S T A T E   O F   N E W   Y O R K
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     S. 5468                                                  A. 7399
 
                        2019-2020 Regular Sessions
 
                       S E N A T E - A S S E M B L Y
 
                                May 1, 2019
                                ___________
 
 IN SENATE -- Introduced by Sen. LAVALLE -- read twice and ordered print-
   ed, and when printed to be committed to the Committee on Civil Service
   and Pensions
 
 IN  ASSEMBLY  -- Introduced by M. of A. THIELE -- read once and referred
   to the Committee on Governmental Employees

 AN ACT to amend the retirement and social security law, in  relation  to
   participation  by free association libraries in the New York state and
   local employees' retirement system
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The retirement and social security law is amended by adding
 a new section 31-g to read as follows:
   §  31-G.  PARTICIPATION  BY FREE ASSOCIATION LIBRARIES. A FREE ASSOCI-
 ATION LIBRARY AS DEFINED IN  SECTION  TWO  HUNDRED  FIFTY-THREE  OF  THE
 EDUCATION  LAW  AND  WHICH MEETS THE CRITERIA SET FORTH IN THIS SECTION,
 MAY BY RESOLUTION ADOPTED AS PROVIDED IN SECTION SEVEN HUNDRED EIGHT  OF
 THE  NOT-FOR-PROFIT CORPORATION LAW BY ITS BOARD OF TRUSTEES AND SUBJECT
 TO THE APPROVAL OF THE COMPTROLLER, ELECT TO PARTICIPATE IN THE  RETIRE-
 MENT  SYSTEM.  ACCEPTANCE OF ITS EMPLOYEES FOR MEMBERSHIP IN THE RETIRE-
 MENT SYSTEM SHALL BE MANDATORY WITH THE COMPTROLLER, WHO SHALL DETERMINE
 THE AMOUNTS OF CONTRIBUTION PAYABLE BY SUCH LIBRARY AND  ITS  EMPLOYEES,
 SHALL  RESOLVE  QUESTIONS  OF CREDIT FOR PRIOR SERVICE, AND SHALL IN ALL
 OTHER RESPECTS ASSURE THAT SUCH EMPLOYEES SHARE THE SAME  RIGHTS,  OBLI-
 GATIONS  AND  BENEFITS AS OTHER MEMBERS OF THE RETIREMENT SYSTEM. A FREE
 ASSOCIATION LIBRARY SHALL BE ELIGIBLE  TO  JOIN  THE  RETIREMENT  SYSTEM
 UNDER THE FOLLOWING CONDITIONS:
   (A) SUCH LIBRARY SHALL BE CHARTERED BY THE STATE BOARD OF REGENTS;
   (B)  SUCH  LIBRARY  SHALL SERVE THE ENTIRE POPULATION OF ITS CHARTERED
 SERVICE AREA;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03202-02-9
              

 S. 5468                             2                            A. 7399
 
   (C) THE BOARD OF TRUSTEES OF SUCH LIBRARY  SHALL  BE  ELECTED  BY  THE
 VOTERS OF ITS CHARTERED SERVICE AREA;
   (D) SUCH LIBRARY'S BUDGET SHALL BE APPROVED BY THE VOTERS OF ITS CHAR-
 TERED SERVICE AREA;
   (E)  AT  LEAST FIFTY-ONE PERCENT OF SUCH LIBRARY'S BUDGET SHALL DERIVE
 FROM PUBLIC SOURCES; AND
   (F) SUCH LIBRARY SHALL FILE THE ANNUAL REPORT WITH THE COMPTROLLER  AS
 REQUIRED  OF PUBLIC LIBRARIES BY SECTION THIRTY OF THE GENERAL MUNICIPAL
 LAW.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This bill would permit any free association public library which meets
 certain specific criteria to elect participation in the New  York  State
 and Local Employees' Retirement System (NYSLERS).
   If  this  bill  is  enacted and an eligible corporation elects partic-
 ipation, the future annual cost would  depend  on  the  retirement  plan
 adopted and the billable salary of the electing corporation.
   As  a  percentage  of  payroll, we anticipate that the annual contrib-
 utions of the affected corporation for the fiscal year ending March  31,
 2020, will be as follows:
                        Tier           Rate
                          1       10.6% to 21.4%
                          2        9.7% to 19.4%
                          3            15.7%
                          4            15.7%
                          5            12.9%
                          6             9.2%
   In addition to the annual contributions discussed above, there will be
 a  deficiency cost to the affected corporation which will be payable for
 a 25 year period. These costs will depend on the age,  service,  salary,
 tier status and plan of the affected employees.
   Internal  Revenue  Service (IRS) plan qualification issues: permitting
 participation of non-governmental employees in the NYSLERS  could  jeop-
 ardize   the  Retirement  System's  governmental  plan  status  and  its
 exemption from ERISA. This development could result in the loss of qual-
 ified status, which would mean the loss of  tax  benefits.  This  result
 would  substantially  impair  the  System's  value  to our more than one
 million participants.
   Prior to the enactment of this legislation, we recommend that a favor-
 able ruling be obtained from the IRS stating that these provisions would
 not harm the qualification status of the System. It  is  estimated  that
 the  costs  to obtain such a ruling would be $28,000 for the services of
 the IRS, and $800 per hour for legal consultants.
   Summary of relevant resources:
   The membership data used in  measuring  the  impact  of  the  proposed
 change  was  the same as that used in the March 31, 2018 actuarial valu-
 ation.  Distributions and other statistics can  be  found  in  the  2018
 Report  of  the  Actuary  and  the  2018  Comprehensive Annual Financial
 Report.
   The actuarial assumptions and methods used are described in the  2015,
 2016,  2017  and  2018  Annual  Report  to  the Comptroller on Actuarial
 Assumptions, and the Codes, Rules, and Regulations of the State  of  New
 York: Audit and Control.
   The Market Assets and GASB Disclosures are found in the March 31, 2018
 New  York  State  and  Local  Retirement System Financial Statements and
 Supplementary Information.

 S. 5468                             3                            A. 7399
 
   I am a member of the American Academy of Actuaries and meet the Quali-
 fication Standards to render the actuarial opinion contained herein.
   This  fiscal note does not constitute a legal opinion on the viability
 of the proposed change nor is it intended to serve as a  substitute  for
 the professional judgment of an attorney.
   This  estimate, dated April 19, 2019, and intended for use only during
 the 2019 Legislative Session, is Fiscal Note No. 2019-103,  prepared  by
 the Actuary for the New York State and Local Retirement System.