S T A T E O F N E W Y O R K
________________________________________________________________________
8603
I N A S S E M B L Y
January 27, 2014
___________
Introduced by M. of A. FITZPATRICK -- read once and referred to the
Committee on Governmental Employees
AN ACT to amend the civil service law, in relation to improper employer
practices relating to the continuation of pay, vacation and health
care benefits; to amend the education law, in relation to employer
contributions to certain retirement plans; to amend the civil service
law, in relation to disputed agreements; and to amend the retirement
and social security law, in relation to establishing a defined
contribution plan and in relation to certain binding arbitration
awards
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph (e) of subdivision 1 of section 209-a of the
civil service law, as amended by chapter 244 of the laws of 2007, is
amended to read as follows:
(e) to refuse to continue [all the] terms of an expired agreement THAT
RELATE TO LEAVES OF ABSENCE, ACTIVE EMPLOYEES HEALTH INSURANCE, HOLI-
DAYS, SALARIES EXCLUDING STEP INCREASES, AND ALL OTHER MANDATORY
SUBJECTS OF A BARGAINING AGREEMENT AS DEFINED BY THE PUBLIC EMPLOYMENT
RELATIONS BOARD CASE LAW PRIOR TO ITS CONVERSION DOCTRINE until a new
agreement is negotiated, unless the employee organization which is a
party to such agreement has, during such negotiations or prior to such
resolution of such negotiations, engaged in conduct violative of subdi-
vision one of section two hundred ten of this article;
S 2. Subdivision 1-a of section 392 of the education law, as added by
chapter 18 of the laws of 2012, is amended to read as follows:
1-a. Employer contributions. (A) In the case of any electing employee
excluded from or not encompassed within a negotiating unit within the
meaning of article fourteen of the civil service law initially hired on
or after July first, two thousand thirteen, the state and the electing
employer shall, during the continuance of his or her employment, make
contributions at the rate of eight per centum of his or her salary.
(B) IN THE CASE OF ANY ELECTING EMPLOYEE INITIALLY HIRED ON OR AFTER
JANUARY FIRST, TWO THOUSAND FIFTEEN, THE STATE AND THE ELECTING EMPLOYER
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD13290-06-4
A. 8603 2
SHALL, DURING THE CONTINUANCE OF HIS OR HER EMPLOYMENT, MAKE CONTRIB-
UTIONS AT THE RATE OF EIGHT PER CENTUM OF HIS OR HER SALARY.
S 3. Subdivision 3-a of section 390 of the education law, as added by
chapter 18 of the laws of 2012, is amended to read as follows:
3-a. (A) Beginning July first, two thousand thirteen, the term "eligi-
ble employees" shall also mean any person excluded from or not encom-
passed within a negotiating unit within the meaning of article fourteen
of the civil service law who would otherwise be entitled to receive a
benefit under the retirement and social security law or the education
law initially hired on or after July first, two thousand thirteen with
estimated annual wages of seventy-five thousand per annum or greater.
Such estimate of annual wages to determine eligibility for the purposes
of this subdivision shall be provided by the employer. For the purposes
of this subdivision, a newly hired state employee whose immediate
preceding employment was with another department, division, or agency of
the state shall not be deemed to be an eligible employee.
(B) BEGINNING JANUARY FIRST, TWO THOUSAND FIFTEEN, THE TERM "ELIGIBLE
EMPLOYEES" SHALL ALSO MEAN ANY PERSON WHO WOULD OTHERWISE BE A MEMBER OF
THE NEW YORK STATE EMPLOYEES' RETIREMENT SYSTEM OR THE NEW YORK STATE
TEACHERS' RETIREMENT SYSTEM INITIALLY HIRED ON OR AFTER JANUARY FIRST,
TWO THOUSAND FIFTEEN OR CURRENT MEMBERS OF THE NEW YORK STATE EMPLOYEES'
RETIREMENT SYSTEM OR THE NEW YORK STATE TEACHERS' RETIREMENT SYSTEM WHO
ARE NOT YET VESTED. FOR THE PURPOSES OF THIS SUBDIVISION, A NEWLY HIRED
STATE EMPLOYEE WHOSE IMMEDIATE PRECEDING EMPLOYMENT WAS WITH ANOTHER
DEPARTMENT, DIVISION, OR AGENCY OF THE STATE SHALL NOT BE DEEMED TO BE
AN ELIGIBLE EMPLOYEE.
S 4. Section 209 of the civil service law is amended by adding a new
subdivision 7 to read as follows:
7. NOTWITHSTANDING ANY OTHER PROVISION OF LAW TO THE CONTRARY, FOR
ANY DISPUTE THAT IS SUBJECT TO THE PROVISIONS OF THIS SECTION, THE
DETERMINATION OF THE PUBLIC ARBITRATION PANEL ON A DISPUTED AGREEMENT
SHALL NOT CONTAIN AN INCREASE IN ALL COMPENSATION ITEMS SUBJECT TO NEGO-
TIATION WHICH IS GREATER THAN TWO PERCENT MORE THAN ALL COMPENSATION
ITEMS SUBJECT TO NEGOTIATION RECEIVED BY THE EMPLOYEE ORGANIZATION IN
THE AGREEMENT BETWEEN THE PUBLIC EMPLOYER AND THE EMPLOYEE ORGANIZATION
IMMEDIATELY PRECEDING THE AGREEMENT BEING ARBITRATED.
S 5. The retirement and social security law is amended by adding a new
section 618 to read as follows:
S 618. DEFINED CONTRIBUTION PLAN. 1. THE DEFINED CONTRIBUTION PLAN IS
HEREBY ESTABLISHED. THE COMPTROLLER SHALL ADOPT RULES AND REGULATIONS
REGARDING THE STANDARDS AND REQUIREMENTS OF THE DEFINED CONTRIBUTION
PLAN ESTABLISHED PURSUANT TO THIS SECTION, INCLUDING SELECTION OF FINAN-
CIAL ORGANIZATIONS FOR INVESTMENT PURPOSES.
2. A. NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE DEFINED
CONTRIBUTION PLAN SHALL BE ESTABLISHED FOR ALL NON-CIVIL SERVICE
APPOINTED EMPLOYEES AND ELECTED OFFICIALS EMPLOYED BY THE STATE OF NEW
YORK OR ANY PUBLIC EMPLOYER WHICH HAS ELECTED TO PARTICIPATE IN THE NEW
YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM.
B. THE COMPTROLLER SHALL ENTER INTO WRITTEN AGREEMENTS WITH ONE OR
MORE FINANCIAL ORGANIZATIONS TO ADMINISTER THE DEFINED CONTRIBUTION PLAN
FOR MEMBERS AND TO INVEST FUNDS HELD PURSUANT TO SUCH PLAN.
C. THE RULES AND REGULATIONS PROMULGATED BY THE COMPTROLLER SHALL
ESTABLISH STANDARDS FOR THE SELECTION OF FINANCIAL ORGANIZATIONS,
AUTHORIZED TO DO BUSINESS IN THIS STATE, TO PARTICIPATE IN SUCH PLANS,
INCLUDING, BUT NOT LIMITED TO, THE FOLLOWING CRITERIA: (I) RATES OF
COMMISSION, BROKERAGE AND OTHER FEES, ADMINISTRATIVE EXPENSES AND
A. 8603 3
RELATED SERVICE CHARGES IMPOSED BY THE FINANCIAL ORGANIZATION; (II)
VARIETY OF TYPES OF INVESTMENT OPPORTUNITIES OFFERED BY THE FINANCIAL
ORGANIZATION AND/OR AMONG THE FINANCIAL ORGANIZATIONS SELECTED AND THE
ABILITY TO TRANSFER AMONG SUCH OPPORTUNITIES; (III) THE STABILITY OF THE
FINANCIAL ORGANIZATION AS EVIDENCED BY EXPERIENCE, REPUTATION, ASSETS
AND HOLDINGS, ABILITY TO GUARANTEE SPECIFIC RATES OF RETURN; (IV) ABILI-
TY TO COMPLY WITH REPORTING REQUIREMENTS TO THE COMPTROLLER AND TO
PARTICIPANTS IN SUCH A PLAN; AND (V) SUCH OTHER FACTORS WHICH WOULD BE
CONSIDERED BY A PRUDENT INVESTOR IN SUCH A PLAN.
D. THE PRESIDENT OF THE STATE CIVIL SERVICE COMMISSION, SUBJECT TO THE
RULES AND REGULATIONS OF THE COMPTROLLER, SHALL PROVIDE ASSISTANCE TO
ANY PUBLIC EMPLOYER AS IS APPROPRIATE TO THE PROVISIONS OF THIS SECTION.
3. A PUBLIC EMPLOYER SHALL CONTRIBUTE THREE PERCENT OF SUCH AFFECTED
EMPLOYEE'S ANNUAL SALARY TOWARDS SUCH DEFINED CONTRIBUTION PLAN. ALL
NON-CIVIL SERVICE APPOINTED EMPLOYEES AND ELECTED OFFICIALS ARE REQUIRED
TO CONTRIBUTE THREE PERCENT OF THEIR SALARY TOWARDS THE DEFINED CONTRIB-
UTION PLAN. SUCH EMPLOYEES MAY CONTRIBUTE UP TO ONE HUNDRED PERCENT,
NOT TO EXCEED SIXTEEN THOUSAND FIVE HUNDRED DOLLARS OF HIS OR HER SALARY
TOWARDS THE DEFINED CONTRIBUTION PLAN.
4. THE TERM "FINANCIAL ORGANIZATION" SHALL MEAN AN ORGANIZATION
AUTHORIZED TO DO BUSINESS IN THE STATE OF NEW YORK AND (A) WHICH IS AN
AUTHORIZED FIDUCIARY TO ACT AS A TRUSTEE PURSUANT TO THE PROVISIONS OF
AN ACT OF CONGRESS ENTITLED "EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974" AS SUCH PROVISIONS MAY BE AMENDED FROM TIME TO TIME, OR AN INSUR-
ANCE COMPANY; AND (B) (I) IS LICENSED OR CHARTERED BY THE DEPARTMENT OF
FINANCIAL SERVICES; (II) IS CHARTERED BY AN AGENCY OF THE FEDERAL
GOVERNMENT; (III) IS SUBJECT TO THE JURISDICTION AND REGULATION OF THE
SECURITIES AND EXCHANGE COMMISSION OF THE FEDERAL GOVERNMENT; OR (IV) IS
ANY OTHER ENTITY OTHERWISE AUTHORIZED TO ACT IN THIS STATE AS A TRUSTEE
PURSUANT TO THE PROVISIONS OF AN ACT OF CONGRESS ENTITLED "EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974" AS SUCH PROVISIONS MAY BE
AMENDED FROM TIME TO TIME.
5. THE CURRENT RETIREMENT PLANS FOR NON-CIVIL SERVICE APPOINTED
EMPLOYEES AND ELECTED OFFICIALS SHALL BE FROZEN AS OF THE EFFECTIVE DATE
OF THIS SECTION. NON-CIVIL SERVICE APPOINTED EMPLOYEES AND ELECTED OFFI-
CIALS SHALL NO LONGER CONTRIBUTE TO THEIR CURRENT RETIREMENT PLAN,
HOWEVER, SUCH PERSONS SHALL RECEIVE THE BENEFITS THEY HAVE ACCRUED UP TO
THE EFFECTIVE DATE OF THIS SECTION UPON RETIREMENT. THE MEMBERSHIP OF A
NON-CIVIL SERVICE APPOINTED EMPLOYEE OR ELECTED OFFICIAL IN ANY STATE
RETIREMENT SYSTEM SHALL REMAIN OPEN IF HE OR SHE BECOMES A MEMBER OF THE
DEFINED CONTRIBUTION PLAN.
S 6. This act shall take effect immediately; provided, however, that
section five of this act shall take effect on the first of the fiscal
year next succeeding the date on which it shall have become a law.
Effective immediately, the addition, amendment and/or repeal of any rule
or regulation necessary for the implementation of this act on its effec-
tive date are authorized and directed to be made and completed on or
before such effective date.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would:
1) amend section 209-a of the civil service law (Triborough act) to no
longer continue the terms of certain expired agreements.
2) amend the Education law to allow future employees who would have
become members of either the New York State and Local Employees' Retire-
ment System (NYS&LERS) or the New York State Teachers Retirement System
(NYSTRS) to join the SUNY optional retirement system. In addition
A. 8603 4
current members of either the NYS&LERS or the NYSTRS who are not yet
vested will have the option of joining the SUNY optional retirement
system. Pursuant to Chapter 18 of the Law 2012, participation currently
is optional in a defined contribution plan for non-union employees hired
on or after July 1, 2013 whose salary is $75,000 or higher.
3) limit binding arbitration awards to a maximum of 2% for all compen-
sation items subject to negotiation.
4) require the retirement plan coverage for certain existing and
future elected officials and non-civil service appointees who are
employed by the State of New York or any public employer which partic-
ipates in the NYS&LERS to become covered by a deferred contribution
plan. Affected employees and their employers would be required to
contribute 3% of annual compensation to such plan. The Comptroller shall
select one or more financial organizations to administer the plan and to
invest the funds held pursuant to such plan.
This legislation would freeze the benefit accruals of certain existing
and future elected officials and non-civil service appointees who are
members in the NYS&LERS as of the effective date. If this becomes law,
this bill is likely to face a constitutional challenge based upon the
guarantee that a member's benefits may not be diminished.
The state and participating employers will incur costs to modify their
payroll systems and procedures in order to collect employee contrib-
utions and remit them along with mandatory employer contributions short-
ly after each payroll. Remittance of employer contributions on a payroll
schedule, rather than annually under the defined benefit plan, will
affect employers' cash management. Further, the bill contains no appro-
priation to support the additional payroll administrative expense to the
Office of the State Comptroller or the implementation and ongoing
expenses of NYSLRS related to the new plan.
In addition, employees will incur management and investment expenses
for their defined contribution accounts estimated to average 0.5% of the
account balance annually.
Summary of relevant resources:
The membership data used in measuring the impact of the proposed
change was the same as that used in the March 31, 2013 actuarial valu-
ation. Distributions and other statistics can be found in the 2013
Report of the Actuary and the 2013 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2010,
2011, 2012 and 2013 Annual Report to the Comptroller on Actuarial
Assumptions, and the Codes Rules and Regulations of the State of New
York: Audit and Control.
The Market Assets and GASB Disclosures are found in the March 31, 2013
New York State and Local Retirement System Financial Statements and
Supplementary Information.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This estimate, dated January 27, 2014, and intended for used only
during the 2014 Legislative Session, if Fiscal Note No. 2014-67 prepared
by the Actuary for the New York State and Local Employees' Retirement
System.