S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5256--A
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                              March 17, 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 -- 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
   standardizing the overtime reporting period for certain members of the
   New York state and local employees' retirement system
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. Subdivision 24 of section 501 of the retirement and social
 security law, as amended by chapter 298 of the laws of 2016, is  amended
 to read as follows:
   24.  (A) "Wages" shall mean regular compensation earned by and paid to
 a member by a public employer, except that for members  who  first  join
 the  state  and  local  employees' retirement system on or after January
 first, two thousand ten, overtime  compensation  paid  in  any  year  in
 excess  of  the  overtime ceiling, as defined by this subdivision, shall
 not be included in the definition of wages.
   (B) "Overtime compensation" shall mean, for purposes of this  section,
 compensation paid under any law or policy under which employees are paid
 at  a  rate greater than their standard rate for additional hours worked
 beyond those required, including compensation  paid  under  section  one
 hundred  thirty-four  of the civil service law and section ninety of the
 general municipal law.
   (C)(I) The "overtime ceiling" shall mean fifteen thousand dollars  per
 annum  on  January  first,  two  thousand ten, and shall be increased by
 three percent each year thereafter, provided, however, that for  members
 who  first  become  members  of  the New York state and local employees'
 retirement system on or after April first, two thousand  twelve,  "over-
 time  ceiling"  shall  mean  fifteen thousand dollars per annum on April
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD07063-05-7

 S. 5256--A                          2
 
 first, two thousand twelve, and shall be increased each year  thereafter
 by  a  percentage to be determined annually by reference to the consumer
 price index (all urban consumers, CPI-U, U.S. city average,  all  items,
 1982-84=100), published by the United States bureau of labor statistics,
 for each applicable calendar year. Said percentage shall equal the annu-
 al inflation as determined from the increase in the consumer price index
 in  the  one  year period ending on the December thirty-first [prior to]
 PRECEDING the [cost-of-living] OVERTIME CEILING adjustment effective  on
 the ensuing April first.
   (II)  COMMENCING  JANUARY  FIRST, TWO THOUSAND EIGHTEEN, AND EACH YEAR
 THEREAFTER, THE OVERTIME CEILING PERCENTAGE SHALL  BE  INCREASED  BY  AN
 AMOUNT  EQUAL TO THE ANNUAL INFLATION AS DETERMINED FROM THE INCREASE IN
 THE CONSUMER PRICE INDEX IN THE ONE YEAR PERIOD ENDING ON THE  SEPTEMBER
 THIRTIETH  PRIOR  TO  THE  OVERTIME  CEILING ADJUSTMENT EFFECTIVE ON THE
 ENSUING JANUARY FIRST.
   (D) For the purpose of calculation a member's primary  federal  social
 security  retirement or disability benefit, wages shall, in any calendar
 year, be limited to the portion of the member's  wages  which  would  be
 subject  to  tax  under section three thousand one hundred twenty-one of
 the internal revenue code of nineteen hundred fifty-four, or any  prede-
 cessor  or  successor  provision  relating  thereto,  if such member was
 employed by a private employer.
   (E) For members who first become members of the  New  York  state  and
 local  employees'  retirement  system  on or after the effective date of
 chapter eighteen of the laws of two thousand twelve, the following items
 shall not be included in the definition of wages: (a) wages in excess of
 the annual salary paid to the governor  pursuant  to  section  three  of
 article  four  of  the  state  constitution,  (b)  lump sum payments for
 deferred compensation, sick leave, accumulated vacation or other credits
 for time not worked, (c) any form of termination pay, (d) any additional
 compensation paid in anticipation of retirement, and (e) in the case  of
 employees  who  receive  wages  from three or more employers in a twelve
 month period, the wages paid by the third and each successive employer.
   (F) For New York city enhanced plan members who receive  the  ordinary
 disability  benefit  provided  for  in  subdivision  c-1 of section five
 hundred six  of  this  article  or  the  accidental  disability  benefit
 provided for in paragraph three of subdivision c of section five hundred
 seven  of this article, the following items shall not be included in the
 definition of wages: (a) lump sum payments  for  deferred  compensation,
 sick  leave,  accumulated vacation or other credits for time not worked,
 (b) any form of termination pay, (c) any additional compensation paid in
 anticipation of retirement, and (d) in the case of employees who receive
 wages from three or more employers in a twelve month period,  the  wages
 paid by the third and each successive employer.
   § 2. Subdivision l of section 601 of the retirement and social securi-
 ty  law,  as  amended  by chapter 510 of the laws of 2015, is amended to
 read as follows:
   l. (A) "Wages" shall mean regular compensation earned by and paid to a
 member by a public employer, except that for members who first join  the
 New  York  state  and local employees' retirement system or the New York
 state teachers' retirement system on or after January first,  two  thou-
 sand  ten, overtime compensation paid in any year in excess of the over-
 time ceiling, as defined by this subdivision, shall not be  included  in
 the definition of wages.
   (B)  "Overtime compensation" shall mean, for purposes of this section,
 compensation paid under any law or policy under which employees are paid

 S. 5256--A                          3
 
 at a rate greater than their standard rate for additional  hours  worked
 beyond  those  required,  including  compensation paid under section one
 hundred thirty-four of the civil service law and section ninety  of  the
 general municipal law.
   (C)  The  "overtime  ceiling"  shall mean fifteen thousand dollars per
 annum on January first, two thousand ten,  and  shall  be  increased  by
 three per cent each year thereafter, provided, however, that:
   (I) for members who first become members of a public retirement system
 of  the  state  on  or after April first, two thousand twelve, "overtime
 ceiling" shall mean fifteen thousand dollars per annum on  April  first,
 two  thousand  twelve,  and shall be increased each year thereafter by a
 percentage to be determined annually by reference to the consumer  price
 index  (all  urban  consumers,  CPI-U,  U.S.  city  average,  all items,
 1982-84=100), published by the United States bureau of labor statistics,
 for each applicable calendar year. Said percentage shall equal the annu-
 al inflation as determined from the increase in the consumer price index
 in the one year period ending on the December  thirty-first  [prior  to]
 PRECEDING  the [cost-of-living] OVERTIME CEILING adjustment effective on
 the ensuing April first.
   (II) COMMENCING JANUARY FIRST, TWO THOUSAND EIGHTEEN,  AND  EACH  YEAR
 THEREAFTER,  THE  OVERTIME  CEILING  PERCENTAGE SHALL BE INCREASED BY AN
 AMOUNT EQUAL TO THE ANNUAL INFLATION AS DETERMINED FROM THE INCREASE  IN
 THE  CONSUMER PRICE INDEX IN THE ONE YEAR PERIOD ENDING ON THE SEPTEMBER
 THIRTIETH PRIOR TO THE OVERTIME  CEILING  ADJUSTMENT  EFFECTIVE  ON  THE
 ENSUING JANUARY FIRST.
   (D) For members who first join a public retirement system of the state
 on  or after April first, two thousand twelve, the following items shall
 not be included in the definition of wages: 1. wages in  excess  of  the
 annual  salary paid to the governor pursuant to section three of article
 four of the state  constitution,  2.  lump  sum  payments  for  deferred
 compensation, sick leave, accumulated vacation or other credits for time
 not  worked,  3.  any form of termination pay, 4. any additional compen-
 sation paid in anticipation of retirement, and 5. in the case of employ-
 ees who receive wages from three or more employers  in  a  twelve  month
 period, the wages paid by the third and each additional employer.
   § 3. This act shall take effect immediately.
   FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
   This  bill will change the date of the annual increase in the overtime
 ceiling that can be included in the calculation of final average  salary
 for  Tier 6 members of certain public retirement systems from April 1 to
 January 1. The annual increase will be based  on  the  increase  in  the
 consumer  price  index  in  the  one year period ending on the September
 thirtieth prior to each ensuing January first. This change  will  become
 effective on January 1, 2018.
   If this bill is enacted, insofar as it would affect the New York State
 and Local Employees Retirement System, we estimate that there would be a
 small initial administrative cost to the system.
   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, 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

 S. 5256--A                          4
 
 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 February 13,  2017  and  intended  for  use  only
 during  the  2017  Legislative  Session,  is  Fiscal  Note  No. 2017-21,
 prepared by the Actuary for the New  York  State  and  Local  Retirement
 System.
   FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
   This  bill  would  amend Section 501 and Section 601 of the Retirement
 and Social Security Law to change the date of the annual increase in the
 overtime ceiling that can be used in the calculation  of  final  average
 salary  for Tier 6 members from April 1st to January 1st. This bill also
 provides that the annual increase in the overtime ceiling will be  based
 on the increase in the Consumer Price Index (CPI) in the one year period
 ending  on  the September 30th prior to each ensuing January 1st.  These
 changes will commence January 1, 2018.
   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 2017-13 dated March 31,
 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.