S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 5826--A

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                              June 8, 2009
                               ___________

Introduced by Sens. SAVINO, STACHOWSKI -- (at request of the State Comp-
  troller)  --  read  twice  and ordered printed, and when printed to be
  committed to the Committee on Rules -- recommitted to the Committee on
  Civil Service and Pensions in accordance with Senate Rule 6, sec. 8 --
  committee discharged, bill amended, ordered reprinted as  amended  and
  recommitted to said committee

AN  ACT  to amend the retirement and social security law, in relation to
  the manner of paying employer contributions to the New York state  and
  local  employees'  retirement  system and the New York state and local
  police and fire retirement system

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The retirement and social security law is amended by adding
a new section 19-a to read as follows:
  S  19-A.   EMPLOYER CONTRIBUTIONS FOR THE TWO THOUSAND TEN - TWO THOU-
SAND ELEVEN FISCAL YEAR AND SUBSEQUENT FISCAL YEARS. A. IN  ADDITION  TO
THE  DEFINITIONS  IN  SECTION  TWO  OF  THIS  ARTICLE, WHEN USED IN THIS
SECTION:
  (1) "AMORTIZING EMPLOYER" SHALL MEAN AN EMPLOYER THAT ELECTS TO  AMOR-
TIZE  A  PORTION OF THE EMPLOYER'S ANNUAL BILL PURSUANT TO PARAGRAPH ONE
OF SUBDIVISION D OF THIS SECTION FOR THE TWO THOUSAND TEN - TWO THOUSAND
ELEVEN FISCAL YEAR, OR ANY SUBSEQUENT FISCAL YEAR, REGARDLESS OF WHETHER
THE EMPLOYER HAS SUBSEQUENTLY PAID IN FULL ALL SUCH AMORTIZED AMOUNTS.
  (2) "AMOUNT ELIGIBLE FOR AMORTIZATION" FOR A GIVEN FISCAL  YEAR  SHALL
MEAN  THE  AMOUNT BY WHICH AN EMPLOYER'S ACTUARIAL CONTRIBUTION FOR SUCH
FISCAL YEAR EXCEEDS THE EMPLOYER'S  GRADED  CONTRIBUTION  FOR  THE  SAME
FISCAL YEAR, LESS ANY AMOUNT FROM THE EMPLOYER CONTRIBUTION RESERVE FUND
APPLIED  TO  REDUCE  THE EMPLOYER'S PAYMENT TO THE RETIREMENT SYSTEM FOR
THE FISCAL YEAR, PROVIDED, HOWEVER, THAT IF THE EMPLOYER'S AVERAGE ACTU-
ARIAL CONTRIBUTION RATE FOR THE  FISCAL  YEAR  IS  LESS  THAN  NINE  AND

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14111-07-0

              

S. 5826--A                          2

ONE-HALF  PERCENT,  THEN  THE  AMOUNT ELIGIBLE FOR AMORTIZATION SHALL BE
ZERO.
  (3)  "EMPLOYER'S ACTUARIAL CONTRIBUTION" FOR A GIVEN FISCAL YEAR SHALL
MEAN AN EMPLOYER'S ANNUAL BILL FOR SUCH FISCAL YEAR EXCLUSIVE  OF  DEFI-
CIENCY  CONTRIBUTIONS  AND PAYMENTS ON ACCOUNT OF GROUP TERM LIFE INSUR-
ANCE, ADJUSTMENTS RELATING TO PRIOR FISCAL YEARS'  OBLIGATIONS,  RETIRE-
MENT INCENTIVES AND PRIOR AMORTIZATIONS.
  (4)  "EMPLOYER'S  ANNUAL  BILL" SHALL MEAN FOR A GIVEN FISCAL YEAR THE
SUM OF THE FOLLOWING AMOUNTS: (I) AN EMPLOYER'S NORMAL CONTRIBUTIONS FOR
THE FISCAL YEAR DETERMINED IN ACCORDANCE WITH PARAGRAPH ONE OF  SUBDIVI-
SION  B  OF  SECTION  TWENTY-THREE OF THIS ARTICLE AND THE COMPREHENSIVE
STRUCTURAL REFORM PROGRAM  IMPLEMENTED  PURSUANT  TO  SUBDIVISION  B  OF
SECTION  TWENTY-THREE-A  OF  THIS  ARTICLE,  INCLUDING THE PROVISIONS OF
SUBDIVISION B OF SECTION TWENTY-THREE-A OF THIS ARTICLE RELATING TO  THE
REQUIRED  MINIMUM  ANNUAL  CONTRIBUTION  OF FOUR AND ONE-HALF PERCENT OF
PENSIONABLE SALARIES; (II) THE EMPLOYER'S DEFICIENCY  CONTRIBUTIONS  AND
ADMINISTRATION  CONTRIBUTIONS  FOR THE FISCAL YEAR DETERMINED IN ACCORD-
ANCE  WITH  PARAGRAPHS  TWO  AND  THREE  OF  SUBDIVISION  B  OF  SECTION
TWENTY-THREE OF THIS ARTICLE; AND (III) ANY PAYMENTS BY THE EMPLOYER DUE
IN  THE FISCAL YEAR ON ACCOUNT OF GROUP TERM LIFE INSURANCE, ADJUSTMENTS
RELATING TO PRIOR FISCAL YEARS' OBLIGATIONS, RETIREMENT  INCENTIVES  AND
PRIOR AMORTIZATIONS.
  (5)  "EMPLOYER'S  AVERAGE  ACTUARIAL  CONTRIBUTION  RATE"  FOR A GIVEN
FISCAL YEAR SHALL MEAN AN EMPLOYER'S  ACTUARIAL  CONTRIBUTION  FOR  SUCH
FISCAL  YEAR  DIVIDED  BY  THE EMPLOYER'S PROJECTED PAYROLL FOR THE SAME
FISCAL YEAR.
  (6) "EMPLOYER CONTRIBUTION RESERVE FUND"  OR  "FUND"  SHALL  MEAN  THE
EMPLOYER CONTRIBUTION RESERVE FUND ESTABLISHED PURSUANT TO SUBDIVISION E
OF THIS SECTION.
  (7)  "EMPLOYER'S  GRADED  CONTRIBUTION"  FOR A GIVEN FISCAL YEAR SHALL
MEAN THE AMOUNT DETERMINED BY APPLYING THE  SYSTEM  GRADED  CONTRIBUTION
RATE  FOR  SUCH  FISCAL  YEAR TO AN EMPLOYER'S PROJECTED PAYROLL FOR THE
SAME FISCAL YEAR.
  (8) "EMPLOYER'S GRADED PAYMENT" FOR A GIVEN FISCAL YEAR SHALL MEAN THE
AMOUNT BY WHICH AN EMPLOYER'S GRADED CONTRIBUTION FOR SUCH  FISCAL  YEAR
EXCEEDS THE EMPLOYER'S ACTUARIAL CONTRIBUTION FOR THE SAME FISCAL YEAR.
  (9)  "PRIOR  AMORTIZATION"  SHALL  MEAN WITH RESPECT TO A GIVEN FISCAL
YEAR ANY PAYMENT DUE IN SUCH FISCAL YEAR ON  ACCOUNT  OF  AN  OBLIGATION
FROM  A  PRIOR  FISCAL  YEAR THAT AN EMPLOYER IS PERMITTED TO PAY TO THE
RETIREMENT SYSTEM ON AN AMORTIZED BASIS.
  (10) "SYSTEM AVERAGE ACTUARIAL CONTRIBUTION RATE" FOR A  GIVEN  FISCAL
YEAR  SHALL  MEAN  THE SUM OF ALL EMPLOYERS' ACTUARIAL CONTRIBUTIONS FOR
SUCH FISCAL YEAR DIVIDED BY THE SUM OF ALL EMPLOYERS' PROJECTED  PAYROLL
FOR THE SAME FISCAL YEAR.
  (11)  "SYSTEM  GRADED CONTRIBUTION RATE" FOR A GIVEN FISCAL YEAR SHALL
MEAN THE GRADED CONTRIBUTION RATE FOR THE RETIREMENT SYSTEM AS  A  WHOLE
DETERMINED  FOR  SUCH  FISCAL  YEAR  PURSUANT  TO  SUBDIVISION C OF THIS
SECTION.
  B. NOTWITHSTANDING THE PROVISIONS OF THIS CHAPTER OR ANY OTHER LAW  TO
THE  CONTRARY,  THE  COMPTROLLER,  IN  HIS OR HER DISCRETION, SHALL HAVE
AUTHORITY TO IMPLEMENT THIS SECTION. IF THE COMPTROLLER ELECTS TO IMPLE-
MENT THIS SECTION, THE PROVISIONS OF THIS SECTION  SHALL  APPLY  TO  THE
PAYMENT  OF  EMPLOYER  CONTRIBUTIONS  FOR  THE FISCAL YEAR COMMENCING ON
APRIL FIRST, TWO THOUSAND TEN, AND FOR SUBSEQUENT FISCAL YEARS.

S. 5826--A                          3

  C. FOR EACH FISCAL YEAR TO WHICH THE PROVISIONS OF THIS SECTION APPLY,
THE COMPTROLLER SHALL DETERMINE  A  GRADED  CONTRIBUTION  RATE  FOR  THE
RETIREMENT SYSTEM AS A WHOLE IN THE MANNER PROVIDED IN THIS SUBDIVISION.
  (1)  FOR  THE  TWO  THOUSAND TEN - TWO THOUSAND ELEVEN FISCAL YEAR THE
SYSTEM GRADED CONTRIBUTION RATE SHALL BE NINE AND ONE-HALF PERCENT.
  (2) FOR THE TWO THOUSAND ELEVEN - TWO THOUSAND TWELVE FISCAL YEAR, AND
SUBSEQUENT FISCAL YEARS,  SYSTEM  GRADED  CONTRIBUTION  RATES  SHALL  BE
DETERMINED AS FOLLOWS:
  (I)  IF  THE  SYSTEM  AVERAGE  ACTUARIAL CONTRIBUTION RATE FOR A GIVEN
FISCAL YEAR IS AT LEAST NINE AND ONE-HALF PERCENT AND EXCEEDS THE SYSTEM
GRADED CONTRIBUTION RATE FOR THE IMMEDIATELY PRECEDING  FISCAL  YEAR  BY
MORE THAN ONE PERCENTAGE POINT, THEN THE SYSTEM GRADED CONTRIBUTION RATE
FOR  THE  GIVEN  FISCAL  YEAR SHALL EQUAL THE SYSTEM GRADED CONTRIBUTION
RATE FOR THE IMMEDIATELY  PRECEDING  FISCAL  YEAR  PLUS  ONE  PERCENTAGE
POINT,  PROVIDED,  HOWEVER,  THAT  IN  NO  EVENT SHALL THE SYSTEM GRADED
CONTRIBUTION RATE BE LESS THAN NINE AND ONE-HALF PERCENT;
  (II) IF THE SYSTEM AVERAGE ACTUARIAL CONTRIBUTION  RATE  FOR  A  GIVEN
FISCAL  YEAR IS AT LEAST NINE AND ONE-HALF PERCENT AND EITHER EQUALS THE
SYSTEM GRADED CONTRIBUTION RATE FOR  THE  IMMEDIATELY  PRECEDING  FISCAL
YEAR  OR EXCEEDS THE SYSTEM GRADED CONTRIBUTION RATE FOR THE IMMEDIATELY
PRECEDING FISCAL YEAR BY ONE PERCENTAGE POINT OR LESS, THEN  THE  SYSTEM
GRADED  CONTRIBUTION  RATE  FOR  THE  GIVEN  FISCAL YEAR SHALL EQUAL THE
SYSTEM  AVERAGE  ACTUARIAL  CONTRIBUTION  RATE  FOR  SUCH  FISCAL  YEAR,
PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE SYSTEM GRADED CONTRIBUTION
RATE BE LESS THAN NINE AND ONE-HALF PERCENT;
  (III)  IF  THE  SYSTEM AVERAGE ACTUARIAL CONTRIBUTION RATE FOR A GIVEN
FISCAL YEAR IS LESS THAN NINE AND ONE-HALF PERCENT AND GREATER THAN  THE
SYSTEM  GRADED  CONTRIBUTION  RATE  FOR THE IMMEDIATELY PRECEDING FISCAL
YEAR, THEN THE SYSTEM GRADED CONTRIBUTION RATE FOR THE GIVEN FISCAL YEAR
SHALL EQUAL THE SYSTEM ACTUARIAL CONTRIBUTION RATE FOR SUCH FISCAL YEAR;
  (IV) IF THE SYSTEM AVERAGE ACTUARIAL CONTRIBUTION  RATE  FOR  A  GIVEN
FISCAL  YEAR IS SMALLER THAN THE SYSTEM GRADED CONTRIBUTION RATE FOR THE
IMMEDIATELY PRECEDING FISCAL YEAR BY MORE  THAN  ONE  PERCENTAGE  POINT,
THEN THE SYSTEM GRADED CONTRIBUTION RATE FOR THE GIVEN FISCAL YEAR SHALL
EQUAL  THE SYSTEM GRADED CONTRIBUTION RATE FOR THE IMMEDIATELY PRECEDING
FISCAL YEAR MINUS ONE PERCENTAGE POINT; AND
  (V) IF THE SYSTEM AVERAGE ACTUARIAL  CONTRIBUTION  RATE  FOR  A  GIVEN
FISCAL  YEAR  EITHER  EQUALS THE SYSTEM GRADED CONTRIBUTION RATE FOR THE
IMMEDIATELY PRECEDING FISCAL YEAR OR IS SMALLER THAN THE  SYSTEM  GRADED
CONTRIBUTION  RATE  FOR  THE  IMMEDIATELY  PRECEDING  FISCAL YEAR BY ONE
PERCENTAGE POINT OR LESS, THEN THE SYSTEM GRADED CONTRIBUTION  RATE  FOR
THE GIVEN FISCAL YEAR SHALL EQUAL THE SYSTEM ACTUARIAL CONTRIBUTION RATE
FOR SUCH FISCAL YEAR.
  D. (1) FOR ANY GIVEN FISCAL YEAR FOR WHICH AN EMPLOYER'S AVERAGE ACTU-
ARIAL CONTRIBUTION RATE EXCEEDS THE SYSTEM GRADED CONTRIBUTION RATE, THE
EMPLOYER  SHALL  PAY  TO  THE  RETIREMENT  SYSTEM AN AMOUNT EQUAL TO THE
EMPLOYER'S ANNUAL BILL FOR SUCH YEAR OR, IN LIEU OF  PAYING  THE  ENTIRE
ANNUAL  BILL,  THE  EMPLOYER  MAY  PAY AN AMOUNT EQUAL TO THE EMPLOYER'S
ANNUAL BILL LESS ALL OR A PORTION OF THE EMPLOYER'S AMOUNT ELIGIBLE  FOR
AMORTIZATION  FOR  THE FISCAL YEAR. IF IN ACCORDANCE WITH THIS PARAGRAPH
THE EMPLOYER'S PAYMENT TO THE RETIREMENT SYSTEM IS LESS THAN THE  ENTIRE
AMOUNT  OF  THE  EMPLOYER'S ANNUAL BILL, THEN THE DIFFERENCE BETWEEN THE
EMPLOYER'S ANNUAL BILL, AND THE AMOUNT ACTUALLY PAID BY THE EMPLOYER  TO
THE RETIREMENT SYSTEM EXCLUSIVE OF ANY AMOUNT FROM THE EMPLOYER CONTRIB-
UTION  RESERVE  FUND  APPLIED TO REDUCE THE EMPLOYER'S PAYMENT, SHALL BE
THE AMOUNT AMORTIZED FOR THE FISCAL YEAR. THE AMOUNT AMORTIZED  FOR  THE

S. 5826--A                          4

FISCAL  YEAR  SHALL  BE  PAID  TO  THE RETIREMENT SYSTEM IN EQUAL ANNUAL
INSTALLMENTS OVER A TEN-YEAR PERIOD, WITH INTEREST ON THE UNPAID BALANCE
AT A RATE DETERMINED BY THE COMPTROLLER WHICH APPROXIMATES A MARKET RATE
OF  RETURN ON TAXABLE FIXED RATE SECURITIES WITH SIMILAR TERMS ISSUED BY
COMPARABLE ISSUERS, AND WITH THE FIRST INSTALLMENT DUE IN THE IMMEDIATE-
LY SUCCEEDING FISCAL YEAR.
  (2) FOR ANY GIVEN FISCAL YEAR FOR WHICH THE SYSTEM GRADED CONTRIBUTION
RATE EQUALS  OR  EXCEEDS  AN  AMORTIZING  EMPLOYER'S  AVERAGE  ACTUARIAL
CONTRIBUTION  RATE,  THE AMORTIZING EMPLOYER SHALL PAY TO THE RETIREMENT
SYSTEM AN AMOUNT EQUAL TO THE EMPLOYER'S ANNUAL BILL FOR SUCH YEAR  PLUS
THE EMPLOYER'S GRADED PAYMENT FOR THE FISCAL YEAR.
  (I)  IF THE AMORTIZING EMPLOYER'S ANNUAL BILL FOR THE FISCAL YEAR DOES
NOT INCLUDE AN AMOUNT ATTRIBUTABLE TO A  PRIOR  AMORTIZATION,  THEN  THE
EMPLOYER'S  GRADED  PAYMENT SHALL BE PAID INTO THE EMPLOYER CONTRIBUTION
RESERVE FUND PROVIDED FOR IN SUBDIVISION E OF THIS SECTION AND  CREDITED
TO AN ACCOUNT WITHIN SUCH FUND ESTABLISHED FOR THE EMPLOYER.
  (II)  IF  THE  AMORTIZING  EMPLOYER'S  ANNUAL BILL FOR THE FISCAL YEAR
INCLUDES AN AMOUNT ATTRIBUTABLE TO A PRIOR AMORTIZATION, THE  EMPLOYER'S
GRADED  PAYMENT  SHALL  BE  USED  FIRST  TO  ELIMINATE THE AMOUNT OF THE
EMPLOYER'S UNPAID PRIOR AMORTIZATION  BALANCES  IN  CHRONOLOGICAL  ORDER
STARTING  WITH THE OLDEST PRIOR AMORTIZATION BALANCE. WHEN IN ANY FISCAL
YEAR THE EMPLOYER'S GRADED PAYMENT ELIMINATES ALL BALANCES OWED  ON  THE
EMPLOYER'S  PRIOR AMORTIZATIONS, ANY REMAINING PORTION OF THE EMPLOYER'S
GRADED PAYMENT FOR SUCH FISCAL YEAR, AND THE EMPLOYER'S  GRADED  PAYMENT
IN  ANY  SUBSEQUENT  FISCAL YEAR IN WHICH THE AMORTIZING EMPLOYER HAS NO
UNPAID PRIOR AMORTIZATIONS, SHALL BE PAID INTO THE EMPLOYER CONTRIBUTION
RESERVE FUND PROVIDED FOR IN SUBDIVISION E OF THIS SECTION AND  CREDITED
TO AN ACCOUNT WITHIN SUCH FUND ESTABLISHED FOR THE EMPLOYER.
  (3)  NOTHING  IN THIS SUBDIVISION SHALL BE CONSTRUED AS PROHIBITING AN
EMPLOYER FROM PRE-PAYING ANY PRIOR AMORTIZATION.
  E. (1) NOTWITHSTANDING ANY LAW TO THE CONTRARY, THERE SHALL  BE  MAIN-
TAINED  SEPARATE AND APART FROM THE OTHER FUNDS OF THE RETIREMENT SYSTEM
AN EMPLOYER CONTRIBUTION RESERVE FUND, THE ASSETS OF WHICH SHALL NOT  BE
USED OR INVESTED IN A MANNER CONTRARY TO THE PROVISIONS OF THIS SUBDIVI-
SION.  THE  FUND SHALL CONSIST OF ALL EMPLOYER CONTRIBUTIONS REQUIRED TO
BE DEPOSITED INTO THE FUND PURSUANT TO SUBDIVISION D  OF  THIS  SECTION.
WITHIN  SUCH  FUND  THERE  SHALL BE A SEPARATE ACCOUNT FOR EACH EMPLOYER
MAKING SUCH CONTRIBUTIONS AND PAYMENTS.
  (2) FOR ANY GIVEN FISCAL YEAR  FOR  WHICH  (I)  THE  SYSTEM  ACTUARIAL
CONTRIBUTION RATE EXCEEDS NINE AND ONE-HALF PERCENT OF PAYROLL, AND (II)
AN  EMPLOYER'S  AVERAGE  ACTUARIAL  CONTRIBUTION RATE EXCEEDS THE SYSTEM
GRADED CONTRIBUTION RATE, THE BALANCE IN THE EMPLOYER'S  ACCOUNT  WITHIN
SUCH  FUND  SHALL  BE  APPLIED  TO  REDUCE THE EMPLOYER'S PAYMENT TO THE
RETIREMENT SYSTEM FOR SUCH FISCAL YEAR IN AN AMOUNT NOT  TO  EXCEED  THE
DIFFERENCE BETWEEN THE EMPLOYER'S ACTUARIAL CONTRIBUTION AND THE EMPLOY-
ER'S GRADED CONTRIBUTION FOR THE FISCAL YEAR.
  (3)  NOTWITHSTANDING  THE PROVISIONS OF PARAGRAPH TWO OF THIS SUBDIVI-
SION, IF AT THE CLOSE OF ANY GIVEN FISCAL YEAR THE BALANCE OF AN EMPLOY-
ER'S ACCOUNT WITHIN THE FUND EXCEEDS ONE HUNDRED PERCENT OF THE  EMPLOY-
ER'S PAYROLL FOR SUCH FISCAL YEAR, THE EXCESS SHALL BE APPLIED TO REDUCE
THE  EMPLOYER'S PAYMENT TO THE RETIREMENT SYSTEM FOR THE NEXT SUCCEEDING
FISCAL YEAR.
  (4) THE ASSETS OF THE FUND SHALL BE INVESTED  IN  ONLY  THE  FOLLOWING
TYPES OF INVESTMENTS:
  (I)  OBLIGATIONS  OF  THE  UNITED  STATES OF AMERICA OR IN OBLIGATIONS
GUARANTEED BY AGENCIES OF THE UNITED STATES OF AMERICA WHERE THE PAYMENT

S. 5826--A                          5

OF PRINCIPAL AND INTEREST ARE GUARANTEED BY THE UNITED STATES OF AMERICA
OR IN OBLIGATIONS OF THE STATE OF NEW YORK;
  (II)  GENERAL  OBLIGATION BONDS AND NOTES OF ANY STATE OTHER THAN THIS
STATE, PROVIDED THAT SUCH BONDS AND NOTES RECEIVE THE HIGHEST RATING  OF
AT LEAST ONE INDEPENDENT RATING AGENCY;
  (III)  OBLIGATIONS OF, OR INSTRUMENTS ISSUED BY OR FULLY GUARANTEED AS
TO PRINCIPAL AND INTEREST BY,  ANY  AGENCY  OR  INSTRUMENTALITY  OF  THE
UNITED  STATES ACTING PURSUANT TO A GRANT OF AUTHORITY FROM THE CONGRESS
OF THE UNITED STATES, INCLUDING, BUT NOT LIMITED TO,  ANY  FEDERAL  HOME
LOAN BANK OR BANKS, THE TENNESSEE VALLEY AUTHORITY, THE FEDERAL NATIONAL
MORTGAGE ASSOCIATION, THE FEDERAL HOME LOAN MORTGAGE CORPORATION AND THE
UNITED STATES POSTAL SERVICE;
  (IV)  CERTIFICATE  OF DEPOSITS THAT ARE FULLY SECURED BY THE ISSUER BY
DEPOSITING WITH THE COMPTROLLER DIRECT OR INDIRECT  OBLIGATIONS  OF  THE
UNITED STATES OR ITS AGENCIES OR A LETTER OF CREDIT ISSUED BY THE FEDER-
AL HOME LOAN BANK; AND
  (V)  OBLIGATIONS  OF  ANY  CORPORATION ORGANIZED UNDER THE LAWS OF ANY
STATE IN THE UNITED STATES MATURING  WITHIN  TWO  HUNDRED  SEVENTY  DAYS
PROVIDED  THAT  SUCH OBLIGATIONS RECEIVE THE HIGHEST RATING OF TWO INDE-
PENDENT RATING SERVICES DESIGNATED BY THE COMPTROLLER.
  (5) AT THE CLOSE OF EACH FISCAL YEAR, THE AMOUNT OF INTEREST AND EARN-
INGS ATTRIBUTABLE TO EACH EMPLOYER'S ACCOUNT SHALL BE  COMPUTED  BY  THE
ACTUARY  AND  CERTIFIED  TO  THE COMPTROLLER, WHO SHALL THEREUPON CREDIT
EACH EMPLOYER'S ACCOUNT IN ACCORDANCE THEREWITH.
  (6) THE ASSETS OF THE FUND SHALL BE EXCLUDED FROM THE ANNUAL VALUATION
OF THE ASSETS AND LIABILITIES OF THE  FUNDS  OF  THE  RETIREMENT  SYSTEM
REQUIRED  BY  SECTION ELEVEN OF THIS TITLE. THE ASSETS OF THE FUND SHALL
NOT BE USED TO FINANCE INCREASES IN PENSION BENEFITS.
  S 2. The opening paragraph and paragraph 1 of subdivision b of section
23 of the retirement and social security law, as amended by chapter  210
of  the  laws of 1990 and clause (ii) of subparagraph (a) of paragraph 1
as amended by chapter 947 of the laws of 1990, are amended  to  read  as
follows:
  Each  employer  shall  make  [two]  THREE contributions annually. They
shall be known as the normal contribution [as  defined  in  subparagraph
(a)  of  paragraph one of this subdivision and], the deficiency contrib-
ution [as defined in paragraph two of this subdivision], AND THE  ADMIN-
ISTRATION  CONTRIBUTION.    The  rates  thereof shall be computed by the
actuary.
  1. [(a)] Normal contribution. The rate of such contribution  shall  be
applied  to the members' annual compensation as of the end of the fiscal
year. Such rate shall be a uniform and constant rate per centum of annu-
al compensation [when determined by dividing the valuation costs by  the
payroll  amount  used in the valuation. Notwithstanding any provision of
law to the contrary, the valuation costs consist of:
  (i) the normal cost, which shall be the actuarial present value of the
employer provided benefits accrued  during  the  year,  based  upon  the
projected  future  salary  on which benefits are expected to be paid, by
prorating each employee's projected benefit over his or her total  years
of service;
  (ii)  the  supplemental  cost,  which  shall  be the cost of providing
supplemental retirement allowance payments pursuant to subdivision e  of
section seventy-eight of this article;
  (iii)  the  administrative  cost,  which  shall be the expenses of the
retirement system pursuant to paragraph three of subdivision b  of  this
section;

S. 5826--A                          6

  (iv)  the  prior service cost, which shall be equal to the interest on
the unfunded actuarial accrued liability or surplus plus  a  portion  of
the  unfunded  liability  or  surplus,  said  portion to be equal to the
unfunded liability or surplus divided by the  average  future  years  of
service of active employees; and
  (v)  the  annual amortization cost, which shall be equal to the amount
of the annual amortization payment required to be paid into the system's
pension accumulation fund under sections sixteen-a  and  seventeen-a  of
this article.
  Provided,  however,  in  no  event shall the amount of contribution be
less than zero.
  (b) The comptroller is authorized to make appropriate adjustments  for
those  participating employers that have paid an amount in excess of the
minimum annual amortization payment required by section  seventeen-a  of
this  article.  The excess payment shall accumulate with interest earned
at the rate used in  the  annual  actuarial  valuation  and  be  applied
against  future  pension  contribution  requirements to insure equitable
treatment of all participating employers.
  (c) In any year in which no contribution is required  to  the  pension
accumulation  fund,  any adjustment reducing a prior year's contribution
resulting from the enactment of section sixteen-b of this chapter, shall
be credited with interest earned at the rate used in the annual actuari-
al valuation and applied against future pension  contributions].    WHEN
APPLIED  TO  THE  COMPENSATION  OF  THE  AVERAGE  NEW ENTRANT DURING THE
REMAINING PERIOD OF HIS OR HER MEMBERSHIP, SUCH RATE SHALL  BE  COMPUTED
TO  BE  SUFFICIENT  TO  PROVIDE  ALL  THE  BENEFITS, OTHER THAN THOSE ON
ACCOUNT OF PRIOR SERVICE, GRANTED BY THIS ARTICLE AND WHICH ARE  PAYABLE
FROM FUNDS CONTRIBUTED TO THE PENSION ACCUMULATION FUND.
  Such  rate  shall be computed each year by means of an actuarial valu-
ation as prescribed in section eleven of this [chapter] ARTICLE  AND  AS
AUTHORIZED BY SECTION TWENTY-THREE-A OF THIS TITLE.
  S 3. The retirement and social security law is amended by adding a new
section 319-a to read as follows:
  S  319-A.  EMPLOYER CONTRIBUTIONS FOR THE TWO THOUSAND TEN - TWO THOU-
SAND ELEVEN FISCAL YEAR AND SUBSEQUENT FISCAL YEARS. A. IN  ADDITION  TO
THE  DEFINITIONS IN SECTION THREE HUNDRED TWO OF THIS ARTICLE, WHEN USED
IN THIS SECTION:
  (1) "AMORTIZING EMPLOYER" SHALL MEAN AN EMPLOYER THAT ELECTS TO  AMOR-
TIZE  A  PORTION OF THE EMPLOYER'S ANNUAL BILL PURSUANT TO PARAGRAPH ONE
OF SUBDIVISION D OF THIS SECTION FOR THE TWO THOUSAND TEN - TWO THOUSAND
ELEVEN FISCAL YEAR, OR ANY SUBSEQUENT FISCAL YEAR, REGARDLESS OF WHETHER
THE EMPLOYER HAS SUBSEQUENTLY PAID IN FULL ALL SUCH AMORTIZED AMOUNTS.
  (2) "AMOUNT ELIGIBLE FOR AMORTIZATION" FOR A GIVEN FISCAL  YEAR  SHALL
MEAN  THE  AMOUNT BY WHICH AN EMPLOYER'S ACTUARIAL CONTRIBUTION FOR SUCH
FISCAL YEAR EXCEEDS THE EMPLOYER'S  GRADED  CONTRIBUTION  FOR  THE  SAME
FISCAL YEAR, LESS ANY AMOUNT FROM THE EMPLOYER CONTRIBUTION RESERVE FUND
APPLIED  TO  REDUCE  THE EMPLOYER'S PAYMENT TO THE RETIREMENT SYSTEM FOR
THE FISCAL YEAR, PROVIDED, HOWEVER, THAT IF THE EMPLOYER'S AVERAGE ACTU-
ARIAL CONTRIBUTION RATE FOR THE FISCAL YEAR IS LESS THAN  SEVENTEEN  AND
ONE-HALF  PERCENT,  THEN  THE  AMOUNT ELIGIBLE FOR AMORTIZATION SHALL BE
ZERO.
  (3) "EMPLOYER'S ACTUARIAL CONTRIBUTION" FOR A GIVEN FISCAL YEAR  SHALL
MEAN  AN  EMPLOYER'S  ANNUAL  BILL FOR SUCH FISCAL YEAR EXCLUSIVE OF THE
DEFICIENCY CONTRIBUTIONS AND PAYMENTS ON  ACCOUNT  OF  GROUP  TERM  LIFE
INSURANCE,  ADJUSTMENTS  RELATING  TO  PRIOR  FISCAL YEARS' OBLIGATIONS,
RETIREMENT INCENTIVES AND PRIOR AMORTIZATIONS.

S. 5826--A                          7

  (4) "EMPLOYER'S ANNUAL BILL" SHALL MEAN FOR A GIVEN  FISCAL  YEAR  THE
SUM OF THE FOLLOWING AMOUNTS: (I) AN EMPLOYER'S NORMAL CONTRIBUTIONS FOR
THE  FISCAL YEAR DETERMINED IN ACCORDANCE WITH PARAGRAPH ONE OF SUBDIVI-
SION B OF SECTION THREE HUNDRED TWENTY-THREE OF  THIS  ARTICLE  AND  THE
COMPREHENSIVE STRUCTURAL REFORM PROGRAM IMPLEMENTED PURSUANT TO SUBDIVI-
SION  B OF SECTION THREE HUNDRED TWENTY-THREE-A OF THIS ARTICLE, INCLUD-
ING  THE  PROVISIONS  OF  SUBDIVISION  B  OF   SECTION   THREE   HUNDRED
TWENTY-THREE-A  OF  THIS ARTICLE RELATING TO THE REQUIRED MINIMUM ANNUAL
CONTRIBUTION OF FOUR AND ONE-HALF PERCENT OF PENSIONABLE SALARIES;  (II)
THE EMPLOYER'S DEFICIENCY CONTRIBUTIONS AND ADMINISTRATION CONTRIBUTIONS
FOR  THE  FISCAL  YEAR  DETERMINED IN ACCORDANCE WITH PARAGRAPHS TWO AND
THREE OF SUBDIVISION B OF SECTION THREE  HUNDRED  TWENTY-THREE  OF  THIS
ARTICLE;  AND  (III) ANY PAYMENTS BY THE EMPLOYER DUE IN THE FISCAL YEAR
ON ACCOUNT OF GROUP TERM LIFE INSURANCE, ADJUSTMENTS RELATING  TO  PRIOR
FISCAL  YEARS'  OBLIGATIONS,  RETIREMENT  INCENTIVES  AND  PRIOR AMORTI-
ZATIONS.
  (5) "EMPLOYER'S AVERAGE  ACTUARIAL  CONTRIBUTION  RATE"  FOR  A  GIVEN
FISCAL  YEAR  SHALL  MEAN  AN EMPLOYER'S ACTUARIAL CONTRIBUTION FOR SUCH
FISCAL YEAR DIVIDED BY THE EMPLOYER'S PROJECTED  PAYROLL  FOR  THE  SAME
FISCAL YEAR.
  (6)  "EMPLOYER  CONTRIBUTION  RESERVE  FUND"  OR "FUND" SHALL MEAN THE
EMPLOYER CONTRIBUTION RESERVE FUND ESTABLISHED PURSUANT TO SUBDIVISION E
OF THIS SECTION.
  (7) "EMPLOYER'S GRADED CONTRIBUTION" FOR A  GIVEN  FISCAL  YEAR  SHALL
MEAN  THE  AMOUNT  DETERMINED BY APPLYING THE EMPLOYER'S GRADED CONTRIB-
UTION RATE FOR SUCH FISCAL YEAR TO AN EMPLOYER'S PROJECTED  PAYROLL  FOR
THE SAME FISCAL YEAR.
  (8)  "EMPLOYER'S  GRADED  CONTRIBUTION  RATE"  FOR A GIVEN FISCAL YEAR
SHALL MEAN (I) THE SYSTEM GRADED CONTRIBUTION RATE FOR SUCH FISCAL YEAR,
OR (II) IN THE CASE  OF  AN  INDIVIDUAL  EMPLOYER  FOR  WHICH  A  GRADED
CONTRIBUTION  RATE  HAS  BEEN  DETERMINED PURSUANT TO PARAGRAPH THREE OF
SUBDIVISION C OF THIS SECTION, THE  GRADED  CONTRIBUTION  RATE  FOR  THE
INDIVIDUAL EMPLOYER FOR SUCH FISCAL YEAR.
  (9) "EMPLOYER'S GRADED PAYMENT" FOR A GIVEN FISCAL YEAR SHALL MEAN THE
AMOUNT  BY  WHICH AN EMPLOYER'S GRADED CONTRIBUTION FOR SUCH FISCAL YEAR
EXCEEDS THE EMPLOYER'S ACTUARIAL CONTRIBUTION FOR THE SAME FISCAL YEAR.
  (10) "PRIOR AMORTIZATION" SHALL MEAN WITH RESPECT TO  A  GIVEN  FISCAL
YEAR  ANY  PAYMENT  DUE  IN SUCH FISCAL YEAR ON ACCOUNT OF AN OBLIGATION
FROM A PRIOR FISCAL YEAR THAT AN EMPLOYER IS PERMITTED  TO  PAY  TO  THE
RETIREMENT SYSTEM ON AN AMORTIZED BASIS.
  (11)  "SYSTEM  AVERAGE ACTUARIAL CONTRIBUTION RATE" FOR A GIVEN FISCAL
YEAR SHALL MEAN THE SUM OF ALL EMPLOYERS'  ACTUARIAL  CONTRIBUTIONS  FOR
SUCH FISCAL YEAR, DIVIDED BY THE SUM OF ALL EMPLOYERS' PROJECTED PAYROLL
FOR THE SAME FISCAL YEAR.
  (12)  "SYSTEM  GRADED CONTRIBUTION RATE" FOR A GIVEN FISCAL YEAR SHALL
MEAN THE GRADED CONTRIBUTION RATE FOR THE RETIREMENT SYSTEM AS  A  WHOLE
DETERMINED  FOR  SUCH  FISCAL  YEAR  PURSUANT TO PARAGRAPH ONE OR TWO OF
SUBDIVISION C OF THIS SECTION.
  B. NOTWITHSTANDING THE PROVISIONS OF THIS CHAPTER OR ANY OTHER LAW  TO
THE  CONTRARY,  THE  COMPTROLLER,  IN  HIS OR HER DISCRETION, SHALL HAVE
AUTHORITY TO IMPLEMENT THIS SECTION. IF THE COMPTROLLER ELECTS TO IMPLE-
MENT THIS SECTION, THE PROVISIONS OF THIS SECTION  SHALL  APPLY  TO  THE
PAYMENT  OF  EMPLOYER  CONTRIBUTIONS  FOR  THE FISCAL YEAR COMMENCING ON
APRIL FIRST, TWO THOUSAND TEN, AND FOR SUBSEQUENT FISCAL YEARS.

S. 5826--A                          8

  C. FOR EACH FISCAL YEAR TO WHICH THE PROVISIONS OF THIS SECTION APPLY,
THE COMPTROLLER SHALL DETERMINE  A  GRADED  CONTRIBUTION  RATE  FOR  THE
RETIREMENT SYSTEM AS A WHOLE IN THE MANNER PROVIDED IN THIS SUBDIVISION.
  (1)  FOR  THE  TWO  THOUSAND TEN - TWO THOUSAND ELEVEN FISCAL YEAR THE
SYSTEM GRADED CONTRIBUTION RATE SHALL BE SEVENTEEN AND ONE-HALF PERCENT.
  (2) FOR THE TWO THOUSAND ELEVEN - TWO THOUSAND TWELVE FISCAL YEAR, AND
SUBSEQUENT FISCAL YEARS,  SYSTEM  GRADED  CONTRIBUTION  RATES  SHALL  BE
DETERMINED AS FOLLOWS:
  (I)  IF  THE  SYSTEM  AVERAGE  ACTUARIAL CONTRIBUTION RATE FOR A GIVEN
FISCAL YEAR IS AT LEAST SEVENTEEN AND ONE-HALF PERCENT AND  EXCEEDS  THE
SYSTEM  GRADED  CONTRIBUTION  RATE  FOR THE IMMEDIATELY PRECEDING FISCAL
YEAR BY MORE THAN ONE PERCENTAGE POINT, THEN THE SYSTEM GRADED  CONTRIB-
UTION  RATE  FOR  THE  GIVEN  FISCAL  YEAR SHALL EQUAL THE SYSTEM GRADED
CONTRIBUTION RATE FOR THE IMMEDIATELY PRECEDING  FISCAL  YEAR  PLUS  ONE
PERCENTAGE  POINT,  PROVIDED  HOWEVER, THAT IN NO EVENT SHALL THE SYSTEM
GRADED CONTRIBUTION RATE BE LESS THAN SEVENTEEN AND ONE-HALF PERCENT;
  (II) IF THE SYSTEM AVERAGE ACTUARIAL CONTRIBUTION  RATE  FOR  A  GIVEN
FISCAL YEAR IS AT LEAST SEVENTEEN AND ONE-HALF PERCENT AND EITHER EQUALS
THE SYSTEM GRADED CONTRIBUTION RATE FOR THE IMMEDIATELY PRECEDING FISCAL
YEAR  OR EXCEEDS THE SYSTEM GRADED CONTRIBUTION RATE FOR THE IMMEDIATELY
PRECEDING FISCAL YEAR BY ONE PERCENTAGE POINT OR LESS, THEN  THE  SYSTEM
GRADED  CONTRIBUTION  RATE  FOR  THE  GIVEN  FISCAL YEAR SHALL EQUAL THE
SYSTEM  AVERAGE  ACTUARIAL  CONTRIBUTION  RATE  FOR  SUCH  FISCAL  YEAR,
PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE SYSTEM GRADED CONTRIBUTION
RATE BE LESS THAN SEVENTEEN AND ONE-HALF PERCENT;
  (III)  IF  THE  SYSTEM AVERAGE ACTUARIAL CONTRIBUTION RATE FOR A GIVEN
FISCAL YEAR IS LESS THAN SEVENTEEN AND ONE-HALF PERCENT AND GREATER THAN
THE SYSTEM GRADED CONTRIBUTION RATE FOR THE IMMEDIATELY PRECEDING FISCAL
YEAR, THEN THE SYSTEM GRADED CONTRIBUTION RATE FOR THE GIVEN FISCAL YEAR
SHALL EQUAL THE SYSTEM ACTUARIAL CONTRIBUTION RATE FOR SUCH FISCAL YEAR;
  (IV) IF THE SYSTEM AVERAGE ACTUARIAL CONTRIBUTION  RATE  FOR  A  GIVEN
FISCAL  YEAR IS SMALLER THAN THE SYSTEM GRADED CONTRIBUTION RATE FOR THE
IMMEDIATELY PRECEDING FISCAL YEAR BY MORE  THAN  ONE  PERCENTAGE  POINT,
THEN THE SYSTEM GRADED CONTRIBUTION RATE FOR THE GIVEN FISCAL YEAR SHALL
EQUAL  THE SYSTEM GRADED CONTRIBUTION RATE FOR THE IMMEDIATELY PRECEDING
FISCAL YEAR MINUS ONE PERCENTAGE POINT; AND
  (V) IF THE SYSTEM AVERAGE ACTUARIAL  CONTRIBUTION  RATE  FOR  A  GIVEN
FISCAL  YEAR  EITHER  EQUALS THE SYSTEM GRADED CONTRIBUTION RATE FOR THE
IMMEDIATELY PRECEDING FISCAL YEAR OR IS SMALLER THAN THE  SYSTEM  GRADED
CONTRIBUTION  RATE  FOR  THE  IMMEDIATELY  PRECEDING  FISCAL YEAR BY ONE
PERCENTAGE POINT OR LESS, THEN THE SYSTEM GRADED CONTRIBUTION  RATE  FOR
THE GIVEN FISCAL YEAR SHALL EQUAL THE SYSTEM ACTUARIAL CONTRIBUTION RATE
FOR SUCH FISCAL YEAR.
  (3)  THE  COMPTROLLER  SHALL  DETERMINE A GRADED CONTRIBUTION RATE FOR
INDIVIDUAL EMPLOYERS AS PROVIDED IN THIS PARAGRAPH.
  (I) IF THE ACTUARIAL CONTRIBUTION RATE FOR AN  EMPLOYER  FOR  A  GIVEN
FISCAL  YEAR  IS  EQUAL  TO  OR GREATER THAN FIFTY PERCENT OF THE SYSTEM
ACTUARIAL CONTRIBUTION RATE FOR SUCH YEAR, AND LESS  THAN  OR  EQUAL  TO
SEVENTY-FIVE  PERCENT  OF  SUCH SYSTEM ACTUARIAL CONTRIBUTION RATE, THEN
THE GRADED CONTRIBUTION RATE FOR THE EMPLOYER FOR THE FISCAL YEAR  SHALL
EQUAL  SEVENTY-FIVE  PERCENT  OF THE SYSTEM GRADED CONTRIBUTION FOR SUCH
YEAR.
  (II) IF THE ACTUARIAL CONTRIBUTION RATE FOR AN EMPLOYER  FOR  A  GIVEN
FISCAL  YEAR IS LESS THAN FIFTY PERCENT OF THE SYSTEM ACTUARIAL CONTRIB-
UTION RATE FOR SUCH YEAR, THEN THE  GRADED  CONTRIBUTION  RATE  FOR  THE

S. 5826--A                          9

EMPLOYER  FOR  THE  FISCAL  YEAR SHALL EQUAL FIFTY PERCENT OF THE SYSTEM
GRADED CONTRIBUTION RATE FOR SUCH YEAR.
  D. (1) FOR ANY GIVEN FISCAL YEAR FOR WHICH AN EMPLOYER'S AVERAGE ACTU-
ARIAL  CONTRIBUTION  RATE  EXCEEDS  THE  GRADED  CONTRIBUTION  RATE, THE
EMPLOYER SHALL PAY TO THE RETIREMENT  SYSTEM  AN  AMOUNT  EQUAL  TO  THE
EMPLOYER'S  ANNUAL  BILL  FOR SUCH YEAR OR, IN LIEU OF PAYING THE ENTIRE
ANNUAL BILL, THE EMPLOYER MAY PAY AN  AMOUNT  EQUAL  TO  THE  EMPLOYER'S
ANNUAL  BILL LESS ALL OR A PORTION OF THE EMPLOYER'S AMOUNT ELIGIBLE FOR
AMORTIZATION FOR THE FISCAL YEAR. IF IN ACCORDANCE WITH  THIS  PARAGRAPH
THE  EMPLOYER'S PAYMENT TO THE RETIREMENT SYSTEM IS LESS THAN THE ENTIRE
AMOUNT OF THE EMPLOYER'S ANNUAL BILL, THEN THE  DIFFERENCE  BETWEEN  THE
EMPLOYER'S  ANNUAL BILL, AND THE AMOUNT ACTUALLY PAID BY THE EMPLOYER TO
THE RETIREMENT SYSTEM EXCLUSIVE OF ANY AMOUNT FROM THE EMPLOYER CONTRIB-
UTION RESERVE FUND APPLIED TO REDUCE THE EMPLOYER'S  PAYMENT,  SHALL  BE
THE  AMOUNT  AMORTIZED FOR THE FISCAL YEAR. THE AMOUNT AMORTIZED FOR THE
FISCAL YEAR SHALL BE PAID TO  THE  RETIREMENT  SYSTEM  IN  EQUAL  ANNUAL
INSTALLMENTS OVER A TEN-YEAR PERIOD, WITH INTEREST ON THE UNPAID BALANCE
AT A RATE DETERMINED BY THE COMPTROLLER WHICH APPROXIMATES A MARKET RATE
OF  RETURN ON TAXABLE FIXED RATE SECURITIES WITH SIMILAR TERMS ISSUED BY
COMPARABLE ISSUERS, AND WITH THE FIRST INSTALLMENT DUE IN THE IMMEDIATE-
LY SUCCEEDING FISCAL YEAR.
  (2) FOR ANY GIVEN FISCAL YEAR FOR WHICH THE SYSTEM GRADED CONTRIBUTION
RATE EQUALS  OR  EXCEEDS  AN  AMORTIZING  EMPLOYER'S  AVERAGE  ACTUARIAL
CONTRIBUTION  RATE,  THE AMORTIZING EMPLOYER SHALL PAY TO THE RETIREMENT
SYSTEM AN AMOUNT EQUAL TO THE EMPLOYER'S ANNUAL BILL FOR SUCH YEAR  PLUS
THE EMPLOYER'S GRADED PAYMENT FOR THE FISCAL YEAR.
  (I)  IF THE AMORTIZING EMPLOYER'S ANNUAL BILL FOR THE FISCAL YEAR DOES
NOT INCLUDE AN AMOUNT ATTRIBUTABLE TO A  PRIOR  AMORTIZATION,  THEN  THE
EMPLOYER'S  GRADED  PAYMENT SHALL BE PAID INTO THE EMPLOYER CONTRIBUTION
RESERVE FUND PROVIDED FOR IN SUBDIVISION E OF THIS SECTION AND  CREDITED
TO AN ACCOUNT WITHIN SUCH FUND ESTABLISHED FOR THE EMPLOYER.
  (II)  IF  THE  AMORTIZING  EMPLOYER'S  ANNUAL BILL FOR THE FISCAL YEAR
INCLUDES AN AMOUNT ATTRIBUTABLE TO A PRIOR AMORTIZATION, THE  EMPLOYER'S
GRADED  PAYMENT  SHALL  BE  USED  FIRST  TO  ELIMINATE THE AMOUNT OF THE
EMPLOYER'S UNPAID PRIOR AMORTIZATION  BALANCES  IN  CHRONOLOGICAL  ORDER
STARTING  WITH  OLDEST  PRIOR AMORTIZATION BALANCE.   WHEN IN ANY FISCAL
YEAR THE EMPLOYER'S GRADED PAYMENT ELIMINATES ALL BALANCES OWED  ON  THE
EMPLOYER'S  PRIOR AMORTIZATIONS, ANY REMAINING PORTION OF THE EMPLOYER'S
GRADED PAYMENT FOR SUCH FISCAL YEAR, AND THE EMPLOYER'S  GRADED  PAYMENT
IN  ANY  SUBSEQUENT  FISCAL YEAR IN WHICH THE AMORTIZING EMPLOYER HAS NO
UNPAID PRIOR AMORTIZATIONS, SHALL BE PAID INTO THE EMPLOYER CONTRIBUTION
RESERVE FUND PROVIDED FOR IN SUBDIVISION E OF THIS SECTION AND  CREDITED
TO AN ACCOUNT WITHIN SUCH FUND ESTABLISHED FOR THE EMPLOYER.
  (3)  NOTHING  IN THIS SUBDIVISION SHALL BE CONSTRUED AS PROHIBITING AN
EMPLOYER FROM PRE-PAYING ANY PRIOR AMORTIZATION.
  E. (1) NOTWITHSTANDING ANY LAW TO THE CONTRARY, THERE SHALL  BE  MAIN-
TAINED  SEPARATE AND APART FROM THE OTHER FUNDS OF THE RETIREMENT SYSTEM
AN EMPLOYER CONTRIBUTION RESERVE FUND, THE ASSETS OF WHICH SHALL NOT  BE
USED OR INVESTED IN A MANNER CONTRARY TO THE PROVISIONS OF THIS SUBDIVI-
SION.  THE  FUND SHALL CONSIST OF ALL EMPLOYER CONTRIBUTIONS REQUIRED TO
BE DEPOSITED INTO THE FUND PURSUANT TO SUBDIVISION D  OF  THIS  SECTION.
WITHIN  SUCH  FUND  THERE  SHALL BE A SEPARATE ACCOUNT FOR EACH EMPLOYER
MAKING SUCH CONTRIBUTIONS AND PAYMENTS.
  (2) FOR ANY GIVEN FISCAL YEAR  FOR  WHICH  (I)  THE  SYSTEM  ACTUARIAL
CONTRIBUTION RATE EXCEEDS SEVENTEEN AND ONE-HALF PERCENT OF PAYROLL, AND
(II) FOR WHICH AN EMPLOYER'S AVERAGE ACTUARIAL CONTRIBUTION RATE EXCEEDS

S. 5826--A                         10

THE  GRADED  CONTRIBUTION  RATE,  THE  BALANCE IN THE EMPLOYER'S ACCOUNT
WITHIN SUCH FUND SHALL BE APPLIED TO REDUCE THE  EMPLOYER'S  PAYMENT  TO
THE  RETIREMENT  SYSTEM  FOR SUCH FISCAL YEAR IN AN AMOUNT NOT TO EXCEED
THE  DIFFERENCE  BETWEEN  THE  EMPLOYER'S ACTUARIAL CONTRIBUTION AND THE
EMPLOYER'S GRADED CONTRIBUTION FOR THE FISCAL YEAR.
  (3) NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH TWO OF  THIS  SUBDIVI-
SION, IF AT THE CLOSE OF ANY GIVEN FISCAL YEAR THE BALANCE OF AN EMPLOY-
ER'S  ACCOUNT WITHIN THE FUND EXCEEDS ONE HUNDRED PERCENT OF THE EMPLOY-
ER'S PAYROLL FOR SUCH FISCAL YEAR, THE EXCESS SHALL BE APPLIED TO REDUCE
THE EMPLOYER'S PAYMENT TO THE RETIREMENT SYSTEM FOR THE NEXT  SUCCEEDING
FISCAL YEAR.
  (4)  THE  ASSETS  OF  THE FUND SHALL BE INVESTED IN ONLY THE FOLLOWING
TYPES OF INVESTMENTS:
  (I) OBLIGATIONS OF THE UNITED STATES  OF  AMERICA  OR  IN  OBLIGATIONS
GUARANTEED BY AGENCIES OF THE UNITED STATES OF AMERICA WHERE THE PAYMENT
OF PRINCIPAL AND INTEREST ARE GUARANTEED BY THE UNITED STATES OF AMERICA
OR IN OBLIGATIONS OF THE STATE OF NEW YORK;
  (II)  GENERAL  OBLIGATION BONDS AND NOTES OF ANY STATE OTHER THAN THIS
STATE, PROVIDED THAT SUCH BONDS AND NOTES RECEIVE THE HIGHEST RATING  OF
AT LEAST ONE INDEPENDENT RATING AGENCY;
  (III)  OBLIGATIONS OF, OR INSTRUMENTS ISSUED BY OR FULLY GUARANTEED AS
TO PRINCIPAL AND INTEREST BY,  ANY  AGENCY  OR  INSTRUMENTALITY  OF  THE
UNITED  STATES ACTING PURSUANT TO A GRANT OF AUTHORITY FROM THE CONGRESS
OF THE UNITED STATES, INCLUDING, BUT NOT LIMITED TO,  ANY  FEDERAL  HOME
LOAN BANK OR BANKS, THE TENNESSEE VALLEY AUTHORITY, THE FEDERAL NATIONAL
MORTGAGE ASSOCIATION, THE FEDERAL HOME LOAN MORTGAGE CORPORATION AND THE
UNITED STATES POSTAL SERVICE;
  (IV)  CERTIFICATE  OF DEPOSITS THAT ARE FULLY SECURED BY THE ISSUER BY
DEPOSITING WITH THE COMPTROLLER DIRECT OR INDIRECT  OBLIGATIONS  OF  THE
UNITED STATES OR ITS AGENCIES OR A LETTER OF CREDIT ISSUED BY THE FEDER-
AL HOME LOAN BANK; AND
  (V)  OBLIGATIONS  OF  ANY  CORPORATION ORGANIZED UNDER THE LAWS OF ANY
STATE IN THE UNITED STATES MATURING  WITHIN  TWO  HUNDRED  SEVENTY  DAYS
PROVIDED  THAT  SUCH OBLIGATIONS RECEIVE THE HIGHEST RATING OF TWO INDE-
PENDENT RATING SERVICES DESIGNATED BY THE COMPTROLLER.
  (5) AT THE CLOSE OF EACH FISCAL YEAR, THE AMOUNT OF INTEREST AND EARN-
INGS ATTRIBUTABLE TO EACH EMPLOYER'S ACCOUNT SHALL BE  COMPUTED  BY  THE
ACTUARY  AND  CERTIFIED  TO  THE COMPTROLLER, WHO SHALL THEREUPON CREDIT
EACH EMPLOYER'S ACCOUNT IN ACCORDANCE THEREWITH.
  (6) THE ASSETS OF THE FUND SHALL BE EXCLUDED FROM THE ANNUAL VALUATION
OF THE ASSETS AND LIABILITIES OF THE  FUNDS  OF  THE  RETIREMENT  SYSTEM
REQUIRED  BY  SECTION  THREE HUNDRED ELEVEN OF THIS TITLE. THE ASSETS OF
THE FUND SHALL NOT FINANCE INCREASES IN PENSION BENEFITS.
  S 4. The opening paragraph and paragraph 1 of subdivision b of section
323 of the retirement and social security law, as amended by chapter 210
of the laws of 1990 and clause (ii) of subparagraph (a) of  paragraph  1
as  amended  by  chapter 947 of the laws of 1990, are amended to read as
follows:
  Each employer shall make  [two]  THREE  contributions  annually.  They
shall  be  known  as the normal contribution [as defined in subparagraph
(a) of paragraph one of this subdivision and], the  deficiency  contrib-
ution  [as defined in paragraph two of this subdivision], AND THE ADMIN-
ISTRATION CONTRIBUTION. The rates thereof shall be computed by the actu-
ary.
  1. [(a)] Normal contribution. The rate of such contribution  shall  be
applied  to the members' annual compensation as of the end of the fiscal

S. 5826--A                         11

year. Such rate shall be a uniform and constant rate per centum of annu-
al compensation [when determined by dividing the valuation costs by  the
payroll  amount  used in the valuation. Notwithstanding any provision of
law to the contrary, the valuation costs consist of:
  (i) the normal cost, which shall be the actuarial present value of the
employer  provided  benefits  accrued  during  the  year, based upon the
projected future salary on which benefits are expected to  be  paid,  by
prorating  each employee's projected benefit over his or her total years
of service;
  (ii) the supplemental cost, which  shall  be  the  cost  of  providing
supplemental  retirement allowance payments pursuant to subdivision e of
section three hundred seventy-eight of this article;
  (iii) the administrative cost, which shall  be  the  expenses  of  the
retirement  system  pursuant to paragraph three of subdivision b of this
section;
  (iv) the prior service cost, which shall be equal to the  interest  on
the  unfunded  actuarial  accrued liability or surplus plus a portion of
the unfunded liability or surplus, said  portion  to  be  equal  to  the
unfunded  liability  or  surplus  divided by the average future years of
service of active employees; and
  (v) the annual amortization cost, which shall be equal to  the  amount
of the annual amortization payment required to be paid into the system's
pension  accumulation  fund  under  section  three hundred sixteen-a and
three hundred seventeen-a of this article.
  Provided, however, in no event shall the amount of  contribution  cost
be less than zero.
  (b)  The comptroller is authorized to make appropriate adjustments for
those participating employers that have paid an amount in excess of  the
minimum  annual  amortization  payment required by section three hundred
seventeen-a of this article. The excess payment  shall  accumulate  with
interest  earned  at the rate used in the annual actuarial valuation and
be applied against future pension contribution  requirements  to  insure
equitable treatment of all participating employers.
  (c)  In  any  year in which no contribution is required to the pension
accumulation fund, any adjustment reducing a prior  year's  contribution
resulting  from the enactment of section three hundred sixteen-b of this
chapter, shall be credited with interest earned at the rate used in  the
annual  actuarial  valuation and applied against future pension contrib-
utions].  WHEN APPLIED TO THE COMPENSATION OF THE  AVERAGE  NEW  ENTRANT
DURING THE REMAINING PERIOD OF HIS OR HER MEMBERSHIP, SUCH RATE SHALL BE
COMPUTED  TO BE SUFFICIENT TO PROVIDE ALL THE BENEFITS, OTHER THAN THOSE
ON ACCOUNT OF PRIOR SERVICE, GRANTED BY THIS ARTICLE AND WHICH ARE PAYA-
BLE FROM FUNDS CONTRIBUTED TO THE PENSION ACCUMULATION FUND.
  Such rate shall be computed each year by means of an  actuarial  valu-
ation  as  prescribed  in section three hundred eleven of this [chapter]
ARTICLE AND AS AUTHORIZED BY SECTION  THREE  HUNDRED  TWENTY-THREE-A  OF
THIS TITLE.
  S 5. This act shall take effect immediately.
  FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
  This  bill  would  amend  the Retirement and Social Security Law as it
pertains to employer bills of the New York  State  and  Local  Employees
Retirement System (ERS) and the New York State and Local Police and Fire
Retirement System (PFRS).
  This  bill puts in place a program that allows ERS and PFRS employers,
if they choose to participate, to amortize a portion of their bill  with
their  respective  Retirement  System  when employer contributions rates

S. 5826--A                         12

rise above certain levels. If they do this, then when rates are  falling
below  certain  levels  and  they  have paid off all outstanding amorti-
zations, the employer will be required to pay additional monies  into  a
reserve fund that will be used when employer contribution rates begin to
rise in the future.
  If  this  bill  is  enacted,  we  estimate that there would be a small
administrative cost to the System to revise the  current  billing  proc-
esses.
  This  estimate,  dated  February  2,  2010,  and intended for use only
during the 2010  Legislative  Session,  is  Fiscal  Note  No.  2010-104,
prepared  by  the  Actuary  for  the New York State and Local Employees'
Retirement System and the New York  State  and  Local  Police  and  Fire
Retirement System.