S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8644
 
                             I N  S E N A T E
 
                              March 24, 2022
                                ___________
 
 Introduced  by  Sen.  SAVINO -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 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 TWENTY-THREE, 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.
              

                                                            LBD11454-06-2
 S. 8644                             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 EMPLOYER AND THE
 APPLICABLE UNION FOR THE RETIREMENT SYSTEM SHALL JOINTLY PROVIDE WRITTEN
 NOTICE TO THE EMPLOYEE INFORMING THE EMPLOYEE THAT HE  OR  SHE  HAS  THE
 OPTION TO OPT OUT OF THE AUTOMATIC ENROLLMENT PROGRAM. SUCH NOTICE SHALL
 BE PROVIDED TO THE EMPLOYEE ON THREE OCCASIONS: ON OR BEFORE THE THIRTI-
 ETH  DAY,  THE  SIXTIETH  DAY  AND  THE NINETIETH DAY PRIOR TO AUTOMATIC
 ENROLLMENT IN THE RETIREMENT SYSTEM.  THE AUTOMATIC ENROLLMENT OF ELIGI-
 BLE 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 TWENTY-THREE, 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  TWENTY-THREE,
 UNLESS  SUCH EMPLOYEE FILES WITH THE RETIREMENT SYSTEM AN APPLICATION TO
 OPT OUT OF MEMBERSHIP BEFORE OCTOBER FIRST, TWO  THOUSAND  TWENTY-THREE.
 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.
   (V)  THE  PROVISIONS  OF  THIS  SUBPARAGRAPH  SHALL APPLY TO FULL-TIME
 EMPLOYEES AND PART-TIME EMPLOYEES. THE PROVISIONS OF  THIS  SUBPARAGRAPH
 SHALL NOT APPLY TO PROVISIONAL EMPLOYEES.
   §  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:
 S. 8644                             3
 
   (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.
   § 3. This act shall take effect July 1,  2023.  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 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:
 S. 8644                             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:
 S. 8644                             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.