NY State Senate Bill 2017-S4759

Senate Bill S4759

Signed By Governor

2017-2018 Legislative Session

Relates to the definition of graded contribution rate for the purposes of calculating an employer's contributions

download bill text pdf

Archive: Last Bill Status Via A2384 - Signed by Governor

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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 27, 2017	signed chap.48
Jun 15, 2017	delivered to governor
Jun 08, 2017	returned to assembly passed senate 3rd reading cal.437 substituted for s4759
Jun 08, 2017	substituted by a2384
Mar 22, 2017	advanced to third reading
Mar 21, 2017	2nd report cal.
Mar 20, 2017	1st report cal.437
Feb 27, 2017	referred to civil service and pensions

Votes

- Jun 8, 2017 - Floor Vote
  A2384
  
  61
  
  Aye
  
  0
  
  Nay
  
  0
  
  Absent
  
  2
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jun 8, 2017
      
      aye (61)
      
      Addabbo Jr.
      
      Akshar
      
      Alcantara
      
      Amedore
      
      Avella
      
      Bailey
      
      Benjamin
      
      Bonacic
      
      Boyle
      
      Breslin
      
      Brooks
      
      Carlucci
      
      Comrie
      
      Croci
      
      DeFrancisco
      
      Dilan
      
      Felder
      
      Flanagan
      
      Funke
      
      Gallivan
      
      Gianaris
      
      Golden
      
      Griffo
      
      Hamilton
      
      Hannon
      
      Helming
      
      Hoylman-Sigal
      
      Jacobs
      
      Kaminsky
      
      Kennedy
      
      Klein
      
      Krueger
      
      Lanza
      
      Larkin
      
      Latimer
      
      Little
      
      Marcellino
      
      Marchione
      
      Montgomery
      
      Murphy
      
      O'Mara
      
      Ortt
      
      Parker
      
      Peralta
      
      Persaud
      
      Phillips
      
      Ranzenhofer
      
      Ritchie
      
      Rivera
      
      Robach
      
      Sanders Jr.
      
      Savino
      
      Serino
      
      Serrano
      
      Seward
      
      Squadron
      
      Stavisky
      
      Stewart-Cousins
      
      Tedisco
      
      Valesky
      
      Young
      
      excused (2)
      
      Diaz
      
      LaValle
  Mar 20, 2017 - Civil Service And Pensions Committee Vote
  S4759
  
  10
  
  Aye
  
  0
  
  Nay
  
  1
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Civil Service And Pensions Committee Vote: Mar 20, 2017
      
      aye (10)
      
      Addabbo Jr.
      
      Croci
      
      Golden
      
      Lanza
      
      Ortt
      
      Persaud
      
      Phillips
      
      Ritchie
      
      Savino
      
      Serrano
      
      aye wr (1)
      
      Sanders Jr.

co-Sponsors

View additional co-sponsors

2017-S4759 (ACTIVE) - Details

See Assembly Version of this Bill:: A2384
Law Section:: Retirement and Social Security Law
Laws Affected:: Amd §§19-a & 319-a, R & SS L

2017-S4759 (ACTIVE) - Summary

Relates to the definition of graded contribution rate for the purposes of calculating an employer's contributions.

2017-S4759 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S4759

 TITLE OF BILL :  An act to amend the retirement and social security
law, in relation to the definition of graded contribution rate for the
purposes of calculating an employer's contributions

 PURPOSE :

The purpose of this proposed legislation is to provide employers with
a tailored graded contribution rate when amortizing a portion of their
contributions to the retirement system

 SUMMARY OF PROVISIONS :

Section 1 of this proposal amends Paragraphs 5, 7 and 10 of
subdivision a of section 19-a of the retirement and social security
law to make conforming technical changes related to Chapter 94 of the
Laws of 2015 and adds a new paragraph 13 to define "employer's graded
contribution rate" for the purposes of the New York State and Local
Employees' Retirement System (NYSLERS).

Section 2 of this proposal amends Subdivision c of section 19-a of the
retirement and social security law to add a new Paragraph 3 to set
forth the authority and formula for the State Comptroller to determine
a graded contribution rate for individual NYSLERS employers.

Section 3 of this proposal amends Paragraph 1 and the opening
Paragraph of Paragraph 2 of Subdivision d of Section 19-a of the
retirement and social security law to make conforming technical
changes related to graded contribution rate for individual NYSLERS
employers.

Section 4 of this proposal amends Paragraphs 2 and 3 of Subdivision e
of Section 19-a of the retirement and social security law to make
conforming changes related to the fiscal year upon which the
calculation of salaries is to be based.

Section 5 of this proposal amends Paragraphs 5, 7 and 11 of
subdivision a of section 319a of the retirement and social security
law to make conforming technical changes related to Chapter 94 of the
Laws of 2015 for the New York State and Local Police and Fire
Retirement System (PFRS).

Section 6 of this proposal amends Paragraph 3 of Subdivision c of
section 319-a of the retirement and social security law to set forth
the authority and formula for the State Comptroller to determine a
graded contribution rate for individual PFRS employers.

Section 7 of this proposal amends the opening Paragraph of Paragraph 2
of Subdivision d of Section 319-a of the retirement and social
security law to make conforming technical changes related to graded
contribution rate for individual PFRS employers.

Section 8 of this proposal amends Paragraphs 2 and 3 of Subdivision e
of Section 319-a of the retirement and social security law to make
conforming changes related to the fiscal year upon which the
calculation of salaries is to be based.

Section 9 sets forth an immediate effective date.

 PRIOR LEGISLATIVE HISTORY :

New bill.

 JUSTIFICATION :

The contributions stabilization program enacted by Part TT of Chapter
57 of the Laws of 2010 has proven to be a useful tool for a number of
participating employers (employer or employers) in managing their
employer contribution expenses however, it has become necessary to
update the law in light of the enactment of Chapter 94 of the Laws of
2015, which revised the salary base used in employer billing, and the
increased spread in the average contribution rate of individual
employers, which is a consequence of the addition of Tiers 5 and 6.

The proposed legislation amends Section 19-a of the Retirement and
Social Security Law by defining the term "employer's graded contribute
rate" for the purposes of such section. Additionally, it amends
Sections 19-a and 319-a to authorize the comptroller to determine a
graded contribution rate for the New York State and Local Retirement
System's individual employers and establishes how such graded
contribution rate shall be computed.

These changes are necessary because employer contributions are
currently based on actual payroll for the previous fiscal year rather
than estimated payroll for the fiscal year of billing. Also, these
changes will align the graded rate applicable to the employer with
their plan demographics rather than the system's plan demographics.

Under current law, the same graded rate applies to virtually all
employers (one size fits all in ERS, three sizes fit all in PFRS).
The current exceptions are a graded rate of 50% of the system graded
rate for PFRS employers with a rate that is less than 50% of the
system average rate; and, a graded rate of 75% of the system graded
rate for PFRS employers with a rate that is 50%-75% of the system
average rate. These exceptions were written into the original law
because it was understood that one graded rate in PFRS would not serve
small employers with less lucrative plans.

This concern did not exist in ERS because all employers were
predominantly populated by members in Tier 4, Article 15, which made
the average rate for all employers occupy a very narrow band.

Tiers 5 and 6 have created a bigger spread in the average contribution
rate of employers. As a result, the number of employers with
contribution rates significantly different from the system average has
increased.

Further, the existence of contributory and non-contributory versions
of PFRS plans has led to more gradations in employer rates than the
original three. Thus calculating amortization rates using 3 bands in
PFRS and no bands in ERS is inappropriate.

The Comptroller urges passage of this legislation.

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE :
Provides for an immediate effective date.

2017-S4759 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4759
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                             February 27, 2017
                                ___________
 
 Introduced  by  Sen.  GOLDEN -- (at request of the State Comptroller) --
   read twice and ordered printed, and when printed to  be  committed  to
   the Committee on Civil Service and Pensions
 
 AN  ACT  to amend the retirement and social security law, in relation to
   the definition of graded contribution rate for the purposes of  calcu-
   lating an employer's contributions
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraphs 5, 7 and 10 of subdivision a of section 19-a  of
 the  retirement and social security law, as amended by section 2 of part
 BB of chapter 57 of the laws of 2013, are amended and a new paragraph 13
 is added to read as follows:
   (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]
 PREVIOUS fiscal year.
   (7) "Employer's graded contribution" for a  given  fiscal  year  shall
 mean  the  amount  determined by applying the [system] EMPLOYER'S graded
 contribution rate or the alternative system graded contribution rate for
 such fiscal year to an employer's [projected]  payroll  for  the  [same]
 PREVIOUS fiscal year.
   (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] PREVIOUS fiscal year.
   (13) "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.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD00025-02-7

 S. 4759                             2
 
   § 2. Subdivision c of section 19-a of the retirement and social  secu-
 rity law is amended by adding a new paragraph 3 to read as follows:
   (3)  THE  COMPTROLLER  SHALL  DETERMINE A GRADED CONTRIBUTION RATE FOR
 INDIVIDUAL EMPLOYERS AS PROVIDED IN THIS PARAGRAPH. THE GRADED  CONTRIB-
 UTION  RATE  FOR  AN  INDIVIDUAL EMPLOYER IS THE PRODUCT OF THE SYSTEM'S
 GRADED CONTRIBUTION RATE WITH THE RATIO OF THE EMPLOYER'S AVERAGE  ACTU-
 ARIAL  CONTRIBUTION  RATE TO THE SYSTEM'S AVERAGE ACTUARIAL CONTRIBUTION
 RATE, NOT TO EXCEED ONE HUNDRED PERCENT OF THE SYSTEM'S GRADED  CONTRIB-
 UTION RATE.
   §  3. Paragraph 1 and the opening paragraph of paragraph 2 of subdivi-
 sion d of section 19-a of the retirement and social security law,  para-
 graph  1  as amended by section 1 of part Z of chapter 54 of the laws of
 2016 and the opening paragraph of paragraph 2 as amended by section 2 of
 part BB of chapter 57 of the laws  of  2013,  are  amended  to  read  as
 follows:
   (1) For any given fiscal year for which an employer's average actuari-
 al  contribution  rate exceeds the [system] EMPLOYER 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 employ-
 er'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  para-
 graph  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
 contribution  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  immediately  succeeding  fiscal  year.  Provided  however  that,
 notwithstanding  any  provision  of  law to the contrary and at the sole
 discretion of the director of the division of the budget, the  state  as
 an  amortizing  employer  may  prepay to the retirement system the total
 amount of principal due for any such annual installment or  installments
 for  a given fiscal year prior to the expiration of the ten-year amorti-
 zation period. In the event the state elects to  make  such  prepayment,
 the  director of the division of budget must identify the fiscal year or
 years for which the total principal amount due for the  annual  install-
 ment  is being prepaid. In any fiscal year for which the director of the
 division of the budget identifies such prepayment  is  being  made,  the
 state  (i)  shall  not be required to make a payment of principal to the
 retirement system for such fiscal  year,  and  (ii)  shall  pay  to  the
 retirement  system annual interest on the remaining principal balance at
 the rate originally set by the comptroller when the state first  elected
 to  amortize in accordance with this paragraph. Nothing contained herein
 shall permit the state to  extend  the  amortization  period  originally
 established  in  accordance with this paragraph beyond the original ten-
 year amortization period.
   For any given fiscal year  for  which  the  [system]  EMPLOYER  graded
 contribution  rate  equals  or  exceeds an amortizing employer's average
 actuarial contribution rate, the amortizing employer shall  pay  to  the

 S. 4759                             3
 
 retirement system an amount equal to the employer's annual bill for such
 year plus the employer's graded payment for the fiscal year.
   §  4.  Paragraphs  2  and  3  of  subdivision e of section 19-a of the
 retirement and social security law, as amended by section 2 of  part  BB
 of chapter 57 of the laws of 2013, are amended to read as follows:
   (2)  For  any  given  fiscal  year  for which (i) the system actuarial
 contribution rate exceeds nine and one-half percent of payroll AS OF THE
 END OF THE PREVIOUS FISCAL YEAR, and (ii) an employer's average actuari-
 al contribution rate exceeds the system graded contribution rate or  the
 alternative  system graded contribution rate, the balance in the employ-
 er'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] THE PREVIOUS fiscal year, the excess shall be
 applied to reduce the employer's payment to the  retirement  system  for
 the next succeeding fiscal year.
   §  5.  Paragraphs 5, 7 and 11 of subdivision a of section 319-a of the
 retirement and social security law, as amended by section 3 of  part  BB
 of chapter 57 of the laws of 2013, are amended to read as follows:
   (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]
 PREVIOUS fiscal year.
   (7)  "Employer's  graded  contribution"  for a given fiscal year shall
 mean the amount determined by applying the  employer's  graded  contrib-
 ution  rate or the alternative amortizing employer's graded contribution
 rate for such fiscal year to an employer's [projected] payroll  for  the
 [same] PREVIOUS fiscal year.
   (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] PREVIOUS fiscal year.
   § 6. Paragraph 3 of subdivision c of section 319-a of  the  retirement
 and  social  security law, as amended by section 3 of part BB of chapter
 57 of the laws of 2013, is amended to read as follows:
   (3) The comptroller shall determine a  graded  contribution  rate  for
 individual employers as provided in this paragraph.  THE GRADED CONTRIB-
 UTION  RATE  FOR  AN  INDIVIDUAL EMPLOYER IS THE PRODUCT OF THE SYSTEM'S
 GRADED CONTRIBUTION RATE WITH THE RATIO OF THE EMPLOYER'S AVERAGE  ACTU-
 ARIAL  CONTRIBUTION  RATE TO THE SYSTEM'S AVERAGE ACTUARIAL CONTRIBUTION
 RATE, NOT TO EXCEED ONE HUNDRED PERCENT OF THE SYSTEM'S GRADED  CONTRIB-
 UTION RATE.
   [(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  rate  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. 4759                             4

 employer for the fiscal year shall equal fifty  percent  of  the  system
 graded contribution rate for such year.]
   §  7. The opening paragraph of paragraph 2 of subdivision d of section
 319-a of the retirement and social security law, as amended by section 3
 of part BB of chapter 57 of the laws of 2013,  is  amended  to  read  as
 follows:
   For  any  given  fiscal  year  for  which the [system] EMPLOYER 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.
   § 8. Paragraphs 2 and 3 of subdivision  e  of  section  319-a  of  the
 retirement  and  social security law, as amended by section 3 of part BB
 of chapter 57 of the laws of 2013, are amended to read as follows:
   (2) For any given fiscal year  for  which  (i)  the  system  actuarial
 contribution  rate  exceeds seventeen and one-half percent of payroll AS
 OF THE END OF THE PREVIOUS FISCAL YEAR, and (ii) for which an employer's
 average actuarial contribution rate exceeds the graded contribution rate
 or the alternative 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 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] THE PREVIOUS fiscal year, the  excess  shall  be
 applied  to  reduce  the employer's payment to the retirement system for
 the next succeeding fiscal year.
   § 9. This act shall take effect immediately.
   FISCAL NOTE.  This bill would amend Section 19-a and Section 319-a  of
 the  Retirement and Social Security Law as it pertains to employer bills
 of the New York State  and  Local  Police  and  Fire  Retirement  System
 (PFRS).
   This  bill  modifies  the calculation of the graded rate for those ERS
 and PFRS employers who participate in the program which allows  them  to
 amortize a portion of their bill with their respective Retirement System
 when  employer contribution rates rise above the employer's graded rate.
 If they do this, then when rates are falling below the employer's graded
 rate and they have paid off all outstanding amortizations, 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.
   Currently the graded rate which is used for each employer in  the  ERS
 is the system graded rate. In PFRS the graded rate is either 50%, 75% or
 100%  of the system grade rate. This bill will modify the graded rate to
 be the product of the system's graded contribution rate with  the  ratio
 of  the  employer's  average  contribution  rate to the system's average
 contribution rate, but to never exceed the system's graded  contribution
 rate.
   In  addition,  this  bill makes the necessary technical corrections to
 accommodate the changed due to Chapter 94 of the  Laws  of  2015,  which
 requires  billing  rates  to be applied to salaries as of the end of the
 previous fiscal year instead of the  year  in  which  contributions  are
 made.

 S. 4759                             5
 
   If  this  bill  is  enacted,  we  estimate that there would be a small
 administrative cost to the system to  revise  the  current  billing  and
 business communication processes.
   The  membership  data  used  in  measuring  the impact of the proposed
 change was the same as that used in the March 31, 2016  actuarial  valu-
 ation.    Distributions  and  other  statistics can be found in the 2016
 Report of the  Actuary  and  the  2016  Comprehensive  Annual  Financial
 Report.
   The  actuarial  assumptions and methods used are described in the 2015
 and 2016 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, 2016
 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 9, 2017 and intended for use only during
 the 2017 Legislative Session, is Fiscal Note No.  2017-10,  prepared  by
 the Actuary for the New York State and Local Retirement System.

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