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S08844 Summary:

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S08844 Committee Votes:

S08844 Floor Votes:

S08844 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         8844--A
            Cal. No. 1402
 
                    IN SENATE
 
                                      May 24, 2018
                                       ___________
 
        Introduced  by  Sen.  SAVINO -- read twice and ordered printed, and when
          printed to be committed to the Committee on Civil Service and Pensions
          -- reported favorably from said committee, ordered  to  first  report,
          amended  on  first  report,  ordered  to  a  second report and ordered
          reprinted, retaining its place in the order of second report

        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 nineteen, 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.
                                                                   LBD10847-16-8
        S. 8844--A                          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 automatic enrollment
    12  of  eligible employees as provided for in this subparagraph shall not be
    13  construed to modify the right of eligible employees to join the  retire-
    14  ment  system  as  of  the  first date of covered employment by filing an
    15  application for membership with  the  retirement  system.  The  employer
    16  shall  inform the employee in writing of the right to join the system as
    17  well as the fact that the employee shall be enrolled in  the  retirement
    18  system  on the ninety-first day after commencement of employment, unless
    19  such employee files with the retirement system an application to opt out
    20  of membership prior to such date. Any eligible employee  who  elects  to
    21  opt  out  of  membership  in the retirement system within the ninety day
    22  period shall retain the right to join such system by subsequently filing
    23  an application for membership  so  long  as  such  employee  remains  in
    24  covered employment.
    25    (ii)  Every  current  employee  who  is eligible for membership in the
    26  retirement system on July first, two thousand nineteen, and who is not a
    27  member in the retirement system or any other public retirement system of
    28  the city or state of New York,  shall  be  enrolled  in  the  retirement
    29  system  effective  October  first,  two  thousand  nineteen, unless such
    30  employee files with the retirement system an application to opt  out  of
    31  membership  before  October first, two thousand nineteen. Such automatic
    32  enrollment in the retirement system shall not be construed to waive  any
    33  of the eligibility requirements for previous service credit.
    34    (iii)  The  automatic enrollment of eligible employees as provided for
    35  in this subparagraph shall not be construed to  modify  the  rights  and
    36  obligations of any employee whose participation in the retirement system
    37  is mandated by the rules and regulations of the retirement system or any
    38  applicable law, and such mandated members may not opt out of membership.
    39    (iv)  If  an  employee who is automatically enrolled in the retirement
    40  system pursuant to the provisions of this paragraph is  a  member  of  a
    41  union,  the  retirement system shall provide written notice to the union
    42  of the employee's  enrollment  within  thirty  days  of  the  employee's
    43  enrollment in the retirement system.
    44    §  2. Paragraph (f) of subdivision 18 of section 2575 of the education
    45  law, as added by chapter 749 of the laws of 1992, is amended to read  as
    46  follows:
    47    (f) Notwithstanding the provisions of paragraph (a) of subdivision one
    48  of  this  section  or  any provision of the rules and regulations or any
    49  other provision of law to the  contrary,  membership  in  the  board  of
    50  education retirement system shall include any person employed by the New
    51  York  city  police  department in the title of school crossing guard who
    52  becomes a member in the manner prescribed by the provisions of  subdivi-
    53  sion g of section 13-638.4 of the administrative code of the city of New
    54  York  or by the provisions of subparagraph four of paragraph (b) of this
    55  subdivision.
        S. 8844--A                          3
 
     1    § 3. This act shall take effect July 1, 2019.   Effective  immediately
     2  the  addition,  amendment and/or repeal of any rule or regulation neces-
     3  sary for the implementation of  this  act  on  its  effective  date  are
     4  authorized to be made 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 new and existing New York City Board of
        Education Retirement System  (BERS)  eligible  employees,  who  are  not
        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 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  competitive or labor class, who are employed in BERS eligible posi-
        tions, are currently mandated into BERS membership.
          The proposed legislation would require BERS  to  enroll  new  eligible
        employees into BERS membership, within 90 days of employment, unless the
        employee  files an application with BERS to opt out of membership within
        the 90-day period. An existing eligible employee who is  not  already  a
        BERS  member will be enrolled a a BERS member on October 1, 2019, unless
        such employee files an application with BERS to opt out of membership by
        September 30, 2019.
          A BERS eligible employee who timely opts out of BERS automatic enroll-
        ment may still join BERS at any time during employment with anticipating
        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 legislation 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 to
        provide  written  notice  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, 2019.
          FINANCIAL  IMPACT  -  ADDITIONAL  ANNUAL  EMPLOYER  CONTRIBUTIONS:  If
        enacted into law, the ultimate employer cost for  this  proposed  legis-
        lation  would be based on the number, ages, years of service, and salary
        of those employees that would  otherwise  not  have  elected  to  become
        members of BERS.
          To  prepare  this  Fiscal  Note,  the  Office  of the Actuary (OA) was
        supplied a file of 28,289 individuals who are not currently  members  of
        BERS  but  could voluntarily elect to participate. This group consist of
        26,179 part-time and 2,110 full-time employees, is 64% female,  and  has
        an  average age of 30.8, average annual salary of approximately $22,410,
        and average service since date of hire of 2.5 years. The OA was  advised
        that  employees  in Payroll Codes 056, 744, 745, 746, and 747 work part-
        time and earned 0.72 years, 0.44 years, 0.80 years, 0.60 years, and 0.06
        years of service per year on average, respectively. Employees in Payroll
        Codes 740 and 742 are generally full-time employees. Finally, the OA was
        advised that approximately 73% of  eligible  employees  eventually  join
        BERS. These assumptions are reflected in the OA's calculations.
          Based on this data and these statistics, and assuming no BERS eligible
        employee  opts  out of participation, the OA has estimated the following
        costs for this legislation:
        S. 8844--A                          4
 
          * The additional annual employer contribution will be $19.1 million if
        no prior years of service are purchased by these individuals.
          * The additional annual employer contribution will be $28.4 million if
        all  years  of prior service eligible for buyback are purchased by these
        individuals.
          Note that the fiscal year's additional  annual  employer  contribution
        will likely be significantly larger than those amounts due to the accel-
        eration  of  membership  for  certain  individuals. The present value of
        future liabilities for both contribution streams, however, will  be  the
        same.
          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).    Finally,  for  purposes of determining the portion of
        annual employer  contribution  attributable  to  the  buyback  of  prior
        service, we have assumed an amortization period of 15 years (14 payments
        under the Lag methodology used in the actuarial valuation).
          CONTRIBUTION  TIMING:  Since the proposed legislation required BERS to
        enroll all existing eligible employees (who are not already members  and
        who  do  not  opt  out)  into  BERS  on October 1, 2019, the increase in
        employer contributions for BERS  would  likely  first  be  reflected  in
        Fiscal Year 2020.
          OTHER COSTS: Not measured in this Fiscal Note are the following poten-
        tial costs:
          *  The  additional  administrative costs to BERS and its participating
        employers to implement the proposed legislation.
          * The impact of this  proposed  legislation  on  Other  Postemployment
        Benefit (OPEB) costs. Since a retiree who receives a pension from one of
        the  New  York  City  Retirement  Systems is eligible for OPEB, there is
        potential for additional OPEB costs  if  this  proposed  legislation  is
        enacted.
          ACTUARIAL  ASSUMPTIONS  AND  METHODS:  In  addition to the assumptions
        above, the additional employer contributions presented herein have  been
        calculated based on the same actuarial assumptions and methods in effect
        for  the  June,  30 2017 (Lag) actuarial valuation used to determine the
        Preliminary Fiscal Year 2019 employer contributions of BERS. Please note
        these assumptions and methods are subject to change as this valuation is
        not considered final until end of the Fiscal Year 2019.
          STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief  Actu-
        ary  for,  and  independent of, the New York City Retirement Systems and
        Pension Funds. I am a Fellow of the Society of  Actuaries,  an  Enrolled
        Actuary  under  the  Employee Retirement Income and Security Act of 1974
        (ERISA), a Member of the American Academy of Actuaries, and a Fellow  of
        the  Conference of Consulting Actuaries. I meet the Qualification Stand-
        ards of the American Academy of Actuaries to render the actuarial  opin-
        ion contained herein. To the best of my knowledge, the results contained
        herein have been prepared in accordance with generally accepted actuari-
        al  principles  and procedures and with the Actuarial Standards of Prac-
        tice issued by the Actuarial Standards Board.
          FISCAL NOTE IDENTIFICATION: This Fiscal Note  2018-28  dated  May  18,
        2018,  was  prepared by the Chief Actuary for the New York City Board of
        Education Retirement System. This estimate  is  intended  for  use  only
        during the 2018 Legislative Session.