NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2384
SPONSOR: Abbate 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 grad-
ed 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 conform-
ing 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 conform-
ing 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 employ-
ers, 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 esti-
mated payroll for the fiscal year of billing. Also, these changes will
align the graded rate applicable to the employer with their plan demo-
graphics rather than the system's plan demographics.
Under current law, the same graded rate applies to virtually all employ-
ers (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 aver-
age 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 predomi-
nantly populated by members in Tier 4, Article 15, which made the aver-
age 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 contrib-
ution 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.
