Connecticut General Statutes Title 4. Management of State Agencies § 4-30a. Transfer of surplus to Budget Reserve Fund, State Employees Retirement Fund and Teachers’ Retirement Fund.  Reduction of outstanding state indebtedness.  Transfer of funds from Budget Reserve Fund

(c) (1) (A) Whenever the amount in the Budget Reserve Fund equals fifteen per cent of the net General Fund appropriations for the current fiscal year, no further transfers shall be made by the Treasurer to the Budget Reserve Fund and the amount of such funds in excess of that transferred to said fund shall be deemed to be appropriated, as selected by the Treasurer in the best interests of the state, to (i) 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 state employees retirement system as set forth in the most recent actuarial valuation certified by the State Employee Retirement Commission, or (ii) the Teachers' Retirement Fund, in addition to the payments required pursuant to section 10-183z, but not exceeding five per cent of the unfunded past service liability of the teachers' retirement system as set forth in the most recent actuarial valuation prepared for the Teachers' Retirement Board.

(B) Any surplus in excess of the amounts transferred to the Budget Reserve Fund and the state employees retirement system or the teachers' retirement system, as applicable, shall be deemed to be appropriated for:  (i) Redeeming prior to maturity any outstanding indebtedness of the state selected by the Treasurer in the best interests of the state;  (ii) 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;  (iii) 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;  (iv) making additional payments towards unfunded past service liability of the state employees retirement system or of the teachers' retirement system, as selected by the Treasurer in the best interests of the state, or (v) 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 (I) 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, (II) obligations guaranteed by the United States government, and (III) 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.