Standardize Overtime Reporting Dates

Section 1. Subdivision 24 of section 501 of the retirement and social security law, as amended by chapter 298 of the laws of 2016, is amended to read as follows:

24. (a) "Wages" shall mean regular compensation earned by and paid to a member by a public employer, except that for members who first join the state and local employees' retirement system on or after January first, two thousand ten, overtime compensation paid in any year in excess of the overtime ceiling, as defined by this subdivision, shall not be included in the definition of wages.

(b) "Overtime compensation" shall mean, for purposes of this section, compensation paid under any law or policy under which employees are paid at a rate greater than their standard rate for additional hours worked beyond those required, including compensation paid under section one hundred thirty-four of the civil service law and section ninety of the general municipal law.

(c)(i) The "overtime ceiling" shall mean fifteen thousand dollars per annum on January first, two thousand ten, and shall be increased by three percent each year thereafter, provided, however, that for members who first become members of the New York state and local employees' retirement system on or after April first, two thousand twelve, "overtime ceiling" shall mean fifteen thousand dollars per annum on April

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD07063-05-7

S. 5256--A 2

first, two thousand twelve, and shall be increased each year thereafter by a percentage to be determined annually by reference to the consumer price index (all urban consumers, CPI-U, U.S. city average, all items, 1982-84=100), published by the United States bureau of labor statistics, for each applicable calendar year. Said percentage shall equal the annual inflation as determined from the increase in the consumer price index in the one year period ending on the December thirty-first [prior to] preceding the [cost-of-living] overtime ceiling adjustment effective on the ensuing April first.

(ii) Commencing January first, two thousand eighteen, and each year thereafter, the overtime ceiling percentage shall be increased by an amount equal to the annual inflation as determined from the increase in the consumer price index in the one year period ending on the September thirtieth prior to the overtime ceiling adjustment effective on the ensuing January first.

(d) For the purpose of calculation a member's primary federal social security retirement or disability benefit, wages shall, in any calendar year, be limited to the portion of the member's wages which would be subject to tax under section three thousand one hundred twenty-one of the internal revenue code of nineteen hundred fifty-four, or any predecessor or successor provision relating thereto, if such member was employed by a private employer.

(e) For members who first become members of the New York state and local employees' retirement system on or after the effective date of chapter eighteen of the laws of two thousand twelve, the following items shall not be included in the definition of wages: (a) wages in excess of the annual salary paid to the governor pursuant to section three of article four of the state constitution, (b) lump sum payments for deferred compensation, sick leave, accumulated vacation or other credits for time not worked, (c) any form of termination pay, (d) any additional compensation paid in anticipation of retirement, and (e) in the case of employees who receive wages from three or more employers in a twelve month period, the wages paid by the third and each successive employer.

(f) For New York city enhanced plan members who receive the ordinary disability benefit provided for in subdivision c-1 of section five hundred six of this article or the accidental disability benefit provided for in paragraph three of subdivision c of section five hundred seven of this article, the following items shall not be included in the definition of wages: (a) lump sum payments for deferred compensation, sick leave, accumulated vacation or other credits for time not worked, (b) any form of termination pay, (c) any additional compensation paid in anticipation of retirement, and (d) in the case of employees who receive wages from three or more employers in a twelve month period, the wages paid by the third and each successive employer.

§ 2. Subdivision l of section 601 of the retirement and social security law, as amended by chapter 510 of the laws of 2015, is amended to read as follows:

l. (a) "Wages" shall mean regular compensation earned by and paid to a member by a public employer, except that for members who first join the New York state and local employees' retirement system or the New York state teachers' retirement system on or after January first, two thousand ten, overtime compensation paid in any year in excess of the overtime ceiling, as defined by this subdivision, shall not be included in the definition of wages.

(b) "Overtime compensation" shall mean, for purposes of this section, compensation paid under any law or policy under which employees are paid

S. 5256--A 3

at a rate greater than their standard rate for additional hours worked beyond those required, including compensation paid under section one hundred thirty-four of the civil service law and section ninety of the general municipal law.

(c) The "overtime ceiling" shall mean fifteen thousand dollars per annum on January first, two thousand ten, and shall be increased by three per cent each year thereafter, provided, however, that:

(i) for members who first become members of a public retirement system of the state on or after April first, two thousand twelve, "overtime ceiling" shall mean fifteen thousand dollars per annum on April first, two thousand twelve, and shall be increased each year thereafter by a percentage to be determined annually by reference to the consumer price index (all urban consumers, CPI-U, U.S. city average, all items, 1982-84=100), published by the United States bureau of labor statistics, for each applicable calendar year. Said percentage shall equal the annual inflation as determined from the increase in the consumer price index in the one year period ending on the December thirty-first [prior to] preceding the [cost-of-living] overtime ceiling adjustment effective on the ensuing April first.

(ii) Commencing January first, two thousand eighteen, and each year thereafter, the overtime ceiling percentage shall be increased by an amount equal to the annual inflation as determined from the increase in the consumer price index in the one year period ending on the September thirtieth prior to the overtime ceiling adjustment effective on the ensuing January first.

(d) For members who first join a public retirement system of the state on or after April first, two thousand twelve, the following items shall not be included in the definition of wages: 1. wages in excess of the annual salary paid to the governor pursuant to section three of article four of the state constitution, 2. lump sum payments for deferred compensation, sick leave, accumulated vacation or other credits for time not worked, 3. any form of termination pay, 4. any additional compensation paid in anticipation of retirement, and 5. in the case of employees who receive wages from three or more employers in a twelve month period, the wages paid by the third and each additional employer.

§ 3. This act shall take effect immediately.

FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:

This bill will change the date of the annual increase in the overtime

ceiling that can be included in the calculation of final average salary

for Tier 6 members of certain public retirement systems from April 1 to

January 1. The annual increase will be based on the increase in the

consumer price index in the one year period ending on the September

thirtieth prior to each ensuing January first. This change will become

effective on January 1, 2018.

If this bill is enacted, insofar as it would affect the New York State

and Local Employees Retirement System, we estimate that there would be a

small initial administrative cost to the system.

Summary of relevant resources:

The membership data used in measuring the impact of the proposed

change was the same as that used in the March 31, 2016 actuarial valu-

ation. Distributions and other statistics can be found in the 2016

Report of the Actuary and the 2016 Comprehensive Annual Financial

Report.

The actuarial assumptions and methods used are described in the 2015

and 2016 Annual Report to the Comptroller on Actuarial Assumptions, and

S. 5256--A 4

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, 2016

New York State and Local Retirement System Financial Statements and

Supplementary Information.

I am a member of the American Academy of Actuaries and meet the Quali-

fication Standards to render the actuarial opinion contained herein.

This estimate, dated February 13, 2017 and intended for use only

during the 2017 Legislative Session, is Fiscal Note No. 2017-21,

prepared by the Actuary for the New York State and Local Retirement

System.

FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:

This bill would amend Section 501 and Section 601 of the Retirement

and Social Security Law to change the date of the annual increase in the

overtime ceiling that can be used in the calculation of final average

salary for Tier 6 members from April 1st to January 1st. This bill also

provides that the annual increase in the overtime ceiling will be based

on the increase in the Consumer Price Index (CPI) in the one year period

ending on the September 30th prior to each ensuing January 1st. These

changes will commence January 1, 2018.

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.

Employee 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 2017-13 dated March 31,

2017 prepared by the Actuary of the New York State Teachers' Retirement

System and is intended for use only during the 2017 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.