NY State Senate Bill 2021-S8461

Senate Bill S8461

2021-2022 Legislative Session

Permits wages earned through shared services agreements to be included in the computation of final average salaries

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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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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 03, 2022	referred to civil service and pensions

2021-S8461 (ACTIVE) - Details

Current Committee:: Senate Civil Service And Pensions
Law Section:: Retirement and Social Security Law
Laws Affected:: Amd §§512, 608 & 1209, R & SS L

2021-S8461 (ACTIVE) - Summary

Permits wages earned through shared services agreements to be included in the computation of final average salaries regardless if such earnings make the final average salary exceed that of the previous two years by more than ten percent; provides any additional costs shall be borne by the participating members of the shared services agreement, not the state.

2021-S8461 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S8461

SPONSOR: RITCHIE
 
TITLE OF BILL:

An act to amend the retirement and social security law, in relation to
permitting wages earned through shared services agreements to be
included in the computation of final average salaries

 
PURPOSE:

This bill would allow earnings while working under a shared services
agreement that are in excess of the ten percent limitation to be
included in the computation of final average salary

 
SUMMARY OF PROVISIONS:

Sections 1 through 3 amend the retirement and social security law to
provide that, for retirement system members of tiers 3 through 6, earn-
ings while working under a shared services agreement that are in excess
of the ten percent limitation, can be included in the computation of
final average salary

Section 4 provides that the costs of implementation shall be borne by
the entities involved in the shared services agreement.

Section 5 provides the effective date.

 
JUSTIFICATION:

This bill would allow earnings accrued while working under a shared
services agreement that are in excess of the ten percent limitation, to
be included in the computation of final average salary for tiers 3
through 6 members. Currently, earnings in any year used in computation
of the final average salary cannot exceed the average of the previous
two years (four years for tier 6) by more than ten percent.

A shared services agreement is an agreement between two municipalities,
libraries or public or quasi-public organizations participating in the
retirement system, which agree to share services. Collaborating and
sharing services between public entities is undertaken to save the enti-
ties resources and money. However, the current ten percent limitation on
the earnings allowed to be included in a calculation of final average
salary serves as a deterrent for public employees to serve under a
shared services agreement.

The exclusion of increases in salary over ten percent is intended to
stop public employees from dramatically increasing their final average
salary in their last three years of service through the use of excessive
overtime. It was not intended to cover public employees who are serving
under a shared services agreement for two or more public entities, such
as a school superintendent serving two districts and thus saving the
districts tens of thousands of dollars per year.

As the law is currently written, it discourages collaboration and the
sharing of services instead of encouraging this practice.

 
LEGISLATIVE HISTORY:

This is new legislation.

 
FISCAL IMPLICATIONS:

See Fiscal Note provided.

 
EFFECTIVE DATE:
This act shall take effect immediately.

2021-S8461 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8461
 
                             I N  S E N A T E
 
                               March 3, 2022
                                ___________
 
 Introduced  by  Sen. RITCHIE -- 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
   permitting  wages  earned  through  shared  services  agreements to be
   included in the computation of final average salaries

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Subdivisions a and b of section 512 of the retirement and
 social security law, subdivision a as amended by chapter 298 of the laws
 of 2016 and subdivision b as amended by chapter 18 of the laws of  2012,
 are amended and a new subdivision e is added to read as follows:
   a.  A  member's final average salary shall be the average wages earned
 by such a member during any three consecutive years  which  provide  the
 highest  average wage; provided, however, if the wages earned during any
 year included in the period  used  to  determine  final  average  salary
 exceeds  that  of the average of the previous two years by more than ten
 percent, the amount in excess of ten percent shall be excluded from  the
 computation  of  final average salary; PROVIDED HOWEVER IF THE AMOUNT IN
 EXCESS OF TEN PERCENT WAS EARNED WHILE WORKING UNDER A  SHARED  SERVICES
 AGREEMENT, SUCH EXCESS SHALL BE INCLUDED IN THE COMPUTATION OF THE FINAL
 AVERAGE SALARY.  Notwithstanding the preceding provisions of this subdi-
 vision  to  the contrary, for a member who first becomes a member of the
 New York state and local employees' retirement system on or after  April
 first,  two  thousand twelve, or for a New York city police/fire revised
 plan member, a New York city enhanced plan member who receives the ordi-
 nary 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, a New York city  uniformed  correction/sanitation
 revised  plan  member or an investigator revised plan member, a member's
 final average salary shall be the average wages earned by such a  member
 during  any  five  consecutive  years  which provide the highest average
 wage; provided, however, if the wages earned during any year included in
 the period used to determine final average salary exceeds  that  of  the
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.

                                                            LBD14387-03-2
 S. 8461                             2
 
 average  of the previous four years by more than ten percent, the amount
 in excess of ten percent shall be excluded from the computation of final
 average salary. In determining final  average  salary  pursuant  to  any
 provision  of this subdivision, where the period used to determine final
 average salary is the period which  immediately  precedes  the  date  of
 retirement,  any  month  or months (not in excess of twelve) which would
 otherwise be included in computing final average salary but during which
 the member was on authorized leave of absence at partial pay or  without
 pay  shall  be excluded from the computation of final average salary and
 the month or an equal number of months immediately preceding such period
 shall be substituted in lieu thereof.
   b. Notwithstanding the provisions of subdivision a  of  this  section,
 with  respect  to  members  of  the New York state employees' retirement
 system who first become members of the New York state and local  employ-
 ees'  retirement system before April first, two thousand twelve, the New
 York state and local police and fire retirement system and the New  York
 city  teachers' retirement system, a member's final average salary shall
 be equal to one-third of the  highest  total  wages  earned  during  any
 continuous  period  of employment for which the member was credited with
 three years of service credit; provided, however, if  the  wages  earned
 during  any  year of credited service included the period used to deter-
 mine final average salary exceeds the average of the wages of the previ-
 ous two years of credited service by more than ten percent,  the  amount
 in excess of ten percent shall be excluded from the computation of final
 average  salary; PROVIDED HOWEVER IF THE AMOUNT IN EXCESS OF TEN PERCENT
 WAS EARNED WHILE WORKING UNDER A    SHARED    SERVICES  AGREEMENT,  SUCH
 EXCESS SHALL BE INCLUDED IN THE COMPUTATION OF THE FINAL AVERAGE SALARY.
 For  members  who  first become a member of the New York state and local
 employees' retirement system on  or  after  April  first,  two  thousand
 twelve,  with respect to members of the New York state and local employ-
 ees' retirement system, a member's final average salary shall  be  equal
 to  one-fifth  of  the  highest total wages earned during any continuous
 period of employment for which the member was credited with  five  years
 of  service  credit;  provided,  however, if the wages earned during any
 year of credited service included the period  used  to  determine  final
 average  salary  exceeds  the  average of the wages of the previous four
 years of credited service by more than ten percent, the amount in excess
 of ten percent shall be excluded from the computation of  final  average
 salary;  PROVIDED  HOWEVER  IF  THE  AMOUNT IN EXCESS OF TEN PERCENT WAS
 EARNED WHILE WORKING UNDER A  SHARED   SERVICES AGREEMENT,  SUCH  EXCESS
 SHALL BE INCLUDED IN THE COMPUTATION OF THE FINAL AVERAGE SALARY.
   E.  FOR THE PURPOSES OF THIS SECTION "SHARED SERVICES AGREEMENT" SHALL
 MEAN AN AGREEMENT ENTERED  INTO  BETWEEN  TWO  OR  MORE  MUNICIPALITIES,
 LIBRARIES,  OR PUBLIC OR QUASI-PUBLIC ORGANIZATIONS PARTICIPATING IN THE
 RETIREMENT SYSTEM, WHEREBY SUCH PARTICIPATING ENTITIES  AGREE  TO  SHARE
 SERVICES DESCRIBED IN SUCH AGREEMENT.
   § 2.  Subdivisions a and b of section 608 of the retirement and social
 security  law, as amended by chapter 18 of the laws of 2012, are amended
 and a new subdivision f is added to read as follows:
   a. For members who first become members of a public retirement  system
 of  the  state before April first, two thousand twelve, a member's final
 average salary shall be the average wages earned by such a member during
 any three consecutive years which  provide  the  highest  average  wage;
 provided,  however,  if the wages earned during any year included in the
 period used to determine final average salary exceeds that of the  aver-
 age  of  the  previous two years by more than ten percent, the amount in
 S. 8461                             3
 
 excess of ten percent shall be excluded from the  computation  of  final
 average  salary; PROVIDED HOWEVER IF THE AMOUNT IN EXCESS OF TEN PERCENT
 WAS EARNED WHILE WORKING UNDER A    SHARED    SERVICES  AGREEMENT,  SUCH
 EXCESS SHALL BE INCLUDED IN THE COMPUTATION OF THE FINAL AVERAGE SALARY.
 For  members  who  first  become members of the New York state and local
 employees' retirement system or the New York state teachers'  retirement
 system  on  or  after April first, two thousand twelve, a member's final
 average salary shall be the average wages earned by such  member  during
 any  five  consecutive  years  which  provide  the highest average wage;
 provided, however, if the wages earned during any year included  in  the
 period  used to determine final average salary exceeds that of the aver-
 age of the previous four years by more than ten percent, the  amount  in
 excess  of  ten  percent shall be excluded from the computation of final
 average salary; PROVIDED HOWEVER IF THE AMOUNT IN EXCESS OF TEN  PERCENT
 WAS  EARNED  WHILE  WORKING  UNDER A   SHARED   SERVICES AGREEMENT, SUCH
 EXCESS SHALL BE INCLUDED IN THE COMPUTATION OF THE FINAL AVERAGE SALARY.
 Where the period used to determine final average salary  is  the  period
 which  immediately  precedes the date of retirement, any month or months
 (not in excess of twelve) which would otherwise be included in computing
 final average salary but during which the member was on authorized leave
 of absence at partial pay or without pay  shall  be  excluded  from  the
 computation  of final average salary and the month or an equal number of
 months immediately preceding such period shall be  substituted  in  lieu
 thereof.
   b.  Notwithstanding  the  provisions of subdivision a of this section,
 with respect to members who first became members of the New  York  state
 and  local  employees' retirement system and the New York city teachers'
 retirement system before April first, two thousand  twelve,  a  member's
 final  average  salary  shall be equal to one-third of the highest total
 wages earned by such member during any continuous period  of  employment
 for  which  the  member was credited with three years of service credit;
 provided, however, if the wages  earned  during  any  year  of  credited
 service  included  in  the period used to determine final average salary
 exceeds the average of the wages of the previous two years  of  credited
 service  by  more  than ten percent, the amount in excess of ten percent
 shall be excluded from the computation of final average salary; PROVIDED
 HOWEVER IF THE AMOUNT IN EXCESS OF TEN PERCENT WAS EARNED WHILE  WORKING
 UNDER  A   SHARED   SERVICES AGREEMENT, SUCH EXCESS SHALL BE INCLUDED IN
 THE COMPUTATION OF THE FINAL AVERAGE SALARY. With respect to members who
 first become members of the New York state and local employees'  retire-
 ment  system  and  the  New  York city teachers' retirement system on or
 after April first, two thousand twelve, a member's final average  salary
 shall  be  equal  to one-fifth of the highest total wages earned by such
 member during any continuous period of employment for which  the  member
 was  credited  with  five years of service credit; provided, however, if
 the wages earned during any year of credited  service  included  in  the
 period used to determine final average salary exceeds the average of the
 wages  of  the  previous four years of credited service by more than ten
 percent, the amount in excess of ten percent shall be excluded from  the
 computation  of  final average salary; PROVIDED HOWEVER IF THE AMOUNT IN
 EXCESS OF TEN PERCENT WAS EARNED WHILE WORKING UNDER A  SHARED  SERVICES
 AGREEMENT, SUCH EXCESS SHALL BE INCLUDED IN THE COMPUTATION OF THE FINAL
 AVERAGE SALARY.
   F. FOR THE PURPOSES OF THIS SECTION "SHARED SERVICES AGREEMENT"  SHALL
 MEAN  AN  AGREEMENT  ENTERED  INTO  BETWEEN  TWO OR MORE MUNICIPALITIES,
 LIBRARIES, OR PUBLIC OR QUASI-PUBLIC ORGANIZATIONS PARTICIPATING IN  THE
 S. 8461                             4
 
 RETIREMENT  SYSTEM,  WHEREBY  SUCH PARTICIPATING ENTITIES AGREE TO SHARE
 SERVICES DESCRIBED IN SUCH AGREEMENT.
   §  3. Section 1209 of the retirement and social security law, as added
 by chapter 18 of the laws of 2012, is amended to read as follows:
   § 1209. Final average salary. A. For members who first become  members
 of  the New York state and local police and fire retirement system on or
 after April first, two thousand twelve, a member's final average  salary
 shall  be  equal  to one-fifth of the highest total wages earned by such
 member during any continuous period of employment for which  the  member
 was  credited  with  five years of service credit; provided, however, if
 the wages earned during any year of credited  service  included  in  the
 period used to determine final average salary exceeds the average of the
 wages  of  the  previous four years of credited service by more than ten
 percent, the amount in excess of ten percent shall be excluded from  the
 computation  of  final average salary; PROVIDED HOWEVER IF THE AMOUNT IN
 EXCESS OF TEN PERCENT WAS EARNED WHILE WORKING UNDER A  SHARED  SERVICES
 AGREEMENT, SUCH EXCESS SHALL BE INCLUDED IN THE COMPUTATION OF THE FINAL
 AVERAGE SALARY.  Wages in excess of the annual salary paid to the gover-
 nor pursuant to section three of article four of the state  constitution
 shall  be  excluded  from  the  computation  of final average salary for
 members who first become members of the New York state and local  police
 and fire retirement system on or after April first, two thousand twelve.
   B.  FOR THE PURPOSES OF THIS SECTION "SHARED SERVICES AGREEMENT" SHALL
 MEAN AN AGREEMENT ENTERED  INTO  BETWEEN  TWO  OR  MORE  MUNICIPALITIES,
 LIBRARIES,  OR PUBLIC OR QUASI-PUBLIC ORGANIZATIONS PARTICIPATING IN THE
 RETIREMENT SYSTEM, WHEREBY SUCH PARTICIPATING ENTITIES  AGREE  TO  SHARE
 SERVICES DESCRIBED IN SUCH AGREEMENT.
   § 4. All costs associated with implementing the provisions of this act
 shall  be  borne by the entities involved in such shared services agree-
 ments and shall not be subject to the provisions of section  twenty-five
 of the retirement and social security law.
   § 5. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill  would allow earnings while working under a shared services
 agreement in excess of the ten percent limitation to be included in  the
 computation  of  final  average salary for tiers 3 through 6. Currently,
 earnings in any year used in computation of  the  final  average  salary
 cannot exceed the average of the previous two years (four years for tier
 6) by more than ten percent. A shared services agreement is an agreement
 between  two  municipalities, libraries or public or quasi-public organ-
 izations participating in the retirement system  which  agree  to  share
 services.
   The  exact  number  of  current  members as well as future members who
 could be affected by this legislation cannot be readily  determined.  In
 all  likelihood, very few members would be affected. However, if a large
 number of members earn salary under  these  shared  services  agreements
 there could be significant additional annual costs.
   If this bill is enacted, insofar as this proposal affects the New York
 State  and Local Employees' Retirement System (NYSLERS), any costs aris-
 ing from this legislation would be shared by the State of New  York  and
 the participating employers in the NYSLERS.
   Insofar  as  this proposal affects the New York State and Local Police
 and Fire Retirement System  (NYSLPFRS),  any  costs  arising  from  this
 legislation would be shared by the State of New York and the participat-
 ing employers in the NYSLPFRS.
   Summary of relevant resources:
 S. 8461                             5
 
   Membership  data as of March 31, 2021 was used in measuring the impact
 of the proposed change, the same data used in the April 1, 2021 actuari-
 al valuation. Distributions and other statistics can  be  found  in  the
 2021  Report  of the Actuary and the 2021 Comprehensive Annual Financial
 Report.
   The  actuarial  assumptions and methods used are described in the 2020
 and 2021 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, 2021
 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  February  18,  2022, and intended for use only
 during the  2022  Legislative  Session,  is  Fiscal  Note  No.  2022-66,
 prepared  by  the  Actuary  for  the New York State and Local Retirement
 System.

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