S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4245
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                             February 6, 2023
                                ___________
 
 Introduced  by  Sen. PALUMBO -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 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;
   (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;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03853-02-3
 S. 4245                             2
              

 
   (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 during the 2023 legislative  session,  and  an
 eligible  corporation elects participation, 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,
 2024, will be as follows:
 
                     Tier    Rate
                     1       9.8% to 19.7%
                     2       9.1% to 18.0%
                     3       14.8%
                     4       14.8%
                     5       12.8%
                     6       9.4%

   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. This cost 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:
   Membership data as of March 31, 2022 was used in measuring the  impact
 of the proposed change, the same data used in the April 1, 2022 actuari-
 al  valuation.  Distributions  and  other statistics can be found in the
 2022 Report of the Actuary and the 2022 Annual  Comprehensive  Financial
 Report.
   The  actuarial assumptions and methods used are described in the 2020,
 2021, and 2022 Annual Report to the  Comptroller  on  Actuarial  Assump-
 tions,  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, 2022
 New York State and Local  Retirement  System  Financial  Statements  and
 Supplementary Information.
 S. 4245                             3
 
   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  February  2,  2023,  and intended for use only
 during the  2023  Legislative  Session,  is  Fiscal  Note  No.  2023-40,
 prepared  by  the  Actuary  for  the New York State and Local Retirement
 System.