NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4983A
SPONSOR: Abbate TITLE OF BILL: An act to amend the retirement and social security
law, in relation to clarifying the maximum salary which may be used to
calculate the ordinary death benefit of members of the public retirement
systems of the state
PURPOSE OF THE BILL:
This bill is intended to clarify the maximum salary which may be used in
the calculation of the paragraph 2 ordinary death benefit pursuant to
Retirement and Social Security Law §§ 448(c), 508(c) and 606(c).
SUMMARY AND JUSTIFICATION:
This bill amends Retirement and Social Security Law §§ 448(c), 508(c)
and 606(c) to clarify the maximum salary used to calculate the ordinary
death benefit for members with a date of membership on or after July 1,
1973. Currently, these provisions specify that the paragraph 2 death
benefit is to be calculated using the member's regular compensation
earned during the member's last twelve months of service in full pay
status as a member, provided such salary shall exclude any form of
termination pay, any lump sum payment for deferred compensation sick
leave, any lump sum payment for accumulated vacation credit or any other
payment for time not worked. Additionally, for the purposes of the
paragraph 2 ordinary death benefit calculation under these provisions, a
member's salary shall not exceed the maximum salary specified in Civil
Service Law Section § 130.
In 2011, Section 130 of the Civil Service Law was amended by Chapter 491
which was signed into law August 17, 2011, and retroactive to April 1,
2011. Unlike prior amendments to Civil Service Law § 130, Chapter 491
reduced, rather than increased, the maximum salary specified in that
section. The maximum salary specified under Civil Service Law §
130(1)(d) has been $163,772 since April of 2007, when it was repealed
and added by part B of Chapter 10 of the Laws of 2008. After the enact-
ment of Chapter 491, the maximum salary specified under Civil Service
Law § 130(1)(e) is $163,033.
In 2012, Chapters 15, 37, 67, 257 and 261 made further amendments to the
provisions of Section 130 of the Civil Service Law and enacted various
negotiated state labor agreements. The amendments made by these subse-
quent chapters did not rectify the amendments made by Chapter 491 of the
Laws of 2011. Moreover, yet another maximum salary is provided for under
Chapter 37 of the Laws of 2012.
The amendments reducing the maximum salary specified in Civil Service
Law § 130 for the purposes of the paragraph 2 ordinary death benefit
raise a potential constitutional problem in the calculation of such
benefit and it is for this reason that the Retirement System seeks the
amendments proposed in this bill. Article V, Section 7 of the New York
Constitution prohibits any diminishment or impairment of retirement
system benefits of existing members and retirees. Thus, while the Legis-
lature may be free to change Civil Service Law § 130 as applicable to
the salaries of state workers, Article V, Section 7 would, by its appli-
cation, prevent any reduction in death benefits of affected members
caused by using the reduced Civil Service Law § 130 maximum salary in
the calculation of a paragraph 2 ordinary death benefit.
The amendments proposed in this bill would remedy the administrative
difficulty of having multiple maximum salaries and avoid the possible
constitutional problem by providing a permanent alternative maximum
salary to be used in the ordinary death benefit calculation. Further,
these amendments would assure a uniform maximum salary applicable to all
retirement system members and retirees without regard to date of member-
ship. The amendments proposed in this bill would allow the retirement
systems to calculate the paragraph 2 ordinary death benefit using a
maximum salary which shall not be less than the maximum salary provided
for under Civil Service Law § 130, as it was added by part 13 of Chapter
10 of the Laws of 2008, or the maximum salary specified under Civil
Service Law § 130, as thereafter amended, whichever is greater. As the
provision of in-service death benefits is ancillary to the main mission
of retirement systems to provide retirement security, the ordinary death
benefit provisions were intended to provide a uniform calculation for
the death benefit. As such, the amendments proposed in the bill are
consistent with such intent. The permanent alternative maximum salary
would mediate any risk of constitutional challenge and maintain a
uniform calculation of the death benefit provided in Retirement and
Social Security Law §§ 448(c), 508(e) and 606(c).
EFFECTIVE DATE OF THE BILL:
This bill shall take effect immediately and shall be deemed to have been
in full force and effect on and after April 1, 2011.
OTHER AGENCIES TO WHOM THE BILL MAY BE OF INTEREST:
Division of the Budget, Department of Financial Services, State Comp-
troller and New York City.
BUDGETARY IMPLICATIONS OF THE BILL:
The annual cost to the employers of members of the New York State Teach-
ers' Retirement System is estimated to be negligible if this bill is
enacted.
