§ 399. Special annuity and custodial account programs authorized. 1.
An employer is hereby authorized to establish by resolution special
annuity and custodial account programs which shall provide for the
purchase of contracts or establishment of custodial accounts providing
retirement and death benefits for or on behalf of employees electing to
enter into an agreement with such employer providing for a reduction of
annual salary for the purpose of purchasing such contracts or for making
contributions to such custodial accounts.

2. Where the employer has established a special annuity and/or
custodial account program authorized by this article, any employee may
enter into an agreement with his employer for the reduction of his
salary which is earned after the effective date of such agreement and
for contributions to the purchase of an annuity contract or to a
custodial account for such employee by his employer in an amount equal
to the reduction in salary so agreed on. The employer shall purchase the
annuity contract or make contributions to the custodial account for such
employee entering into such an agreement from the insurer or custodian
designated pursuant to subdivision four of this section. Such annuity
contract shall be issued to, and become the property of, such employee
whose rights therein shall be non-forfeitable except for failure to pay
future premiums or such custodial account shall be established on behalf
of such employee whose rights therein are non-forfeitable. Neither the
state, or a political subdivision thereof, nor an employer shall be a
party to any annuity contract purchased or custodial account established
in whole or in part with payments pursuant to said agreement, and no
retirement, death or other benefit shall be payable by the state, or
political subdivision thereof, or by an employer under such agreement or
such annuity contract or custodial account.

3. Subject to approval and filing, as hereinafter provided by the
comptroller, any such agreement shall specify the amount of such
reduction, and the effective date thereof, and shall be binding and
irrevocable as to both parties thereto during the continuation of such
employee's employment with the employer; provided, however, that such
agreement may be terminated in accordance with university guidelines
upon notice in writing by either party. Such termination shall take
effect at the beginning of the payroll period the first day of which is
nearest to the thirtieth day following the day on which such
notification of termination was (i) received by the employer, in the
event such termination is initiated by the employee, or (ii) sent to the
employee in the event such termination is initiated by the employer.

4. The board of trustees of state university with respect to the state
university and the community colleges, and the board of trustees of the
city university with respect to employees of the city university of New
York, shall designate the insurer or insurers from which such annuity
contracts or in the case of custodial accounts, the company or companies
from whom regulated investment company shares shall be purchased. In
making such designation, due consideration shall be given to (a) the
nature and extent of the rights and benefits to be provided by contracts
for such special annuity or custodial account for employees and their
beneficiaries, (b) the relation of such rights and benefits to the
amount of contributions to be made for such contracts, (c) the
suitability of such rights and benefits to the needs and interests of
employees, and to the interests of employers in the employment and
retention of employees, and (d) the authority and ability of the
designated insurer or insurers or designated company or companies to
provide rights and benefits under such contracts or custodial accounts.

5. The board of trustees of state university, with respect to the
state university and the community colleges, and the board of trustees
of the city of New York with respect to the city university, are hereby
authorized to provide for the administration of a program for the
purchase of such special annuities or establishment of custodial
accounts, and to perform or authorize the performance of such functions
as may be necessary for such purpose in accordance with this section.

6. No agreement for reduction of salary as authorized by this section
or any termination thereof shall become effective until approved by and
filed with the comptroller. Upon such approval and filing the
comptroller shall reduce an employee's salary pursuant to said agreement
and pay an amount equal to the amount agreed upon for such salary
reduction as an employer contribution to the designated insurer or
insurers or designated custodian or custodians. Notwithstanding the
reductions of salary authorized by this article, (i) the amount of
employer and employee contributions otherwise required on behalf of an
employee electing the optional retirement program pursuant to articles
eight-B or one hundred twenty-five-A of this chapter, as the case may
be, shall continue to be made on the basis of the salary of such
employee without regard to such reduction, or (ii) in the event a member
of a public retirement system in this state agrees to a reduction of his
salary in accordance with this subdivision, such agreement shall not
cause him to lose any benefits under such public retirement system to
which he would be otherwise entitled had he not agreed to reduce his
salary for the purpose of having a special annuity purchased or
contributions to a custodial account made on his behalf, and any
required employer and employee contributions shall continue to be made
on the basis of the salary of such employee without regard to such
reduction. Any survivor's benefit payable pursuant to the civil service
law shall be based upon the salary of such employee without regard to
the reduction authorized by this article.

7. Any payroll deduction, other than income tax withholdings as
required by law, which may be required or authorized pursuant to law,
contract, agreement, or any other instrument, the amount of which is
determined in relation to an employee's earnings, shall be based on the
salary of such employee without regard to reduction thereof pursuant to
any agreement authorized by this article.

8. An employee agreeing to have his salary reduced in accordance with
this article shall be paid an amount equal to his salary less the amount
of the reduction pursuant to such agreement and any deductions
authorized by law, such amount to be paid in equal installments in
accordance with the payroll procedure otherwise appropriate.

9. Payments for contracts providing for a special annuity or custodial
account shall be made by the comptroller to the designated insurer or
insurers or designated custodians out of moneys otherwise available in
accordance with law for salaries of the employees for whom such
annuities are purchased or contributions to such custodial accounts are
made.

10. Nothing contained in this section shall impair or prevent any
agreements which have heretofore, or may hereafter be, entered into
between Alfred university and any employee of the state college of
ceramics under the management and control of Alfred university as the
representative of the state university trustees, or between Cornell
university and any employee of the state colleges of agriculture, home
economics, veterinary medicine or industrial and labor relations, the
state agricultural experiment station at Geneva, or any other
institution or agency under the management and control of Cornell
university as representative of the state university trustees for
reduction of the basic annual salary of any such employee as otherwise
fixed by or pursuant to law and purchase of a special annuity or
contribution to a custodial account on his behalf. In the case of any
such employee whose salary is paid directly to him by the state, the
comptroller is hereby authorized to reduce his salary in accordance with
any such agreement as certified on the appropriate payroll and upon the
audit and warrant of the comptroller the amount of any such reduction
shall be paid to Alfred university or Cornell university, as the case
may be, out of moneys appropriated and otherwise available for the
payment of such employee's salary, for the purchase by such university
of a special annuity or contribution to a custodial account for such
employee. No agreement for reduction of salary and purchase of a special
annuity or contribution to a custodial account by any employee to whom
this subdivision is applicable shall cause him to lose any benefits to
which he would otherwise be entitled by reason of membership in the New
York state and local employees' retirement system and any required
employer and employee contributions to such system shall continue to be
made on the basis of the salary of such employee without regard to such
reduction. In the case of any such employee electing the optional
retirement program the amount of employer and employee contributions
otherwise required shall continue to be made on the basis of the salary
of such employee without regard to such reduction. Any survivor's
benefit payable pursuant to the civil service law shall be based on the
salary of any employee to whom this subdivision is applicable without
regard to his agreement for reduction thereof. Subdivisions seven and
eight of this section shall apply to employees to whom this subdivision
is applicable who enter into agreements for reduction of salary and
purchase of special annuities or contribution to a custodial account.