions shall be notified by the System no later than January 1

of such year. Provided, the additional funding surcharge determined

for any year shall not be greater than an additional funding

Oklahoma Statutes - Title 70. Schools Page 806

surcharge determined under the separate agreement of understanding

but using the “individual entry age normal cost method” as described

in Revenue Procedure 2000-40, Approval 8, to determine the normal

cost/normal cost percentage of the participating institutions.

D. Any payments made to the Teachers’ Retirement System of

Oklahoma pursuant to this section shall not be considered as salary,

fringe benefits or compensation due to the eligible employee or

electing employee for the purpose of meeting any legislative or

contractual obligation of the employer of such person.

E. To determine the amount of assets of the participating

institutions at any point in time after June 30, 2003, the

participating institutions shall have allocated to such institutions

Five Hundred Ninety-two Million Nine Hundred Seventy-four Thousand

Two Hundred Sixty-four Dollars ($592,974,264.00) of the assets of

the Teachers’ Retirement System of Oklahoma which reflects their

portion of assets in the System as of June 30, 2003, plus future

employer and employee contributions including service purchases

attributable to the participating institutions and its members, nine

and forty-one hundredths percent (9.41%) of all federal and state

funding received by the System during the applicable year and other
he Teachers’ Retirement System of Oklahoma which reflects their

portion of assets in the System as of June 30, 2003, plus future

employer and employee contributions including service purchases

attributable to the participating institutions and its members, nine

and forty-one hundredths percent (9.41%) of all federal and state

funding received by the System during the applicable year and other

assets contributed to the System allocable to the participating

institutions subject to the limitations in this subsection, earnings

on investments less distributions and expenses allocable to the

participating institutions. Provided, the allocation of nine and

forty-one hundredths percent (9.41%) of federal and state funding

received by the System to the participating institutions shall not

exceed the unfunded accrued liability and shall remain in effect

until the earlier of June 30, 2034, or when the unfunded accrued

liability of the participating institutions is reduced to zero.

However, if for any applicable year during the thirty-year

amortization period commencing July 1, 2004, there is any unfunded

accrued liability allocable to the participating institutions in the

System, then the allocable percentage of federal and state funding

shall be nine and forty-one hundredths percent (9.41%) but not

exceed the unfunded accrued liability. Provided further, after the

expiration of such thirty-year amortization period, the allocation

of federal and state funding to the participating institutions for

any year shall equal the percentage of all such federal and state

funding received by the System determined by dividing the actuarial

accrued liability of the participating institutions by the actuarial

accrued liability of the System, and such methodology to determine

such allocation shall be made for all years thereafter.

F. After June 30, 2004, the liabilities associated with the

members of the participating institutions participating in the

Teachers’ Retirement System of Oklahoma shall be determined on a

separate basis, reflecting the level of benefits based on the

Oklahoma Statutes - Title 70. Schools Page 807

actuarial methods and assumptions used by the System as applied to

the participating institutions under this act.

G. The actuarial methods and assumptions applicable to the

participating institutions in determining an allocable share of

assets, liabilities and associated costs as provided in this act

shall be reviewed at least every five (5) years.

H. The Board of Trustees of the Teachers’ Retirement System of

Oklahoma and the participating institutions shall enter into a

separate agreement of understanding which details the procedures to

be applied to implement the required review and subsequent

adjustments to the assets, liabilities and the additional funding

surcharge attributable to the participating institutions or the

actuarial methods or assumptions applied to determine the

appropriate share of assets and liabilities applicable to the

participating institutions. Except as otherwise provided in this

act, the Board of Trustees of the System shall be the final

authority to determine all actuarial methods or assumptions to be

used by the System and all such actuarial methods or assumptions

shall be applied on a sound actuarial basis and on a uniform, fair

and consistent basis which methods and assumptions reflect the

actual experience of the members of the participating institutions.