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A09620 Summary:

BILL NOA09620
 
SAME ASSAME AS S08644
 
SPONSORAbbate
 
COSPNSRAubry
 
MLTSPNSR
 
Amd §2575, Ed L
 
Provides for the automatic enrollment of employees of the city of New York eligible to join the New York city board of education retirement system.
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A09620 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          9620
 
                   IN ASSEMBLY
 
                                     March 28, 2022
                                       ___________
 
        Introduced by M. of A. ABBATE -- read once and referred to the Committee
          on Governmental Employees
 
        AN  ACT  to  amend  the  education law, in relation to providing for the
          automatic enrollment of employees of the city of New York eligible  to
          join the New York city board of education retirement system
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Paragraph (b) of subdivision 18  of  section  2575  of  the
     2  education  law,  as added by chapter 536 of the laws of 1986, is amended
     3  to read as follows:
     4    (b) (1) Notwithstanding the provisions of paragraph (a) of subdivision
     5  one of this section or any provision of the rules and regulations or any
     6  other provision of law to the  contrary,  membership  in  the  board  of
     7  education  retirement  system  shall include any provisional employee in
     8  education service who elects to become a member in the manner prescribed
     9  by the applicable provisions  of  subparagraph  two  [or],  subparagraph
    10  three or subparagraph four of this paragraph.
    11    (2)  Any such provisional employee who is not a member of the New York
    12  city employees' retirement system at the time he or she elects to become
    13  a member of the board of education retirement system may  make  such  an
    14  election  of membership by filing with the board of education retirement
    15  system a duly executed and acknowledged application for membership.
    16    (3) Any such provisional employee who is a member of the New York city
    17  employees' retirement system at the time he or she elects  to  become  a
    18  member  of  the  board  of  education retirement system may make such an
    19  election of membership by filing simultaneously with the board of educa-
    20  tion retirement system a duly executed and acknowledged application  for
    21  membership  and a duly executed and acknowledged request that his or her
    22  membership and service credit in the New York city employees' retirement
    23  system be transferred to the board of education retirement system.
    24    (4)(i) Beginning July first, two thousand twenty-three, upon the entry
    25  into employment of any employee eligible  to  elect  membership  in  the
    26  retirement  system  pursuant to subparagraphs one, two and three of this
    27  paragraph or any other applicable provision of law,  and  provided  such
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11454-06-2

        A. 9620                             2
 
     1  employee  is  not  a member in the retirement system or any other public
     2  retirement system of the city or state of New York as of such entry date
     3  in covered employment, such employee shall be enrolled in the retirement
     4  system  effective  ninety-one days after the commencement of employment.
     5  Notwithstanding the preceding, if such employee files with  the  retire-
     6  ment  system  an application to opt out of membership within ninety days
     7  after commencement of employment, the retirement  system  shall  refrain
     8  from enrolling such employee unless and until such employee subsequently
     9  files  an  application  for membership with the retirement system, or is
    10  otherwise subsequently mandated to enroll by the rules  and  regulations
    11  of  the  retirement  system  or any applicable law. The employer and the
    12  applicable union for the retirement system shall jointly provide written
    13  notice to the employee informing the employee that he  or  she  has  the
    14  option to opt out of the automatic enrollment program. Such notice shall
    15  be provided to the employee on three occasions: on or before the thirti-
    16  eth  day,  the  sixtieth  day  and  the ninetieth day prior to automatic
    17  enrollment in the retirement system.  The automatic enrollment of eligi-
    18  ble employees  as  provided  for  in  this  subparagraph  shall  not  be
    19  construed  to modify the right of eligible employees to join the retire-
    20  ment system as of the first date of  covered  employment  by  filing  an
    21  application  for  membership  with  the  retirement system. The employer
    22  shall inform the employee in writing of the right to join the system  as
    23  well  as  the fact that the employee shall be enrolled in the retirement
    24  system on the ninety-first day after commencement of employment,  unless
    25  such employee files with the retirement system an application to opt out
    26  of  membership  prior  to such date. Any eligible employee who elects to
    27  opt out of membership in the retirement system  within  the  ninety  day
    28  period shall retain the right to join such system by subsequently filing
    29  an  application  for  membership  so  long  as  such employee remains in
    30  covered employment.
    31    (ii) Every current employee who is  eligible  for  membership  in  the
    32  retirement  system  on July first, two thousand twenty-three, and who is
    33  not a member in the retirement system or  any  other  public  retirement
    34  system  of  the  city  or  state  of  New York, shall be enrolled in the
    35  retirement system effective October first,  two  thousand  twenty-three,
    36  unless  such employee files with the retirement system an application to
    37  opt out of membership before October first, two  thousand  twenty-three.
    38  Such  automatic  enrollment  in  the  retirement  system  shall  not  be
    39  construed to waive any of  the  eligibility  requirements  for  previous
    40  service credit.
    41    (iii)  The  automatic enrollment of eligible employees as provided for
    42  in this subparagraph shall not be construed to  modify  the  rights  and
    43  obligations of any employee whose participation in the retirement system
    44  is mandated by the rules and regulations of the retirement system or any
    45  applicable law, and such mandated members may not opt out of membership.
    46    (iv)  If  an  employee who is automatically enrolled in the retirement
    47  system pursuant to the provisions of this paragraph is  a  member  of  a
    48  union,  the  retirement system shall provide written notice to the union
    49  of the employee's  enrollment  within  thirty  days  of  the  employee's
    50  enrollment in the retirement system.
    51    (v)  The  provisions  of  this  subparagraph  shall apply to full-time
    52  employees and part-time employees. The provisions of  this  subparagraph
    53  shall not apply to provisional employees.
    54    §  2. Paragraph (f) of subdivision 18 of section 2575 of the education
    55  law, as added by chapter 749 of the laws of 1992, is amended to read  as
    56  follows:

        A. 9620                             3

     1    (f) Notwithstanding the provisions of paragraph (a) of subdivision one
     2  of  this  section  or  any provision of the rules and regulations or any
     3  other provision of law to the  contrary,  membership  in  the  board  of
     4  education retirement system shall include any person employed by the New
     5  York  city  police  department in the title of school crossing guard who
     6  becomes a member in the manner prescribed by the provisions of  subdivi-
     7  sion g of section 13-638.4 of the administrative code of the city of New
     8  York  or by the provisions of subparagraph four of paragraph (b) of this
     9  subdivision.
    10    § 3. This act shall take effect July 1,  2023.  Effective  immediately
    11  the  addition,  amendment and/or repeal of any rule or regulation neces-
    12  sary for the implementation of  this  act  on  its  effective  date  are
    13  authorized to be made and completed on or before such date.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY OF BILL: This proposed legislation would amend Section 2575 of
        the  Education  Law  to  require  certain new and existing New York City
        Board of Education Retirement System (BERS) eligible employees, who  are
        non-provisional,  not  currently  mandated to join BERS, and who are not
        otherwise already a member in a  public  retirement  system  within  the
        State,  to  be  enrolled into BERS membership within stated time periods
        unless the employees timely opt out of such membership.
          Under current law, certain BERS eligible employees,  including  provi-
        sional  employees  in competitive or labor class titles and employees in
        non-competitive and exempt class titles, have the option of joining BERS
        by filing an application for membership at any  time  during  employment
        with  a  BERS participating employer. Permanent employees in the compet-
        itive or labor class, who are employed in BERS eligible  positions,  are
        currently mandated into BERS membership.
          The  proposed  legislation would require BERS to enroll new non-provi-
        sional and non-permanent eligible employees (e.g.,  non-competitive  and
        exempt class titles) into BERS membership, within 90 days of employment,
        unless the employee files an application with BERS to opt out of member-
        ship  within the 90-day period. An existing non-provisional and non-per-
        manent eligible employee who is  not  already  a  BERS  member  will  be
        enrolled as a BERS member on October 1, 2023, unless such employee files
        an application with BERS to opt out of membership by September 30, 2023.
          A BERS eligible employee who timely opts out of BERS automatic enroll-
        ment  may  still  join BERS at any time during employment with a partic-
        ipating employer upon the filing of  an  application.  A  BERS  eligible
        employee  who  would  be subject to automatic enrollment may voluntarily
        join BERS prior to the automatic enrollment date.  The  proposed  legis-
        lation  would  have  no  effect  on  employees  who  are, under existing
        provisions of law, required to become BERS members.
          The proposed legislation also requires  BERS  participating  employers
        and affected unions to provide multiple scheduled written notices of the
        applicable  provisions  to  new  employees  and requires BERS to provide
        written notice to the employee's union within 30 days of the  employee's
        enrollment into BERS.
          Effective Date: July 1, 2023.
          FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: If enacted into law,
        the  ultimate employer cost for this proposed legislation would be based
        on the number, ages, years of service, and  salary  of  those  employees
        that would have otherwise not elected to become members of BERS.
          Based  on  the  data and these statistics herein, and assuming no BERS
        eligible employee opts out of participation, the Office of  the  Actuary
        (OA) has estimated the following costs for this legislation:

        A. 9620                             4
 
          * The additional annual employer contribution will be $12.9 million if
        no prior years of service are purchased by these individuals.
          * The additional annual employer contribution will be $19.7 million if
        all  years  of prior service eligible for buyback are purchased by these
        individuals.
          Note that the first year's  additional  annual  employer  contribution
        will likely be significantly larger than these amounts due to the accel-
        eration  of  membership  for  certain  individuals. However, the present
        value of the future liabilities for each of  these  respective  contrib-
        ution streams does not change.
          Finally, for purposes of determining the portion of the annual employ-
        er  contribution  attributable  to the buyback of prior service, we have
        assumed an amortization period of 15 years (14 payments under  the  One-
        Year Lag Methodology used in the actuarial valuation).
          CONTRIBUTION  TIMING:  For  the  purposes  of  this Fiscal Note, it is
        assumed that since the proposed legislation requires BERS to enroll  all
        existing  eligible employees (who are not already members and who do not
        opt out) into BERS on October 1, 2023, the increase in employer contrib-
        utions for BERS could be first reflected as  early  as  in  Fiscal  Year
        2025.
          CENSUS  DATA:  The estimates presented herein are based on information
        provided by BERS for 19,644 individuals who are non-provisional and  not
        currently  members  of BERS, but could voluntarily elect to participate.
        This group consists of 18,306 part-time and 1,338  full-time  employees,
        is  71%  female,  and  has  an average age of 36.6 years, average annual
        salary of approximately $31,700, and average service since date of  hire
        of 4.5 years.
          The OA was advised that employees in Payroll Codes 056, 744, 745, 746,
        and  747  work  part-time and earned 0.67 years, 0.28 years, 0.78 years,
        0.68 years, and 0.05 years of service per year on average, respectively.
        Employees in Payroll Codes 740 and 742 are generally  full-time  employ-
        ees.
          Finally, the OA was advised that approximately 55% of eligible employ-
        ees  who  are  not currently BERS members are assumed to eventually join
        BERS.  These assumptions are reflected in the OA's calculations.
          ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value of
        future  employer  contributions  and   annual   employer   contributions
        presented herein have been calculated based on the actuarial assumptions
        and  methods  in effect for the June 30, 2021 (Lag) actuarial valuations
        used to determine the Preliminary Fiscal  Year  2023  employer  contrib-
        utions of BERS.
          These  estimates  assume  that  the  fractional  years  of  service as
        described above remains unchanged in the future.  These  estimates  also
        assume  a  level  workforce  (i.e., the number, salary, age, and service
        characteristics of the added group  remain  approximately  the  same  in
        future years).
          RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
        highly on the realization of the actuarial assumptions used, as well  as
        certain  demographic characteristics of BERS and other exogenous factors
        such as investment, contribution, and other risks. If actual  experience
        deviates  from actuarial assumptions, the actual costs could differ from
        those presented herein. Costs are also dependent on the actuarial  meth-
        ods  used,  and  therefore  different  actuarial  methods  could produce
        different results. Quantifying these risks is beyond the scope  of  this
        Fiscal Note.
          Not measured in this Fiscal Note are the following:

        A. 9620                             5
 
          *  The potential savings to other New York City Retirement Systems and
        Pension Funds (NYCRS) as the result of these employees becoming  members
        in BERS instead of another NYCRS.
          *  The  initial, additional administrative costs of BERS and other New
        York City agencies to implement the proposed legislation.
          * The impact of this  proposed  legislation  on  Other  Postemployment
        Benefit (OPEB) costs.
          *  The cost of potential Tax-Deferred Annuity (TDA) plan participation
        and benefits.
          STATEMENT OF ACTUARIAL OPINION: I, Michael J. Samet,  am  the  Interim
        Chief  Actuary  for,  and  independent  of, the New York City Retirement
        Systems and Pension Funds. I am a Fellow of the Society of Actuaries and
        a Member of the American Academy of Actuaries. I meet the  Qualification
        Standards  of  the American Academy of Actuaries to render the actuarial
        opinion contained herein. To the  best  of  my  knowledge,  the  results
        contained  herein  have  been  prepared  in  accordance  with  generally
        accepted actuarial principles and  procedures  and  with  the  Actuarial
        Standards of Practice issued by the Actuarial Standards Board.
          FISCAL  NOTE  IDENTIFICATION: This Fiscal Note 2022-04 dated March 17,
        2022 was prepared by the Interim Chief Actuary for  the  New  York  City
        Board  of Education Retirement System. This estimate is intended for use
        only during the 2022 Legislative Session.
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