(a) The State Bond Commission shall have power, in accordance with the provisions of this section, from time to time to authorize the issuance of bonds of the state in one or more series and in principal maturity amounts which in the aggregate generate proceeds sufficient to fund two billion dollars of the unfunded liability of the Teachers’ Retirement Fund and to pay the costs of issuing such bonds and up to two years of interest on such bonds.

(b) The proceeds of the sale of such bonds, to the extent hereinafter stated, shall be used for the purpose of: (1) Reducing the unfunded liability, as such term is defined in § 10-183b, of the Connecticut teachers’ retirement system, and (2) paying or providing for the costs related to the issuance of the bonds, including the initial costs of agreements and contracts permitted under § 3-20a with respect to such bonds, and up to two years of interest on such bonds.

(c) Except as provided in subsection (e) of this section, all provisions of § 3-20 or the exercise of any right or power granted thereby which are not inconsistent with the provisions of this section are hereby adopted and shall apply to all bonds authorized by the State Bond Commission pursuant to this section, and temporary notes issued in anticipation of the money to be derived from the sale of any such bonds so authorized may be issued in accordance with said § 3-20 and from time to time renewed. Such bonds shall mature at such time or times not exceeding thirty years from their respective dates as may be provided in or pursuant to the resolution or resolutions of the State Bond Commission authorizing such bonds.

(d) None of said bonds shall be authorized except upon a finding by the State Bond Commission that there has been filed with it (1) a request for such authorization, which is signed by the Secretary of the Office of Policy and Management or on behalf of such state officer and stating such terms and conditions as said commission, in its discretion, may require, and (2) a written determination by the State Treasurer and the Secretary of the Office of Policy and Management that the issuance of the bonds is in the best interests of the state.

(e) Proceeds of the bonds issued under this section and all earnings on investments of proceeds of such bonds, to the extent not applied to the payment of costs related to the issuance thereof, shall be deposited in the custody of the State Treasurer in the fund for the Connecticut teachers’ retirement system and, notwithstanding § 3-20, shall be invested by the State Treasurer in the manner provided in § 3-13d for trust funds.

(f) Said bonds issued pursuant to this section shall be general obligations of the state and the full faith and credit of the State of Connecticut are pledged for the payment of the principal of and interest on said bonds as the same become due, and accordingly and as part of the contract of the state with the holders of said bonds, appropriation of all amounts necessary for punctual payment of such principal and interest is hereby made, and the State Treasurer shall pay such principal and interest as the same become due. Any net premium realized from the sale of said bonds shall be deemed appropriated to the payment of debt service on any bonds issued under this section and § 10-183c, subsection (l) of § 10-183g, § 10-183r and sections 12 and 13 of public act 07-186*, and the State Treasurer may apply such net premium to payment of such debt service.

(g) Notwithstanding any provision of § 3-21 to the contrary, bonds authorized and bonds issued under this section and any refunding bonds shall not be subject to the debt limitation in § 3-21 and shall not be included in indebtedness of the state for purposes of calculating the amount of indebtedness of the state which is subject to the debt limitation of § 3-21 and this section and action of the State Bond Commission shall not require any certification of the State Treasurer under § 3-21.

(h) Each fiscal year that any bonds authorized by this section or any refunding bonds are outstanding, there shall be deemed appropriated from the General Fund of the state the amount equal to the annual required contribution to the fund for the Connecticut teachers’ retirement system and such amount shall be deposited by the Treasurer in the fund for the Connecticut teachers’ retirement system in quarterly allotments on July fifteenth, October first, January first and April first of such fiscal year. The amount of the annual required contribution shall be determined in accordance with the provisions of subsection (b) of § 10-183l and § 10-183z, and for each biennial budget shall be the amounts for the fiscal years of said biennium determined in the actuarial evaluation required to be submitted by the December first prior to the beginning of the first fiscal year of the biennium, as provided in said subsection (b) of § 10-183l, beginning with the actuarial evaluation submitted prior to December 1, 2006, for the biennial budget for the fiscal years commencing July 1, 2007, and July 1, 2008. Said amount shall be certified by the Teachers’ Retirement Board and the Comptroller. The state of Connecticut does hereby pledge to and agree with the holders of any bonds issued under this section and any refunding bonds that, as long as the actuarial evaluation for each biennium, as required by this subsection, and the certification of the annual contribution amounts, as required by this subsection, are completed in the manner and by the dates required by this subsection, subsection (b) of § 10-183l and subsection (a) of § 10-183z, no public or special act of the General Assembly shall diminish such required contribution until such bonds, together with the interest thereon, are fully met and discharged, provided nothing herein contained shall preclude such limitation or alteration if and when adequate provision shall be made by law for the protection of the holders of such bonds, or if and when the Governor declares an emergency or the existence of extraordinary circumstances, in which the provisions of § 4-85 are invoked, and at least three-fifths of the members of each chamber of the General Assembly vote to diminish such required contribution during the biennium for which the emergency or existence of extraordinary circumstances are determined, and the funded ratio of the Connecticut teachers’ retirement system is at least equal to the funded ratio immediately after the sale of bonds pursuant to this section in accordance with the actuarial method used at the time. If all of such conditions are met, the funding of the annual required contribution may be diminished, but in no event shall such diminution result in a reduction of the funded ratio of the Connecticut teachers’ retirement system by more than five per cent from the funded ratio which would otherwise have resulted had the state funded the full annual required contribution, or the funded ratio immediately after the sale of the bonds, whichever is greater. For purposes of this subsection, the “funded ratio” shall be measured as the actuarial value of assets over the actuarial value of liabilities. The actuarial value of assets and the actuarial value of liabilities will be projected from the most recent actuarial valuation to the end of the fiscal year in which said annual required contribution is due. For purposes of this subsection, the “existence of extraordinary circumstances” may mean a change in the actuarial methods or accounting standards used to value the fund that would result in a significant increase in the state’s annual required contribution. The State Treasurer is authorized to include this pledge and undertaking for the state in such bonds.