Count Private Teaching Toward Pension

Section 1. Notwithstanding any other provision of law, a member of the New York state teachers' retirement system or the New York city teachers' retirement system, or any member of the New York state and local employees' retirement system who is employed by a school district, a board of cooperative educational services, a vocational education and extension board, an institution for the instruction of the deaf and blind as enumerated in section 4201 of the education law or a school district as enumerated in section 1 of chapter 566 of the laws of 1967, or who is employed by the state of New York as an institutional teacher as defined by section 136 of the civil service law, shall be entitled to obtain credit for up to five years of service rendered as a teacher employed by a private elementary or secondary school within the state of New York chartered by or registered with the board of regents, or in a private college within the state of New York authorized by the board of regents to grant degrees, which would constitute service as a teacher, had it been performed within New York state for an employer subject to the applicable provisions of law governing such retirement system.

§ 2. The crediting of service pursuant to this act shall be in accordance with such rules and regulations as shall be adopted by the retirement board of the New York state teachers' retirement system, the retirement board of the New York city teachers' retirement system or the state comptroller, as appropriate, provided that such rules and regulations shall be substantially equivalent to the rules and regulations

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

[ ] is old law to be omitted.

LBD10846-02-9

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otherwise applicable for the crediting of service pursuant to applicable provisions of law governing each such retirement system, and provided further that if such provisions have not expired such member makes the applicable payments required pursuant to the provisions of sections 517 and 613, and paragraph 2 of subdivision b of section 609 of the retirement and social security law.

§ 3. The service credit granted pursuant to this act shall constitute service for the purpose of both computing the pension payable upon retirement for service and in determining the total length of service credited for the purpose of eligibility for a service retirement benefit, but shall not be used in computing final average salary. Provided further, no such credit shall be allowed for any service for which the person is receiving a benefit or will be entitled to receive a benefit at any future time from any other public or private retirement system or plan in this state, any other state or from the federal government.

§ 4. This act shall take effect June 30, 2019, except that any rule or regulation necessary for the timely implementation of the provisions of this act on its effective date are authorized and directed to be promulgated on or before such date.

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

This bill will allow members of certain public retirement systems who

are currently employed by a school district, a board of cooperative

educational services, a vocational education and extension board, an

institution for the deaf and blind or as an institutional teacher to

receive up to five years of service credit in such public retirement

systems for employment as a teacher in private schools in New York

State. However, credit will not be provided for service where the member

is receiving a benefit or will be entitled to receive a benefit at any

future time from any other public or private retirement system or plan

in this state, any other state or from the federal government.

The additional service credit granted pursuant to this bill shall

constitute service credit for the purpose of computing the pension paya-

ble upon retirement and shall be used to determine eligibility for a

service benefit. For certain members, contributions will be required in

order to obtain such additional service credit. Each such member will be

required to make a payment of 3% (6% for Tier 6) of current compensation

per year of additional service credit granted pursuant to this bill.

Internal Revenue Service (IRS) plan qualification issues: granting

service credit for employment rendered to any organization that may

potentially be considered a non-governmental or private employer, such

as certain types of educational institutions described in this bill,

could jeopardize the Retirement System's governmental plan status and

its exemption from ERISA. This development could result in the loss of

qualified status, which would mean the loss of tax benefits. This result

would substantially impair the System's value to our more than one

million participants.

Prior to the enactment of this bill, we recommend that a favorable

ruling be obtained from the IRS stating that these provisions would not

harm the qualification status of the System. It is estimated that the

costs to obtain such a ruling would be $28,000 for the services of the

IRS, and $800 per hour for legal consultants.

If this bill is enacted, insofar as it affects the New York State and

Local Employees' Retirement System (ERS), it is estimated that the past

service cost will average approximately 15% (12% for Tier 6) of affected

members' compensation for each year of additional service credit that is

purchased.

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The exact number of current members as well as future members who

could be affected by this bill cannot be readily determined.

Pursuant to Section 25 of the Retirement and Social Security Law, the

past service cost for the ERS will be borne entirely by the State of New

York and would require an itemized appropriation sufficient to pay the

cost of the provision. Since a member can apply for this service credit

at any time prior to retirement, a precise cost cannot be determined

until each member, as well as future members, applies for said credit.

Every year a cost will be determined (and billed to the state) based on

those benefiting from this provision.

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, 2018 actuarial valu-

ation. Distributions and other statistics can be found in the 2018

Report of the Actuary and the 2018 Comprehensive Annual Financial

Report.

The actuarial assumptions and methods used are described in the 2015,

2016, 2017 and 2018 Annual Report to the Comptroller on Actuarial

Assumptions, and 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, 2018

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 fiscal note does not constitute a legal opinion on the viability

of the proposed change nor is it intended to serve as a substitute for

the professional judgment of an attorney.

This estimate, dated March 28, 2019, and intended for use only during

the 2019 Legislative Session, is Fiscal Note No. 2019-95, prepared by

the Actuary for the New York State and Local Retirement System.