Senate Bill S4563A

2017-2018 Legislative Session

Relates to allowing certain school districts and BOCES to establish a retirement contribution reserve fund for the purposes of the NYS teachers' retirement system

download bill text pdf

Archive: Last Bill Status - In Senate Committee Civil Service And Pensions Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

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Date of Action	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 23, 2018	print number 4563a
Jan 23, 2018	amend and recommit to civil service and pensions
Jan 03, 2018	referred to civil service and pensions
Jun 21, 2017	committed to rules
May 10, 2017	advanced to third reading
May 09, 2017	2nd report cal.
May 08, 2017	1st report cal.768
Feb 17, 2017	referred to civil service and pensions

Votes

- May 8, 2017 - Civil Service And Pensions Committee Vote
  S4563A
  
  Aye
  
  10
  
  Nay
  
  0
  
  Aye with Reservations
  
  1
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  
  0
  - - Civil Service And Pensions Committee Vote: May 8, 2017
      
      aye (10)
      
      Addabbo Jr.
      
      Croci
      
      Golden
      
      Lanza
      
      Ortt
      
      Persaud
      
      Phillips
      
      Ritchie
      
      Savino
      
      Serrano
      
      aye wr (1)
      
      Sanders Jr.

Bill Amendments

Original

A (Active)

co-Sponsors

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2017-S4563 - Details

See Assembly Version of this Bill:: A7353
Current Committee:: Senate Civil Service And Pensions
Law Section:: General Municipal Law
Laws Affected:: Amd §6-r, Gen Muni L
Versions Introduced in 2019-2020 Legislative Session:: A5759

2017-S4563 - Summary

Relates to allowing certain school districts and BOCES to establish a retirement contribution reserve fund for the purposes of the NYS teachers' retirement system.

2017-S4563 - Sponsor Memo

                                 BILL NUMBER:  S4563

 TITLE OF BILL :

An act to amend the general municipal law, in relation to allowing
certain school districts and boards of cooperative educational
services to establish a retirement contribution reserve fund for the
purposes of the New York state teachers' retirement system

 PURPOSE :

This bill provides eligible participating employers of the New York
State Teachers' Retirement System ("NYSTRS") the option to establish a
retirement contribution reserve sub-fund with respect to contributions
for NYSTRS.

 SUMMARY OF PROVISIONS :

Section one amends the definitions for the terms "participating
employer" and "retirement contribution" provided by General Municipal
Law section 6-r(1).

Section two amends General Municipal Law section 6-r(2).

Section three adds a new subdivision 2-a to General Municipal Law
section 6-r.

Section four amends General Municipal Law section 6-r(5).

Section five adds a new subdivision 11 to General Municipal Law
section 6-r.

Section six provides that this act shall take effect immediately.

 EXISTING LAW :

General Municipal Law section 6-r authorizes and regulates retirement
contribution reserve funds.

 JUSTIFICATION :

The importance of local school districts and NYSTRS employers to fully
fund their actuarially required contributions to the System is
critical to the long term viability of the Retirement System.
Beginning in 2004, downturns in the capital markets caused required
employer contributions to the public employee retirement systems in
the state, which had been at historically low levels, to increase,
sometimes quite markedly. The New York Legislature responded in
several ways, one of which was to allow employers to prepare for
future contribution increases by establishing a retirement
contribution reserve fund, but only with respect to contributions for
the New York State and Local Employees' Retirement System ("ERS") and
the New York State and Local Police and Fire Retirement System
("PFRS").

The current law provides for the establishment of reserve funds for
various restricted purpose accounts. Most relevant, there are eleven
reserve funds currently authorized which may be established as a
financing tool for school districts. Notwithstanding the fact that
teachers comprise an overwhelming majority of school district payrolls
and school district employers of New York state are authorized to
establish retirement contribution reserve funds for contributions to
ERS, there currently exists no legal mechanism to set aside reserve
funds to address the employer contribution rate for NYSTRS.


This bill proposes to amend various provisions of the existing
Retirement Contribution Reserve Funds statute, Section 6-r of the
General Municipal Law, to allow eligible NYSTRS participating
employers to establish a retirement contribution reserve sub-fund.
The governing board of the participating employer may establish a
contribution reserve sub-fund by resolution for the purposes of (a)
financing retirement contributions to NYSTRS and/or (b) offsetting all
or a portion of the amount deducted from the moneys apportioned to the
participating employer from state aid. Once the retirement
contribution reserve sub-fund is established, the participating
employer may elect to reserve during any fiscal year an amount not to
exceed two per centum of the total compensation or salaries of NYSTRS
member payroll (teachers paid during the immediately preceding fiscal
year). In addition, the retirement contribution reserve sub-fund is
limited to a total balance not to exceed ten per centum of the total
compensation or salaries of all teachers employed by the participating
employer who are members of NYSTRS and paid during the immediately
preceding fiscal year.

This bill further proposes to allow the transfer of all or a portion
of the monies (a) in the separately administered sub-fund to the
retirement contribution reserve fund, or (b) from the retirement
contribution reserve fund to the separately administered sub-fund. To
ensure the contribution reserve sub-fund monies are monitored and
regulated and create transparency of any transfers to and/or from the
contribution reserve sub-fund, a resolution is required to initiate
the transfer and the transfer amounts must remain within the annual
and overall fund caps required by the statutory provisions.

Other existing provisions of General Municipal Law Section 6-r not
amended by the proposed legislation remain unchanged and will continue
to require the Board of education or Trustees of the municipal
corporation to regulate and monitor the use of such reserve funds and
expenditures as would be authorized by resolution. The publication
requirements and public notice provisions will be required for any
transfer of such reserve funds. Additionally, the money in such
reserves would be classified as a restricted fund balance on financial
statement balance sheets. These requirements are all consistent with
existing practices specified under the provisions of General Municipal
Law Section 6-r.

In the past, school districts have benefited from the ability to
create reserve funds for other purposes to budget and manage finances
during the most difficult economic times. The reserves promote the
ability to prudently save and protect school districts from future
economic downturns and to offset financial burdens during those
periods of economic shortfalls. Allowing school districts to establish
a contribution reserve subfund for NYSTRS promotes financial strength
for future financial budgetary planning at times when educational
program revenue is not as high as anticipated and/or when financial
shortfalls are experienced. This additional fiscal planning tool
allows school districts to sustain themselves, avoid staff reductions
and maintain consistency in educational programs.  The authority to
establish a retirement contribution reserve sub-fund provides a
financing appropriation mechanism currently not permissible for NYSTRS
participating employers.

With the annual and aggregate caps in place, eligible participating
employers are provided with limits for the amount of money allowed to
be set aside in the retirement contribution reserve sub-fund for
future use, as well as the ability to spend down the monies in order
to remain within the reserve limit. The intent of these limitations is
to eliminate the possibility of the reserve sub-fund being overfunded
and, in general, increase transparency. Any transfer to and/or from
the reserve sub-fund must be approved by resolution permitting all
parties, the public, governing boards, school district employees and
others, to be informed of the amounts and reasons for said reserves,
thus assisting with transparency.

The enactment of this provision rectifies the discrepancy in the
statutes and provides the remedy to allow eligible public employers to
create a reserve sub-fund for retirement contributions for NYSTRS on a
similar basis as is currently allowed for the aforementioned
retirement systems. If this legislation were enacted, it would not be
a mandate on local governments, but it would provide participating
employers the legal authority to participate in the reserve sub-fund
for NYSTRS contributions.

In an effort to provide NYSTRS participating employers with the tools
for fiscal health and planning, and for the other reasons stated, the
Retirement Board respectfully submits this bill to the Legislature for
their consideration.

 LEGISLATIVE HISTORY :

New bill.

 FISCAL IMPLICATIONS :

See fiscal note at the end of the bill.

 EFFECTIVE DATE :
This act shall take effect immediately.

2017-S4563 - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4563
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             February 17, 2017
                                ___________
 
 Introduced  by  Sens.  GOLDEN, AKSHAR -- read twice and ordered printed,
   and when printed to be committed to the Committee on Civil Service and
   Pensions
 
 AN ACT to amend the general  municipal  law,  in  relation  to  allowing
   certain   school  districts  and  boards  of  cooperative  educational
   services to establish a retirement contribution reserve fund  for  the
   purposes of the New York state teachers' retirement system
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraphs b and c of subdivision 1 of section 6-r  of  the
 general  municipal law, as added by chapter 260 of the laws of 2004, are
 amended to read as follows:
   b. "Participating employer" means: (I)  a  participating  employer  as
 defined  in  subdivision  twenty  of  section  two of the retirement and
 social security law or in subdivision twenty of  section  three  hundred
 two of such law; OR (II) A PARTICIPATING EMPLOYER AS DEFINED IN SUBDIVI-
 SION THREE OF SECTION FIVE HUNDRED ONE OF THE EDUCATION LAW.
   c.  "Retirement  contribution"  shall  mean  all or any portion of the
 amount payable by a municipal corporation to:(I)  either  the  New  York
 state  and  local employees' retirement system or the New York state and
 local police and fire retirement system pursuant to section seventeen or
 three hundred seventeen of the retirement and social  security  law;  OR
 (II)  THE NEW YORK STATE TEACHERS' RETIREMENT SYSTEM PURSUANT TO SECTION
 FIVE HUNDRED TWENTY-ONE OF THE EDUCATION LAW.
   § 2. Subdivision 2 of section 6-r of the  general  municipal  law,  as
 added by chapter 260 of the laws of 2004, is amended to read as follows:
   2.  The  governing  board of any municipal corporation which is also a
 participating employer by resolution may establish a retirement contrib-
 ution reserve fund for the purpose of (A) financing retirement  contrib-
 utions,  AND/OR  (B)  IN  THE CASE OF A MUNICIPAL CORPORATION WHICH IS A
 PARTICIPATING EMPLOYER AS DEFINED IN SUBDIVISION THREE OF  SECTION  FIVE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD09918-01-7

 S. 4563                             2
 
 HUNDRED ONE OF THE EDUCATION LAW, FINANCING APPROPRIATIONS AUTHORIZED BY
 LAW  IN ORDER TO OFFSET ALL OR A PORTION OF THE AMOUNT DEDUCTED FROM THE
 MONEYS APPORTIONED TO THE MUNICIPAL CORPORATION FROM THE STATE  FOR  THE
 SUPPORT OF COMMON SCHOOLS PURSUANT TO SECTION FIVE HUNDRED TWENTY-ONE OF
 THE EDUCATION LAW.
   §  3.  Section 6-r of the general municipal law is amended by adding a
 new subdivision 2-a to read as follows:
   2-A. WITH RESPECT TO A MUNICIPAL CORPORATION WHICH IS A  PARTICIPATING
 EMPLOYER  AS DEFINED IN SUBDIVISION THREE OF SECTION FIVE HUNDRED ONE OF
 THE EDUCATION LAW, WHICH ELECTS TO  UTILIZE  A  RETIREMENT  CONTRIBUTION
 RESERVE  FUND  (A)  TO  FINANCE RETIREMENT CONTRIBUTIONS TO THE NEW YORK
 STATE TEACHERS' RETIREMENT SYSTEM PURSUANT TO SECTION FIVE HUNDRED TWEN-
 TY-ONE OF THE EDUCATION LAW AND/OR (B) TO OFFSET ALL OR A PORTION OF THE
 AMOUNT DEDUCTED FROM THE MONEYS APPORTIONED TO THE MUNICIPAL CORPORATION
 FROM THE STATE FOR THE SUPPORT OF COMMON  SCHOOLS  PURSUANT  TO  SECTION
 FIVE HUNDRED TWENTY-ONE OF THE EDUCATION LAW, SUCH MUNICIPAL CORPORATION
 SHALL  ESTABLISH  A  SUB-FUND WITHIN THE RETIREMENT CONTRIBUTION RESERVE
 FUND,  WHICH  SHALL  BE  SEPARATELY  ADMINISTERED  CONSISTENT  WITH  THE
 PROVISIONS OF THIS SECTION. SUCH MUNICIPAL CORPORATION MAY PAY INTO SUCH
 SUB-FUND  DURING  ANY PARTICULAR FISCAL YEAR AN AMOUNT NOT TO EXCEED TWO
 PER CENTUM OF THE TOTAL COMPENSATION OR SALARIES OF ALL TEACHERS IN  THE
 EMPLOY  OF  SAID  MUNICIPAL  CORPORATION WHO ARE MEMBERS OF THE NEW YORK
 STATE TEACHERS' RETIREMENT SYSTEM PAID DURING THE IMMEDIATELY  PRECEDING
 FISCAL  YEAR. THE BALANCE OF SUCH SUB-FUND MAY NOT EXCEED TEN PER CENTUM
 OF THE TOTAL COMPENSATION OR SALARIES OF ALL TEACHERS IN THE  EMPLOY  OF
 THE  MUNICIPAL  CORPORATION WHO ARE MEMBERS OF THE NEW YORK STATE TEACH-
 ERS' RETIREMENT SYSTEM PAID  DURING  THE  IMMEDIATELY  PRECEDING  FISCAL
 YEAR.  FOR  THE  PURPOSES  OF THIS SUBDIVISION, THE TERM "TEACHER" SHALL
 HAVE THE SAME MEANING AS SUCH TERM IS DEFINED UNDER SUBDIVISION FOUR  OF
 SECTION FIVE HUNDRED ONE OF THE EDUCATION LAW.
   §  4.  Subdivision  5  of section 6-r of the general municipal law, as
 added by chapter 260 of the laws of 2004, is amended to read as follows:
   5. The governing board of such municipal corporation by resolution may
 authorize expenditures from  a  retirement  contribution  reserve  fund.
 Except as otherwise provided by law, moneys in a retirement contribution
 reserve  fund  may  only  be expended (A) to finance retirement contrib-
 utions, AND/OR (B) IN THE CASE OF A MUNICIPAL  CORPORATION  WHICH  IS  A
 PARTICIPATING  EMPLOYER, AS DEFINED IN SUBDIVISION THREE OF SECTION FIVE
 HUNDRED ONE OF THE EDUCATION LAW, FOR APPROPRIATIONS AUTHORIZED  BY  LAW
 IN  ORDER  TO  OFFSET  ALL  OR A PORTION OF THE AMOUNT DEDUCTED FROM THE
 MONEYS APPORTIONED TO THE PARTICIPATING EMPLOYER FROM THE STATE FOR  THE
 SUPPORT OF COMMON SCHOOLS PURSUANT TO SECTION FIVE HUNDRED TWENTY-ONE OF
 THE  EDUCATION  LAW.  WITH RESPECT TO A MUNICIPAL CORPORATION WHICH IS A
 PARTICIPATING EMPLOYER AS DEFINED IN SUBDIVISION THREE OF  SECTION  FIVE
 HUNDRED  ONE  OF  THE  EDUCATION  LAW,  EXPENDITURES FROM THE RETIREMENT
 CONTRIBUTION RESERVE FUND TO FINANCE RETIREMENT CONTRIBUTIONS TO THE NEW
 YORK STATE TEACHERS' RETIREMENT SYSTEM PURSUANT TO SECTION FIVE  HUNDRED
 TWENTY-ONE OF THE EDUCATION LAW AND/OR TO OFFSET ALL OR A PORTION OF THE
 AMOUNT DEDUCTED FROM THE MONEYS APPORTIONED TO THE MUNICIPAL CORPORATION
 FROM  THE  STATE  FOR  THE SUPPORT OF COMMON SCHOOLS PURSUANT TO SECTION
 FIVE HUNDRED TWENTY-ONE OF THE EDUCATION LAW MAY ONLY BE MADE  FROM  THE
 SUB-FUND ESTABLISHED PURSUANT TO SUBDIVISION TWO-A OF THIS SECTION.
   §  5.  Section 6-r of the general municipal law is amended by adding a
 new subdivision 11 to read as follows:
   11. THE GOVERNING BOARD OF A MUNICIPAL CORPORATION WHICH IS A  PARTIC-
 IPATING EMPLOYER AS DEFINED IN SUBDIVISION THREE OF SECTION FIVE HUNDRED

 S. 4563                             3
 
 ONE OF THE EDUCATION LAW BY RESOLUTION MAY (A) AUTHORIZE THE TRANSFER OF
 ALL  OR  A PORTION OF THE MONIES IN THE SEPARATELY ADMINISTERED SUB-FUND
 AS ESTABLISHED UNDER SUBDIVISION TWO-A OF THIS SECTION TO THE RETIREMENT
 CONTRIBUTION RESERVE FUND, AND/OR (B) AUTHORIZE THE TRANSFER OF ALL OR A
 PORTION OF THE MONIES IN THE RETIREMENT CONTRIBUTION RESERVE FUND TO THE
 SEPARATELY  ADMINISTERED  SUB-FUND  AS  PROVIDED IN SUBDIVISION TWO-A OF
 THIS SECTION, SUBJECT TO THE LIMITS ON ANNUAL PAYMENTS INTO THE SUB-FUND
 AND THE BALANCE OF THE SUB-FUND SPECIFIED BY THE  SUBDIVISION  TWO-A  OF
 THIS SECTION.
   § 6. This act shall take effect immediately.
   FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
   This  bill  would  amend  Section  6-r of the General Municipal Law to
 allow eligible participating employers of the New York  State  Teachers'
 Retirement  System  (NYSTRS)  to establish a reserve sub-fund within the
 retirement contribution reserve fund for the purpose of reserving  money
 to  offset  future required contributions to NYSTRS. An employer may pay
 into such sub-fund during any particular fiscal year an  amount  not  to
 exceed two percent of the total compensation or salaries of all teachers
 employed by the employer who are members of NYSTRS paid during the imme-
 diately  preceding  fiscal  year. Additionally, the total balance in the
 sub-fund shall not exceed ten percent of the total compensation or sala-
 ries of all teachers employed by the employer who are members of  NYSTRS
 paid during the immediately preceding fiscal year.
   The  governing  board  of  the  employer  may  by resolution authorize
 expenditures from the retirement contribution reserve fund. The  govern-
 ing  board of the employer may also by resolution authorize the transfer
 of money between the separately administered sub-fund and the retirement
 contribution reserve fund subject to the limits on annual payments  into
 the sub-fund and the balance of the sub-fund as provided in this bill.
   It  is estimated that there will be no annual cost to the employers of
 members of the New York State Teachers' Retirement System if  this  bill
 is enacted.
   Employee  data  is  from  the System's most recent actuarial valuation
 files, consisting of data provided by the employers  to  the  Retirement
 System.  Data  distributions and statistics can be found in the System's
 Comprehensive Annual Financial  Report  (CAFR).  System  assets  are  as
 reported  in the System's financial statements, and can also be found in
 the CAFR. Actuarial assumptions and methods are provided in the System's
 Actuarial Valuation Report.
   The source of this estimate is Fiscal Note 2017-2  dated  January  17,
 2017  prepared by the Actuary of the New York State Teachers' Retirement
 System and is intended for use only during the 2017 Legislative Session.
 I, Richard A. Young, am the Actuary for the  New  York  State  Teachers'
 Retirement  System.  I  am a member of the American Academy of Actuaries
 and I meet the Qualification Standards of the American Academy of  Actu-
 aries to render the actuarial opinion contained herein.

co-Sponsors

View additional co-sponsors

2017-S4563A (ACTIVE) - Details

See Assembly Version of this Bill:: A7353
Current Committee:: Senate Civil Service And Pensions
Law Section:: General Municipal Law
Laws Affected:: Amd §6-r, Gen Muni L
Versions Introduced in 2019-2020 Legislative Session:: A5759

2017-S4563A (ACTIVE) - Summary

Relates to allowing certain school districts and BOCES to establish a retirement contribution reserve fund for the purposes of the NYS teachers' retirement system.

2017-S4563A (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S4563A

SPONSOR: GOLDEN
 
TITLE OF BILL:

An act to amend the general municipal law, in relation to allowing
certain school districts and boards of cooperative educational services
to establish a retirement contribution reserve fund for the purposes of
the New York state teachers' retirement system

 
PURPOSE:

This bill provides eligible participating employers of the New York
State Teachers' Retirement System ("NYSTRS") the option to establish a
retirement contribution reserve sub-fund with respect to contributions
for NYSTRS.

 
SUMMARY OF PROVISIONS:

Section one amends the definitions for the terms "participating employ-
er" and "retirement contribution" provided by General Municipal Law

section 6-r(1).

Section two amends General Municipal Law section 6-r(2).

Section three adds a new subdivision 2-a to General Municipal Law
section 6-r. Section four amends General Municipal Law section 6-r(5).

Section five adds a new subdivision 11 to General Municipal Law section
6-r.

Section six provides that this act shall take effect immediately.

 
EXISTING LAW:

General Municipal Law section 6-r authorizes and regulates retirement
contribution reserve funds.

 
JUSTIFICATION:

The importance of local school districts and NYSTRS employers to fully
fund their actuarially required contributions to the System is critical
to the long term viability of the Retirement System.  Beginning in 2004,
downturns in the capital markets caused required employer contributions
to the public employee retirement systems in the state, which had been
at historically low levels, to increase, sometimes quite markedly. The
New York Legislature responded in several ways, one of which was to
allow employers to prepare for future contribution increases by estab-
lishing a retirement contribution reserve fund, but only with respect to
contributions for the New York State and Local Employees' Retirement
System ("ERS") and the New York State and Local Police and Fire Retire-
ment System ("PFRS").

The current law provides for the establishment of reserve funds for
various restricted purpose accounts. Most relevant, there are eleven
reserve funds currently authorized which may be established as a financ-
ing tool for school districts. Notwithstanding the fact that teachers
comprise an overwhelming majority of school district payrolls and school
district employers of New York state are authorized to establish retire-
ment contribution reserve funds for contributions to ERS, there current-
ly exists no legal mechanism to set aside reserve funds to address the
employer contribution rate for NYSTRS.

This bill proposes to amend various provisions of the existing Retire-
ment Contribution Reserve Funds statute, Section 6-r of the General
Municipal Law, to allow eligible NYSTRS participating employers to
establish a retirement contribution reserve sub-fund.  The governing
board of the participating employer may establish a contribution reserve
sub-fund by resolution for the purposes of (a) financing retirement
contributions to NYSTRS and/or (b) offsetting all or a portion of the
amount deducted from the moneys apportioned to the participating employ-
er from state aid. Once the retirement contribution reserve sub-fund is
established, the participating employer may elect to reserve during any
fiscal year an amount not to exceed two per centum of the total compen-
sation or salaries of NYSTRS member payroll (teachers paid during the
immediately preceding fiscal year). In addition, the retirement contrib-
ution reserve sub-fund is limited to a total balance not to exceed ten
per centum of the total compensation or salaries of all teachers
employed by the participating employer who are members of NYSTRS and
paid during the immediately preceding fiscal year.

This bill further proposes to allow the transfer of all or a portion of
the monies (a) in the separately administered sub-fund to the retirement
contribution reserve fund, or (b) from the retirement contribution
reserve fund to the separately administered sub-fund. To ensure the
contribution reserve sub-fund monies are monitored and regulated and
create transparency of any transfers to and/or from the contribution
reserve sub-fund, a resolution is required to initiate the transfer and
the transfer amounts must remain within the annual and overall fund caps
required by the statutory provisions.

Other existing provisions of General Municipal Law Section 6-r not
amended by the proposed legislation remain unchanged and will continue
to require the Board of education or Trustees of the municipal corpo-
ration to regulate and monitor the use of such reserve funds and expend-
itures as would be authorized by resolution. The publication require-
ments and public notice provisions will be required for any transfer of
such reserve funds. Additionally, the money in such reserves would be
classified as a restricted fund balance on financial statement balance
sheets.  These requirements are all consistent with existing practices
specified under the provisions of General Municipal Law Section 6-r.

In the past, school districts have benefited from the ability to create
reserve funds for other purposes to budget and manage finances during
the most difficult economic times. The reserves promote the ability to
prudently save and protect school districts from future economic down-
turns and to offset financial burdens during those periods of economic
shortfalls. Allowing school districts to establish a contribution
reserve sub-fund for NYSTRS promotes financial strength for future
financial budgetary planning at times when educational program revenue
is not as high as anticipated and/or when financial shortfalls are expe-
rienced. This additional fiscal planning tool allows school districts to
sustain themselves, avoid staff reductions and maintain consistency in
educational programs.  The authority to establish a retirement contrib-
ution reserve sub-fund provides a financing appropriation mechanism
currently not permissible for NYSTRS participating employers.

With the annual and aggregate caps in place, eligible participating
employers are provided with limits for the amount of money allowed to be
set aside in the retirement contribution reserve sub-fund for future
use, as well as the ability to spend down the monies in order to remain
within the reserve limit. The intent of these limitations is to elimi-
nate the possibility of the reserve sub-fund being overfunded and, in
general, increase transparency. Any transfer to and/or from the reserve
sub-fund must be approved by resolution permitting all parties, the
public, governing boards, school district employees and others, to be
informed of the amounts and reasons for said reserves, thus assisting
with transparency.

The enactment of this provision rectifies the discrepancy in the stat-
utes and provides the remedy to allow eligible public employers to
create a reserve sub-fund for retirement contributions for NYSTRS on a
similar basis as is currently allowed for the aforementioned retirement
systems. If this legislation were enacted, it would not be a mandate on
local governments, but it would provide participating employers the
legal authority to participate in the reserve sub-fund for NYSTRS
contributions.

In an effort to provide NYSTRS participating employers with the tools
for fiscal health and planning, and for the other reasons stated, the
Retirement Board respectfully submits this bill to the Legislature for
their consideration.

 
LEGISLATIVE HISTORY:

2018: S4563-Referred to Civil Service and Pensions

 
FISCAL IMPLICATIONS:

See fiscal note at the end of the bill.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2017-S4563A (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  4563--A
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             February 17, 2017
                                ___________
 
 Introduced  by  Sens.  GOLDEN,  YOUNG,  AKSHAR, BROOKS, CARLUCCI, CROCI,
   DeFRANCISCO, FUNKE, GALLIVAN, JACOBS, KAMINSKY, MURPHY, ORTT,  SEWARD,
   VALESKY  --  read  twice  and  ordered printed, and when printed to be
   committed to the Committee on Civil Service and Pensions --  recommit-
   ted  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  general  municipal law, in relation to allowing
   certain  school  districts  and  boards  of  cooperative   educational
   services  to  establish a retirement contribution reserve fund for the
   purposes of the New York state teachers' retirement system
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Paragraphs b and c of subdivision 1 of section 6-r of the
 general municipal law, as added by chapter 260 of the laws of 2004,  are
 amended to read as follows:
   b.  "Participating  employer"  means:  (I) a participating employer as
 defined in subdivision twenty of  section  two  of  the  retirement  and
 social  security  law  or in subdivision twenty of section three hundred
 two of such law; OR (II) A PARTICIPATING EMPLOYER AS DEFINED IN SUBDIVI-
 SION THREE OF SECTION FIVE HUNDRED ONE OF THE EDUCATION LAW.
   c. "Retirement contribution" shall mean all  or  any  portion  of  the
 amount  payable  by  a  municipal corporation to:(I) either the New York
 state and local employees' retirement system or the New York  state  and
 local police and fire retirement system pursuant to section seventeen or
 three  hundred  seventeen  of the retirement and social security law; OR
 (II) THE NEW YORK STATE TEACHERS' RETIREMENT SYSTEM PURSUANT TO  SECTION
 FIVE HUNDRED TWENTY-ONE OF THE EDUCATION LAW.
   §  2.  Subdivision  2  of section 6-r of the general municipal law, as
 added by chapter 260 of the laws of 2004, is amended to read as follows:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD09918-02-8

 S. 4563--A                          2
 
   2. The governing board of any municipal corporation which  is  also  a
 participating employer by resolution may establish a retirement contrib-
 ution  reserve fund for the purpose of (A) financing retirement contrib-
 utions, AND/OR (B) IN THE CASE OF A MUNICIPAL  CORPORATION  WHICH  IS  A
 PARTICIPATING  EMPLOYER  AS DEFINED IN SUBDIVISION THREE OF SECTION FIVE
 HUNDRED ONE OF THE EDUCATION LAW, FINANCING APPROPRIATIONS AUTHORIZED BY
 LAW IN ORDER TO OFFSET ALL OR A PORTION OF THE AMOUNT DEDUCTED FROM  THE
 MONEYS  APPORTIONED  TO THE MUNICIPAL CORPORATION FROM THE STATE FOR THE
 SUPPORT OF COMMON SCHOOLS PURSUANT TO SECTION FIVE HUNDRED TWENTY-ONE OF
 THE EDUCATION LAW.
   § 3. Section 6-r of the general municipal law is amended by  adding  a
 new subdivision 2-a to read as follows:
   2-A.  WITH RESPECT TO A MUNICIPAL CORPORATION WHICH IS A PARTICIPATING
 EMPLOYER AS DEFINED IN SUBDIVISION THREE OF SECTION FIVE HUNDRED ONE  OF
 THE  EDUCATION  LAW,  WHICH  ELECTS TO UTILIZE A RETIREMENT CONTRIBUTION
 RESERVE FUND (A) TO FINANCE RETIREMENT CONTRIBUTIONS  TO  THE  NEW  YORK
 STATE TEACHERS' RETIREMENT SYSTEM PURSUANT TO SECTION FIVE HUNDRED TWEN-
 TY-ONE OF THE EDUCATION LAW AND/OR (B) TO OFFSET ALL OR A PORTION OF THE
 AMOUNT DEDUCTED FROM THE MONEYS APPORTIONED TO THE MUNICIPAL CORPORATION
 FROM  THE  STATE  FOR  THE SUPPORT OF COMMON SCHOOLS PURSUANT TO SECTION
 FIVE HUNDRED TWENTY-ONE OF THE EDUCATION LAW, SUCH MUNICIPAL CORPORATION
 SHALL ESTABLISH A SUB-FUND WITHIN THE  RETIREMENT  CONTRIBUTION  RESERVE
 FUND,  WHICH  SHALL  BE  SEPARATELY  ADMINISTERED  CONSISTENT  WITH  THE
 PROVISIONS OF THIS SECTION. SUCH MUNICIPAL CORPORATION MAY PAY INTO SUCH
 SUB-FUND DURING ANY PARTICULAR FISCAL YEAR AN AMOUNT NOT TO  EXCEED  TWO
 PER  CENTUM OF THE TOTAL COMPENSATION OR SALARIES OF ALL TEACHERS IN THE
 EMPLOY OF SAID MUNICIPAL CORPORATION WHO ARE MEMBERS  OF  THE  NEW  YORK
 STATE  TEACHERS' RETIREMENT SYSTEM PAID DURING THE IMMEDIATELY PRECEDING
 FISCAL YEAR. THE BALANCE OF SUCH SUB-FUND MAY NOT EXCEED TEN PER  CENTUM
 OF  THE  TOTAL COMPENSATION OR SALARIES OF ALL TEACHERS IN THE EMPLOY OF
 THE MUNICIPAL CORPORATION WHO ARE MEMBERS OF THE NEW YORK  STATE  TEACH-
 ERS'  RETIREMENT  SYSTEM  PAID  DURING  THE IMMEDIATELY PRECEDING FISCAL
 YEAR. FOR THE PURPOSES OF THIS SUBDIVISION,  THE  TERM  "TEACHER"  SHALL
 HAVE  THE SAME MEANING AS SUCH TERM IS DEFINED UNDER SUBDIVISION FOUR OF
 SECTION FIVE HUNDRED ONE OF THE EDUCATION LAW.
   § 4. Subdivision 5 of section 6-r of the  general  municipal  law,  as
 added by chapter 260 of the laws of 2004, is amended to read as follows:
   5. The governing board of such municipal corporation by resolution may
 authorize  expenditures  from  a  retirement  contribution reserve fund.
 Except as otherwise provided by law, moneys in a retirement contribution
 reserve fund may only be expended (A)  to  finance  retirement  contrib-
 utions,  AND/OR  (B)  IN  THE CASE OF A MUNICIPAL CORPORATION WHICH IS A
 PARTICIPATING EMPLOYER, AS DEFINED IN SUBDIVISION THREE OF SECTION  FIVE
 HUNDRED  ONE  OF THE EDUCATION LAW, FOR APPROPRIATIONS AUTHORIZED BY LAW
 IN ORDER TO OFFSET ALL OR A PORTION OF  THE  AMOUNT  DEDUCTED  FROM  THE
 MONEYS  APPORTIONED TO THE PARTICIPATING EMPLOYER FROM THE STATE FOR THE
 SUPPORT OF COMMON SCHOOLS PURSUANT TO SECTION FIVE HUNDRED TWENTY-ONE OF
 THE EDUCATION LAW. WITH RESPECT TO A MUNICIPAL CORPORATION  WHICH  IS  A
 PARTICIPATING  EMPLOYER  AS DEFINED IN SUBDIVISION THREE OF SECTION FIVE
 HUNDRED ONE OF THE  EDUCATION  LAW,  EXPENDITURES  FROM  THE  RETIREMENT
 CONTRIBUTION RESERVE FUND TO FINANCE RETIREMENT CONTRIBUTIONS TO THE NEW
 YORK  STATE TEACHERS' RETIREMENT SYSTEM PURSUANT TO SECTION FIVE HUNDRED
 TWENTY-ONE OF THE EDUCATION LAW AND/OR TO OFFSET ALL OR A PORTION OF THE
 AMOUNT DEDUCTED FROM THE MONEYS APPORTIONED TO THE MUNICIPAL CORPORATION
 FROM THE STATE FOR THE SUPPORT OF COMMON  SCHOOLS  PURSUANT  TO  SECTION

 S. 4563--A                          3
 
 FIVE  HUNDRED  TWENTY-ONE OF THE EDUCATION LAW MAY ONLY BE MADE FROM THE
 SUB-FUND ESTABLISHED PURSUANT TO SUBDIVISION TWO-A OF THIS SECTION.
   §  5.  Section 6-r of the general municipal law is amended by adding a
 new subdivision 11 to read as follows:
   11. THE GOVERNING BOARD OF A MUNICIPAL CORPORATION WHICH IS A  PARTIC-
 IPATING EMPLOYER AS DEFINED IN SUBDIVISION THREE OF SECTION FIVE HUNDRED
 ONE OF THE EDUCATION LAW BY RESOLUTION MAY (A) AUTHORIZE THE TRANSFER OF
 ALL  OR  A PORTION OF THE MONIES IN THE SEPARATELY ADMINISTERED SUB-FUND
 AS ESTABLISHED UNDER SUBDIVISION TWO-A OF THIS SECTION TO THE RETIREMENT
 CONTRIBUTION RESERVE FUND, AND/OR (B) AUTHORIZE THE TRANSFER OF ALL OR A
 PORTION OF THE MONIES IN THE RETIREMENT CONTRIBUTION RESERVE FUND TO THE
 SEPARATELY ADMINISTERED SUB-FUND AS PROVIDED  IN  SUBDIVISION  TWO-A  OF
 THIS SECTION, SUBJECT TO THE LIMITS ON ANNUAL PAYMENTS INTO THE SUB-FUND
 AND  THE  BALANCE  OF THE SUB-FUND SPECIFIED BY THE SUBDIVISION TWO-A OF
 THIS SECTION.
   § 6. This act shall take effect immediately.
   FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
   This bill would amend Section 6-r of  the  General  Municipal  Law  to
 allow  eligible  participating employers of the New York State Teachers'
 Retirement System (NYSTRS) to establish a reserve  sub-fund  within  the
 retirement  contribution reserve fund for the purpose of reserving money
 to offset future required contributions to NYSTRS. An employer  may  pay
 into  such  sub-fund  during any particular fiscal year an amount not to
 exceed two percent of the total compensation or salaries of all teachers
 employed by the employer who are members of NYSTRS paid during the imme-
 diately preceding fiscal year. Additionally, the total  balance  in  the
 sub-fund shall not exceed ten percent of the total compensation or sala-
 ries  of all teachers employed by the employer who are members of NYSTRS
 paid during the immediately preceding final year.
   The governing board  of  the  employer  may  by  resolution  authorize
 expenditures  from the retirement contribution reserve fund. The govern-
 ing board of the employer may also by resolution authorize the  transfer
 of money between the separately administered sub-fund and the retirement
 contribution  reserve fund subject to the limits on annual payments into
 the sub-fund and the balance of the sub-fund as provided in this bill.
   It is estimated that there will be no annual cost to the employers  of
 members  of  the New York State Teachers' Retirement System if this bill
 is enacted.
   Member data is from  the  System's  most  recent  actuarial  valuation
 files,  consisting  of  data provided by the employers to the Retirement
 System.  Data distributions and statistics can be found in the  System's
 Comprehensive  Annual  Financial  Report  (CAFR).  System  assets are as
 reported in the System's financial statements, and can also be found  in
 the CAFR. Actuarial assumptions and methods are provided in the System's
 Actuarial Valuation Report.
   The  source  of  this  estimate is Fiscal Note 2018-2 dated October 6,
 2017 prepared by the Actuary of the New York State Teachers'  Retirement
 System and is intended for use only during the 2018 Legislative Session.
 I,  Richard  A.  Young,  am the Actuary for the New York State Teachers'
 Retirement System. I am a member of the American  Academy  of  Actuaries
 and  I meet the Qualification Standards of the American Academy of Actu-
 aries to render the actuarial opinion contained herein.

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Archive: Last Bill Status - In Senate Committee Civil Service And Pensions Committee

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