§ 5. Deferred compensation. 1. The deferred compensation board is
hereby established, to consist of one member appointed by the governor,
one member appointed by the temporary president of the senate and one
member appointed by the speaker of the assembly. The board shall adopt
rules and regulations regarding the standards and requirements of all
deferred compensation plans established pursuant to this section,
including selection of financial organizations for investment purposes.

2. a. Notwithstanding any other provision of law, the deferred
compensation board shall establish a deferred compensation plan, under
the provisions of section four hundred fifty-seven of the internal
revenue code and regulations adopted pursuant thereto, for all state
employees and shall promulgate rules and regulations as soon as is
reasonably practicable following the appointment of all members of the
board for the appropriate administration of such a plan.

b. The board shall enter into written agreements with one or more
financial organizations to administer the deferred compensation plan for
state employees and to invest funds held pursuant to such plan. Any such
written agreement and deferred compensation plan shall conform with the
provisions of section four hundred fifty-seven of the internal revenue
code and regulations adopted pursuant thereto.

c. Within the discretion of the deferred compensation board and in
accordance with and subject to its fiduciary duty and obligations to the
deferred compensation plan for state employees and to the members and
beneficiaries of such plan and such other investment limitations as may
be prescribed by this chapter, the deferred compensation board is
authorized to establish an MWBE asset management and financial
institution strategy including reasonable goals for utilization of MWBE
asset managers, MWBE financial institutions and MWBE professional
service firms, which shall include, but shall not be limited to, the
following objectives:

(i) conducting procurement procedures in a manner that will assure the
inclusion of MWBE asset managers in any request for proposal or search
process for asset management services undertaken in accordance with the
rules and regulations and of the board;

(ii) subject to best execution policies, developing a strategy to (1)
conduct trades of public equity securities with MWBE financial
institutions and (2) conduct trades of fixed-income securities through
MWBE financial institutions;

(iii) conducting procurement procedures in a manner that will assure
the inclusion of MWBE financial institutions and other MWBE professional
service firms in procurements for services that include accounting,
banking, financial advisory, insurance, legal, research, valuation and
other financial and professional services that are undertaken in
accordance with the rules and regulations of the board;

(iv) cooperating with other fiduciary controlled entities and state
agencies and offices to identify MWBE asset managers, MWBE financial
institutions and MWBE professional service firms.

As used in this section, the terms "MWBE asset manager", "MWBE
financial institutions", "MWBE", "fiduciary-controlled entities" and
"best execution" shall have the meanings specified in section one
hundred seventy-six of the retirement and social security law.

d. The board is also authorized to:

(i) periodically provide notice of the existence of such strategy so
that MWBE asset managers, MWBE financial institutions and other MWBE
professional service firms are made aware of the opportunities made
available pursuant to this strategy;

(ii) within sixty days of the end of each fiscal year following the
effective date of this paragraph, the board shall report to the
governor, legislature and the chief diversity officer of the state of
New York on the participation of MWBE asset managers, MWBE financial
institutions and MWBE professional service providers in investment and
brokerage transactions with or as providers of services for the deferred
compensation plans, including a comparative analysis of such activity
relative to such activity with all asset managers, financial
institutions and professional service providers for the relevant period
and on the progress and the success of the efforts undertaken during
such period to achieve the goals of such strategy. Each report shall be
simultaneously published on the website of the deferred compensation
plans for not less than sixty days following its release to the governor
and the other recipients named above;

(iii) work with the other fiduciary-controlled entities to create a
database of such MWBE entities; and

(iv) periodically, but not less than annually, hold a conference to
promote such strategy in conjunction with the other fiduciary-controlled
entities.

e. The rules and regulations promulgated by the board shall establish
standards for the selection of financial organizations, authorized to do
business in this state, to participate in such plans, including, but not
limited to, the following criteria:

(i) rates of commission, brokerage and other fees, administrative
expenses and related service charges imposed by the financial
organization,

(ii) variety of types of investment opportunities offered by the
financial organization and/or among the financial organizations selected
and the ability to transfer among such opportunities,

(iii) the stability of the financial organization as evidenced by
experience, reputation, assets and holdings, ability to guarantee
specific rates of return,

(iv) ability to comply with reporting requirements to the board and to
participants in such a plan, and

(v) such other factors which would be considered by a prudent investor
in such a plan.

f. The president of the state civil service commission, subject to the
rules and regulations of the board, shall provide assistance to any
public employer as is appropriate to the provisions of this section.

g. At the request of a state employee the comptroller shall, by
payroll deduction, defer the payment of part of the compensation of such
employee as provided in a written statement by the employee and transfer
the amount so deferred to the authorized financial organization.

h. The board may hire such employees as it deems necessary and prudent
to assist in its administration. Such employees may be either:

(i) in the unclassified service of the state and, notwithstanding any
other provision of law to the contrary, shall be designated managerial
and, as such, eligible for benefits provided by subdivision two of
section eleven and subdivision (a) of section twelve of chapter four
hundred sixty of the laws of nineteen hundred eighty-two, as amended;
section one hundred fifty-eight of the civil service law; eligible to
participate in the state deferred compensation plan, the New York state
and local employees' retirement system; the health benefit plan for
state employees; and subject to coverage under sections seventeen and
eighteen of the public officers law, or

(ii) hired not as state employees but hired on a contractual basis.

3. a. Notwithstanding any other provision of law, every public
employer in the state may provide a deferred compensation plan for its
employees in accordance with standards, rules and regulations of the
deferred compensation board and the provisions of section four hundred
fifty-seven of the internal revenue code and regulations adopted
pursuant thereto.

b. For the purposes of this section, the term "public employer" shall
mean: a county, city, town, village or any other political subdivision
as defined in section one hundred thirty-one of the retirement and
social security law or civil division of the state; a school district or
any governmental entity operating a public school, college or
university; a public improvement or special district; a public
authority, commission or public benefit corporation; any other public
corporation, agency or instrumentality or unit of government which
exercises governmental powers under the laws of the state or any
instrumentality jointly created by this state and any other state or
states.

c. Subject to the rules and regulations promulgated by the board, a
public employer may establish a deferred compensation plan and enter
into written agreements with one or more financial organizations to
administer such deferred compensation plan for its employees and to
invest the funds held pursuant to such plan or such employer may elect
participation in the deferred compensation plan provided for state
employees. At the request of an employee of any such public employer,
the chief fiscal officer or other appropriate officer of the public
employer shall, by payroll deduction, defer the payment of part of the
compensation of such employee, as provided in a written statement by the
employee, and transfer the amount so deferred to the authorized
financial organization.

4. Notwithstanding the other provisions of this section, state
employees, otherwise eligible to participate in the deferred
compensation plan, who are in a negotiating unit represented by an
employee organization which negotiates pursuant to article fourteen of
the civil service law shall not be permitted to participate under the
provisions of this section until such time as such participation is
authorized pursuant to a collectively negotiated agreement between the
state and the employee organization; provided, however, that the state
need only negotiate whether or not such employees shall be included in
such plan.

5. Should a public employer elect to provide or elect to participate
in a deferred compensation plan for employees otherwise eligible to
participate in the plan, employees in a negotiating unit represented by
an employee organization which negotiates pursuant to article fourteen
of the civil service law shall not be permitted to participate under the
provisions of this section until such time as such participation is
authorized pursuant to a collectively negotiated agreement between the
public employer and the employee organization; provided, however, that
the public employer need only negotiate whether or not such employees
shall be included in such plan.

6. To the extent permitted by section four hundred fifty-seven of the
internal revenue code and regulations adopted pursuant thereto, any
compensation deferred by a state employee or an employee of a public
employer under an eligible deferred compensation plan established
pursuant to this section shall be considered part of annual compensation
by any retirement system or plan to which the state or public employer
contributes on behalf of said employee. However, this in no way shall be
construed to supersede the provision of section four hundred thirty-one
of the retirement and social security law or any other similar provision
of law which limits the salary base for computing retirement benefits
payable by a public retirement system.

7. Any benefit from a deferred compensation plan established pursuant
to this section shall be in addition to any retirement benefits provided
a state or public employee under any other provision of law.

8. a. The term "financial organization" shall mean an organization
authorized to do business in the state of New York and (A) which is an
authorized fiduciary to act as a trustee pursuant to the provisions of
an act of congress entitled "Employee Retirement Income Security Act of
1974" as such provisions may be amended from time to time, or an
insurance company; and (B) (i) is licensed or chartered by the state
department of financial services, (ii) is chartered by an agency of the
federal government, (iii) is subject to the jurisdiction and regulation
of the securities and exchange commission of the federal government, or
(iv) is any other entity otherwise authorized to act in this state as a
trustee pursuant to the provisions of an act of congress entitled
"Employee Retirement Income Security Act of 1974" as such provisions may
be amended from time to time.

b. The term "state employee" as used in this section shall mean an
employee or officer of the state, whose salary is paid directly by the
state and, for the limited purposes of this section shall be deemed to
include officers or employees in positions in the institutions under the
management and control of Cornell and Alfred universities, as
representatives of the board of trustees of the state university.