S T A T E   O F   N E W   Y O R K
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                                   5075
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               April 8, 2019
                                ___________
 
 Introduced  by  Sen.  GRIFFO -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 AN ACT to authorize members of the New York  state  and  New  York  city
   teachers'  retirement systems and the New York state and local employ-
   ees' retirement system to claim retirement credit for certain  private
   school teaching service
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Notwithstanding any other provision of law, a member of the
 New York state teachers' retirement system or the New York  city  teach-
 ers'  retirement  system,  or any member of the New York state and local
 employees' retirement system who is employed by  a  school  district,  a
 board  of  cooperative  educational services, a vocational education and
 extension board, an institution for the  instruction  of  the  deaf  and
 blind  as  enumerated  in  section 4201 of the education law or a school
 district as enumerated in section 1 of chapter 566 of the laws of  1967,
 or  who is employed by the state of New York as an institutional teacher
 as defined by section 136 of the civil service law, shall be entitled to
 obtain credit for up to five years of  service  rendered  as  a  teacher
 employed by a private elementary or secondary school within the state of
 New  York  chartered by or registered with the board of regents, or in a
 private college within the state of New York authorized by the board  of
 regents  to  grant degrees, which would constitute service as a teacher,
 had it been performed within New York state for an employer  subject  to
 the applicable provisions of law governing such retirement system.
   § 2. The crediting of service pursuant to this act shall be in accord-
 ance  with such rules and regulations as shall be adopted by the retire-
 ment board of the  New  York  state  teachers'  retirement  system,  the
 retirement board of the New York city teachers' retirement system or the
 state  comptroller,  as  appropriate, provided that such rules and regu-
 lations shall be substantially equivalent to the rules  and  regulations
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD10846-02-9

 S. 5075                             2
 
 otherwise applicable for the crediting of service pursuant to applicable
 provisions  of  law  governing each such retirement system, and provided
 further that if such provisions have not expired such member  makes  the
 applicable  payments required pursuant to the provisions of sections 517
 and 613, and paragraph 2 of subdivision b of section 609 of the  retire-
 ment and social security law.
   §  3. The service credit granted pursuant to this act shall constitute
 service for the purpose of  both  computing  the  pension  payable  upon
 retirement  for  service  and in determining the total length of service
 credited for the purpose of eligibility for a service  retirement  bene-
 fit,  but  shall not be used in computing final average salary. Provided
 further, no such credit shall be allowed for any service for  which  the
 person  is  receiving a benefit or will be entitled to receive a benefit
 at any future time from any other public or private retirement system or
 plan in this state, any other state or from the federal government.
   § 4. This act shall take effect June 30, 2019, except that any rule or
 regulation necessary for the timely implementation of the provisions  of
 this act on its effective date are authorized and directed to be promul-
 gated on or before such date.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill will allow members of certain public retirement systems who
 are currently employed by a school  district,  a  board  of  cooperative
 educational  services,  a  vocational  education and extension board, an
 institution for the deaf and blind or as  an  institutional  teacher  to
 receive  up  to  five  years of service credit in such public retirement
 systems for employment as a teacher  in  private  schools  in  New  York
 State. However, credit will not be provided for service where the member
 is  receiving  a benefit or will be entitled to receive a benefit at any
 future time from any other public or private retirement system  or  plan
 in this state, any other state or from the federal government.
   The  additional  service  credit  granted  pursuant to this bill shall
 constitute service credit for the purpose of computing the pension paya-
 ble upon retirement and shall be used to  determine  eligibility  for  a
 service  benefit. For certain members, contributions will be required in
 order to obtain such additional service credit. Each such member will be
 required to make a payment of 3% (6% for Tier 6) of current compensation
 per year of additional service credit granted pursuant to this bill.
   Internal Revenue Service (IRS)  plan  qualification  issues:  granting
 service  credit  for  employment  rendered  to any organization that may
 potentially be considered a non-governmental or private  employer,  such
 as  certain  types  of  educational institutions described in this bill,
 could jeopardize the Retirement System's governmental  plan  status  and
 its  exemption  from ERISA. This development could result in the loss of
 qualified status, which would mean the loss of tax benefits. This result
 would substantially impair the System's  value  to  our  more  than  one
 million participants.
   Prior  to  the  enactment  of this bill, we recommend that a favorable
 ruling be obtained from the IRS stating that these provisions would  not
 harm  the  qualification  status of the System. It is estimated that the
 costs to obtain such a ruling would be $28,000 for the services  of  the
 IRS, and $800 per hour for legal consultants.
   If  this bill is enacted, insofar as it affects the New York State and
 Local Employees' Retirement System (ERS), it is estimated that the  past
 service cost will average approximately 15% (12% for Tier 6) of affected
 members' compensation for each year of additional service credit that is
 purchased.

 S. 5075                             3
 
   The  exact  number  of  current  members as well as future members who
 could be affected by this bill cannot be readily determined.
   Pursuant  to Section 25 of the Retirement and Social Security Law, the
 past service cost for the ERS will be borne entirely by the State of New
 York and would require an itemized appropriation sufficient to  pay  the
 cost  of the provision. Since a member can apply for this service credit
 at any time prior to retirement, a precise  cost  cannot  be  determined
 until  each  member, as well as future members, applies for said credit.
 Every year a cost will be determined (and billed to the state) based  on
 those benefiting from this provision.
   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, 2018  actuarial  valu-
 ation.    Distributions  and  other  statistics can be found in the 2018
 Report of the  Actuary  and  the  2018  Comprehensive  Annual  Financial
 Report.
   The  actuarial assumptions and methods used are described in the 2015,
 2016, 2017 and 2018  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, 2018
 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  fiscal note does not constitute a legal opinion on the viability
 of the proposed change nor is it intended to serve as a  substitute  for
 the professional judgment of an attorney.
   This  estimate, dated March 28, 2019, and intended for use only during
 the 2019 Legislative Session, is Fiscal Note No.  2019-95,  prepared  by
 the Actuary for the New York State and Local Retirement System.