What's happening
This bill allows certain school districts and BOCES to create reserve funds to help pay for future teachers’ retirement contributions.
Why it matters
Creates a new financial tool for school districts and BOCES. By allowing the establishment of dedicated reserve sub-funds for future teachers’ retirement costs, schools can better plan for and manage unpredictable spikes in pension expenses, potentially reducing the impact on yearly budgets and taxpayers.
Limits on contributions and fund size. The bill sets clear caps—schools can contribute up to 2% of total teacher salaries per year, and the fund can’t exceed 10% of the previous year’s total teacher salaries. These limits aim to prevent excessive stockpiling while still providing meaningful budget flexibility.
Direct link to state aid adjustments. The reserve can also be used to offset reductions in state aid caused by required pension deductions, helping to smooth out the financial impact when the state withholds funds for retirement contributions.
Offers flexibility in fund management. School boards are empowered to move money between the general retirement reserve and the teachers’ retirement sub-fund, allowing them to adapt to changing fiscal needs while maintaining oversight and transparency.
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Who cares
Headline styles
Let Schools Save for Pensions
Plain English, a few words. Used as the page title.
Sponsors
History
- Print number 4563a
- Amend and recommit to civil service and pensions
- Referred to civil service and pensions
- Committed to rules
- Advanced to third reading
- 2nd report cal.
- 1st report cal.768
- Referred to civil service and pensions
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Let Schools Save for Pensions
In Senate Committee · Civil Service And Pensions · Sponsor David Buchwald
Full text
3 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
4563--A
2017-2018 Regular Sessions
IN SENATE
February 17, 2017
Introduced by Sens. GOLDEN, YOUNG, AKSHAR, BROOKS, CARLUCCI, CROCI, DeFRANCISCO, FUNKE, GALLIVAN, JACOBS, KAMINSKY, MURPHY, ORTT, SEWARD, VALESKY -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions -- recommitted to the Committee on Civil Service and Pensions in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the general municipal law, in relation to allowing certain school districts and boards of cooperative educational services to establish a retirement contribution reserve fund for the purposes of the New York state teachers' retirement system
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraphs b and c of subdivision 1 of section 6-r of the general municipal law, as added by chapter 260 of the laws of 2004, are amended to read as follows:
b. "Participating employer" means: (i) a participating employer as defined in subdivision twenty of section two of the retirement and social security law or in subdivision twenty of section three hundred two of such law; or (ii) a participating employer as defined in subdivision three of section five hundred one of the education law.
c. "Retirement contribution" shall mean all or any portion of the amount payable by a municipal corporation to:(i) either the New York state and local employees' retirement system or the New York state and local police and fire retirement system pursuant to section seventeen or three hundred seventeen of the retirement and social security law; or (ii) the New York state teachers' retirement system pursuant to section five hundred twenty-one of the education law.
§ 2. Subdivision 2 of section 6-r of the general municipal law, as added by chapter 260 of the laws of 2004, is amended to read as follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09918-02-8
S. 4563--A 2
2. The governing board of any municipal corporation which is also a participating employer by resolution may establish a retirement contribution reserve fund for the purpose of (a) financing retirement contributions, and/or (b) in the case of a municipal corporation which is a participating employer as defined in subdivision three of section five hundred one of the education law, financing appropriations authorized by law in order to offset all or a portion of the amount deducted from the moneys apportioned to the municipal corporation from the state for the support of common schools pursuant to section five hundred twenty-one of the education law.
§ 3. Section 6-r of the general municipal law is amended by adding a new subdivision 2-a to read as follows:
2-a. With respect to a municipal corporation which is a participating employer as defined in subdivision three of section five hundred one of the education law, which elects to utilize a retirement contribution reserve fund (a) to finance retirement contributions to the New York state teachers' retirement system pursuant to section five hundred twenty-one of the education law and/or (b) to offset all or a portion of the amount deducted from the moneys apportioned to the municipal corporation from the state for the support of common schools pursuant to section five hundred twenty-one of the education law, such municipal corporation shall establish a sub-fund within the retirement contribution reserve fund, which shall be separately administered consistent with the provisions of this section. Such municipal corporation may pay into such sub-fund during any particular fiscal year an amount not to exceed two per centum of the total compensation or salaries of all teachers in the employ of said municipal corporation who are members of the New York state teachers' retirement system paid during the immediately preceding fiscal year. The balance of such sub-fund may not exceed ten per centum of the total compensation or salaries of all teachers in the employ of the municipal corporation who are members of the New York state teachers' retirement system paid during the immediately preceding fiscal year. For the purposes of this subdivision, the term "teacher" shall have the same meaning as such term is defined under subdivision four of section five hundred one of the education law.
§ 4. Subdivision 5 of section 6-r of the general municipal law, as added by chapter 260 of the laws of 2004, is amended to read as follows:
5. The governing board of such municipal corporation by resolution may authorize expenditures from a retirement contribution reserve fund. Except as otherwise provided by law, moneys in a retirement contribution reserve fund may only be expended (a) to finance retirement contributions, and/or (b) in the case of a municipal corporation which is a participating employer, as defined in subdivision three of section five hundred one of the education law, for appropriations authorized by law in order to offset all or a portion of the amount deducted from the moneys apportioned to the participating employer from the state for the support of common schools pursuant to section five hundred twenty-one of the education law. With respect to a municipal corporation which is a participating employer as defined in subdivision three of section five hundred one of the education law, expenditures from the retirement contribution reserve fund to finance retirement contributions to the New York State teachers' retirement system pursuant to section five hundred twenty-one of the education law and/or to offset all or a portion of the amount deducted from the moneys apportioned to the municipal corporation from the state for the support of common schools pursuant to section
S. 4563--A 3
five hundred twenty-one of the education law may only be made from the sub-fund established pursuant to subdivision two-a of this section.
§ 5. Section 6-r of the general municipal law is amended by adding a new subdivision 11 to read as follows:
11. The governing board of a municipal corporation which is a participating employer as defined in subdivision three of section five hundred one of the education law by resolution may (a) authorize the transfer of all or a portion of the monies in the separately administered sub-fund as established under subdivision two-a of this section to the retirement contribution reserve fund, and/or (b) authorize the transfer of all or a portion of the monies in the retirement contribution reserve fund to the separately administered sub-fund as provided in subdivision two-a of this section, subject to the limits on annual payments into the sub-fund and the balance of the sub-fund specified by the subdivision two-a of this section.
§ 6. This act shall take effect immediately.
FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
This bill would amend Section 6-r of the General Municipal Law to
allow eligible participating employers of the New York State Teachers'
Retirement System (NYSTRS) to establish a reserve sub-fund within the
retirement contribution reserve fund for the purpose of reserving money
to offset future required contributions to NYSTRS. An employer may pay
into such sub-fund during any particular fiscal year an amount not to
exceed two percent of the total compensation or salaries of all teachers
employed by the employer who are members of NYSTRS paid during the imme-
diately preceding fiscal year. Additionally, the total balance in the
sub-fund shall not exceed ten percent of the total compensation or sala-
ries of all teachers employed by the employer who are members of NYSTRS
paid during the immediately preceding final year.
The governing board of the employer may by resolution authorize
expenditures from the retirement contribution reserve fund. The govern-
ing board of the employer may also by resolution authorize the transfer
of money between the separately administered sub-fund and the retirement
contribution reserve fund subject to the limits on annual payments into
the sub-fund and the balance of the sub-fund as provided in this bill.
It is estimated that there will be no annual cost to the employers of
members of the New York State Teachers' Retirement System if this bill
is enacted.
Member data is from the System's most recent actuarial valuation
files, consisting of data provided by the employers to the Retirement
System. Data distributions and statistics can be found in the System's
Comprehensive Annual Financial Report (CAFR). System assets are as
reported in the System's financial statements, and can also be found in
the CAFR. Actuarial assumptions and methods are provided in the System's
Actuarial Valuation Report.
The source of this estimate is Fiscal Note 2018-2 dated October 6,
2017 prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2018 Legislative Session.
I, Richard A. Young, am the Actuary for the New York State Teachers'
Retirement System. I am a member of the American Academy of Actuaries
and I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the general municipal law, in relation to allowing certain school districts and boards of cooperative educational services to establish a retirement contribution reserve fund for the purposes of the New York state teachers' retirement system
Purpose
This bill provides eligible participating employers of the New York State Teachers' Retirement System ("NYSTRS") the option to establish a retirement contribution reserve sub-fund with respect to contributions for NYSTRS.
Summary of provisions
Section one amends the definitions for the terms "participating employ- er" and "retirement contribution" provided by General Municipal Law section 6-r(1).
Read the full memo (1,146 words)
Section two amends General Municipal Law section 6-r(2).
Section three adds a new subdivision 2-a to General Municipal Law section 6-r. Section four amends General Municipal Law section 6-r(5).
Section five adds a new subdivision 11 to General Municipal Law section 6-r.
Section six provides that this act shall take effect immediately.
Existing law
General Municipal Law section 6-r authorizes and regulates retirement contribution reserve funds.
Justification
The importance of local school districts and NYSTRS employers to fully fund their actuarially required contributions to the System is critical to the long term viability of the Retirement System. Beginning in 2004, downturns in the capital markets caused required employer contributions to the public employee retirement systems in the state, which had been at historically low levels, to increase, sometimes quite markedly. The New York Legislature responded in several ways, one of which was to allow employers to prepare for future contribution increases by estab- lishing a retirement contribution reserve fund, but only with respect to contributions for the New York State and Local Employees' Retirement System ("ERS") and the New York State and Local Police and Fire Retire- ment System ("PFRS").
The current law provides for the establishment of reserve funds for various restricted purpose accounts. Most relevant, there are eleven reserve funds currently authorized which may be established as a financ- ing tool for school districts. Notwithstanding the fact that teachers comprise an overwhelming majority of school district payrolls and school district employers of New York state are authorized to establish retire- ment contribution reserve funds for contributions to ERS, there current- ly exists no legal mechanism to set aside reserve funds to address the employer contribution rate for NYSTRS.
This bill proposes to amend various provisions of the existing Retire- ment Contribution Reserve Funds statute, Section 6-r of the General Municipal Law, to allow eligible NYSTRS participating employers to establish a retirement contribution reserve sub-fund. The governing board of the participating employer may establish a contribution reserve sub-fund by resolution for the purposes of (a) financing retirement contributions to NYSTRS and/or (b) offsetting all or a portion of the amount deducted from the moneys apportioned to the participating employ- er from state aid. Once the retirement contribution reserve sub-fund is established, the participating employer may elect to reserve during any fiscal year an amount not to exceed two per centum of the total compen- sation or salaries of NYSTRS member payroll (teachers paid during the immediately preceding fiscal year). In addition, the retirement contrib- ution reserve sub-fund is limited to a total balance not to exceed ten per centum of the total compensation or salaries of all teachers employed by the participating employer who are members of NYSTRS and paid during the immediately preceding fiscal year.
This bill further proposes to allow the transfer of all or a portion of the monies (a) in the separately administered sub-fund to the retirement contribution reserve fund, or (b) from the retirement contribution reserve fund to the separately administered sub-fund. To ensure the contribution reserve sub-fund monies are monitored and regulated and create transparency of any transfers to and/or from the contribution reserve sub-fund, a resolution is required to initiate the transfer and the transfer amounts must remain within the annual and overall fund caps required by the statutory provisions.
Other existing provisions of General Municipal Law Section 6-r not amended by the proposed legislation remain unchanged and will continue to require the Board of education or Trustees of the municipal corpo- ration to regulate and monitor the use of such reserve funds and expend- itures as would be authorized by resolution. The publication require- ments and public notice provisions will be required for any transfer of such reserve funds. Additionally, the money in such reserves would be classified as a restricted fund balance on financial statement balance sheets. These requirements are all consistent with existing practices specified under the provisions of General Municipal Law Section 6-r.
In the past, school districts have benefited from the ability to create reserve funds for other purposes to budget and manage finances during the most difficult economic times. The reserves promote the ability to prudently save and protect school districts from future economic down- turns and to offset financial burdens during those periods of economic shortfalls. Allowing school districts to establish a contribution reserve sub-fund for NYSTRS promotes financial strength for future financial budgetary planning at times when educational program revenue is not as high as anticipated and/or when financial shortfalls are expe- rienced. This additional fiscal planning tool allows school districts to sustain themselves, avoid staff reductions and maintain consistency in educational programs. The authority to establish a retirement contrib- ution reserve sub-fund provides a financing appropriation mechanism currently not permissible for NYSTRS participating employers.
With the annual and aggregate caps in place, eligible participating employers are provided with limits for the amount of money allowed to be set aside in the retirement contribution reserve sub-fund for future use, as well as the ability to spend down the monies in order to remain within the reserve limit. The intent of these limitations is to elimi- nate the possibility of the reserve sub-fund being overfunded and, in general, increase transparency. Any transfer to and/or from the reserve sub-fund must be approved by resolution permitting all parties, the public, governing boards, school district employees and others, to be informed of the amounts and reasons for said reserves, thus assisting with transparency.
The enactment of this provision rectifies the discrepancy in the stat- utes and provides the remedy to allow eligible public employers to create a reserve sub-fund for retirement contributions for NYSTRS on a similar basis as is currently allowed for the aforementioned retirement systems. If this legislation were enacted, it would not be a mandate on local governments, but it would provide participating employers the legal authority to participate in the reserve sub-fund for NYSTRS contributions.
In an effort to provide NYSTRS participating employers with the tools for fiscal health and planning, and for the other reasons stated, the Retirement Board respectfully submits this bill to the Legislature for their consideration.
Legislative history
2018: S4563-Referred to Civil Service and Pensions
Fiscal implications
See fiscal note at the end of the bill.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.