Authorizes optional retirement programs for municipalities, local governments and school districts

1 Co-sponsor

• William J. Larkin Jr.

BILL NUMBER:S4524A

Title of bill

An act to amend the general municipal law, the education law and the retirement and social security law, in relation to establishing an optional retirement program for employees of municipalities, local governments and schools

Purpose or general idea of bill

To reduce unfunded mandates and offer new options for municipalities, local governments and schools.

Summary of specific provisions

Section 1 - adds a new Article 8-A to the General Municipal Law. This article would authorize local governments and municipalities to offer an optional retirement program to new employees hired after the enactment of a local law. A municipality could choose to offer a choice to new employees of either the current defined benefit retirement program or the defined contribution retirement program, as SUNY currently does, or choose to only offer the defined contribution, or Optional Retirement Program. This program would not include police and firefighter positions that are covered under the Volunteer Ambulance Workers Benefit Law, the Volunteer Firefighters Benefit Law or Title 9 of Article 2, Article 8, Article 14-B, Article 15 and Article 22 of the Retirement and Social Security Law.

Section 2 - adds a new Article 9-A to the Education Law authorizing local school districts, after public hearing and resolution, to offer an optional retirement program to new employees hired after the enactment of the resolution. A school district could choose to offer a choice to new employees of either the current defined benefit retirement program or the defined contribution retirement program, as SUNY currently does, or choose to only offer the defined contribution, or Optional Retirement Program.

Section 3 - amends subdivision a of section 30 of the Retirement and Social Security Law to provide that a municipality may elect to participate in an optional retirement plan pursuant to Article 8-A of the General Municipal Law and Article 9-A of the Education Law.

Section 4 - provides that this act shall take effect immediately.

Justification

Local governments and school districts are under tremendous financial stress because of the increasing costs of contributions to the state retirement system. Because the amount to be contributed varies from year to year, officials are unable to effectively plan for future costs. In some years, municipalities made no pension contributions. Today, some are

predicting that public employer contributions may reach thirty percent of payroll. Clearly, such costs are unsustainable, and the uncertainty that this system creates does not allow municipalities to forecast future cost effectively. This bill is not another unfunded mandate on local governments, but an effort to provide another choice. Municipalities may choose to continue to participate in the current defined benefit program, offer a choice to employees of either a defined benefit program or a fully portable defined contribution program, or elect to offer only the defined contribution program. Employers will still be required to make contributions to each employees retirement account, but they will know that this contribution will be fixed, allowing more accurate budget planning for future years.

Prior legislative history

2011 -- Civil Service

Fiscal implications

None to State.

Effective date

This act shall take effect immediately.