S T A T E O F N E W Y O R K
________________________________________________________________________
8844--A
Cal. No. 1402
I N S E N A T E
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:
Section 1. Paragraph (b) of subdivision 18 of section 2575 of the
education law, as added by chapter 536 of the laws of 1986, is amended
to read as follows:
(b) (1) Notwithstanding the provisions of paragraph (a) of subdivision
one of this section or any provision of the rules and regulations or any
other provision of law to the contrary, membership in the board of
education retirement system shall include any provisional employee in
education service who elects to become a member in the manner prescribed
by the applicable provisions of subparagraph two [or], subparagraph
three OR SUBPARAGRAPH FOUR of this paragraph.
(2) Any such provisional employee who is not a member of the New York
city employees' retirement system at the time he or she elects to become
a member of the board of education retirement system may make such an
election of membership by filing with the board of education retirement
system a duly executed and acknowledged application for membership.
(3) Any such provisional employee who is a member of the New York city
employees' retirement system at the time he or she elects to become a
member of the board of education retirement system may make such an
election of membership by filing simultaneously with the board of educa-
tion retirement system a duly executed and acknowledged application for
membership and a duly executed and acknowledged request that his or her
membership and service credit in the New York city employees' retirement
system be transferred to the board of education retirement system.
(4)(I) BEGINNING JULY FIRST, TWO THOUSAND NINETEEN, UPON THE ENTRY
INTO EMPLOYMENT OF ANY EMPLOYEE ELIGIBLE TO ELECT MEMBERSHIP IN THE
RETIREMENT SYSTEM PURSUANT TO SUBPARAGRAPHS ONE, TWO AND THREE OF THIS
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
EMPLOYEE IS NOT A MEMBER IN THE RETIREMENT SYSTEM OR ANY OTHER PUBLIC
RETIREMENT SYSTEM OF THE CITY OR STATE OF NEW YORK AS OF SUCH ENTRY DATE
IN COVERED EMPLOYMENT, SUCH EMPLOYEE SHALL BE ENROLLED IN THE RETIREMENT
SYSTEM EFFECTIVE NINETY-ONE DAYS AFTER THE COMMENCEMENT OF EMPLOYMENT.
NOTWITHSTANDING THE PRECEDING, IF SUCH EMPLOYEE FILES WITH THE RETIRE-
MENT SYSTEM AN APPLICATION TO OPT OUT OF MEMBERSHIP WITHIN NINETY DAYS
AFTER COMMENCEMENT OF EMPLOYMENT, THE RETIREMENT SYSTEM SHALL REFRAIN
FROM ENROLLING SUCH EMPLOYEE UNLESS AND UNTIL SUCH EMPLOYEE SUBSEQUENTLY
FILES AN APPLICATION FOR MEMBERSHIP WITH THE RETIREMENT SYSTEM, OR IS
OTHERWISE SUBSEQUENTLY MANDATED TO ENROLL BY THE RULES AND REGULATIONS
OF THE RETIREMENT SYSTEM OR ANY APPLICABLE LAW. THE AUTOMATIC ENROLLMENT
OF ELIGIBLE EMPLOYEES AS PROVIDED FOR IN THIS SUBPARAGRAPH SHALL NOT BE
CONSTRUED TO MODIFY THE RIGHT OF ELIGIBLE EMPLOYEES TO JOIN THE RETIRE-
MENT SYSTEM AS OF THE FIRST DATE OF COVERED EMPLOYMENT BY FILING AN
APPLICATION FOR MEMBERSHIP WITH THE RETIREMENT SYSTEM. THE EMPLOYER
SHALL INFORM THE EMPLOYEE IN WRITING OF THE RIGHT TO JOIN THE SYSTEM AS
WELL AS THE FACT THAT THE EMPLOYEE SHALL BE ENROLLED IN THE RETIREMENT
SYSTEM ON THE NINETY-FIRST DAY AFTER COMMENCEMENT OF EMPLOYMENT, UNLESS
SUCH EMPLOYEE FILES WITH THE RETIREMENT SYSTEM AN APPLICATION TO OPT OUT
OF MEMBERSHIP PRIOR TO SUCH DATE. ANY ELIGIBLE EMPLOYEE WHO ELECTS TO
OPT OUT OF MEMBERSHIP IN THE RETIREMENT SYSTEM WITHIN THE NINETY DAY
PERIOD SHALL RETAIN THE RIGHT TO JOIN SUCH SYSTEM BY SUBSEQUENTLY FILING
AN APPLICATION FOR MEMBERSHIP SO LONG AS SUCH EMPLOYEE REMAINS IN
COVERED EMPLOYMENT.
(II) EVERY CURRENT EMPLOYEE WHO IS ELIGIBLE FOR MEMBERSHIP IN THE
RETIREMENT SYSTEM ON JULY FIRST, TWO THOUSAND NINETEEN, AND WHO IS NOT A
MEMBER IN THE RETIREMENT SYSTEM OR ANY OTHER PUBLIC RETIREMENT SYSTEM OF
THE CITY OR STATE OF NEW YORK, SHALL BE ENROLLED IN THE RETIREMENT
SYSTEM EFFECTIVE OCTOBER FIRST, TWO THOUSAND NINETEEN, UNLESS SUCH
EMPLOYEE FILES WITH THE RETIREMENT SYSTEM AN APPLICATION TO OPT OUT OF
MEMBERSHIP BEFORE OCTOBER FIRST, TWO THOUSAND NINETEEN. SUCH AUTOMATIC
ENROLLMENT IN THE RETIREMENT SYSTEM SHALL NOT BE CONSTRUED TO WAIVE ANY
OF THE ELIGIBILITY REQUIREMENTS FOR PREVIOUS SERVICE CREDIT.
(III) THE AUTOMATIC ENROLLMENT OF ELIGIBLE EMPLOYEES AS PROVIDED FOR
IN THIS SUBPARAGRAPH SHALL NOT BE CONSTRUED TO MODIFY THE RIGHTS AND
OBLIGATIONS OF ANY EMPLOYEE WHOSE PARTICIPATION IN THE RETIREMENT SYSTEM
IS MANDATED BY THE RULES AND REGULATIONS OF THE RETIREMENT SYSTEM OR ANY
APPLICABLE LAW, AND SUCH MANDATED MEMBERS MAY NOT OPT OUT OF MEMBERSHIP.
(IV) IF AN EMPLOYEE WHO IS AUTOMATICALLY ENROLLED IN THE RETIREMENT
SYSTEM PURSUANT TO THE PROVISIONS OF THIS PARAGRAPH IS A MEMBER OF A
UNION, THE RETIREMENT SYSTEM SHALL PROVIDE WRITTEN NOTICE TO THE UNION
OF THE EMPLOYEE'S ENROLLMENT WITHIN THIRTY DAYS OF THE EMPLOYEE'S
ENROLLMENT IN THE RETIREMENT SYSTEM.
§ 2. Paragraph (f) of subdivision 18 of section 2575 of the education
law, as added by chapter 749 of the laws of 1992, is amended to read as
follows:
(f) Notwithstanding the provisions of paragraph (a) of subdivision one
of this section or any provision of the rules and regulations or any
other provision of law to the contrary, membership in the board of
education retirement system shall include any person employed by the New
York city police department in the title of school crossing guard who
becomes a member in the manner prescribed by the provisions of subdivi-
sion g of section 13-638.4 of the administrative code of the city of New
York OR BY THE PROVISIONS OF SUBPARAGRAPH FOUR OF PARAGRAPH (B) OF THIS
SUBDIVISION.
S. 8844--A 3
§ 3. This act shall take effect July 1, 2019. Effective immediately
the addition, amendment and/or repeal of any rule or regulation neces-
sary for the implementation of this act on its effective date are
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.