NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7794
SPONSOR: Schiavoni TITLE OF BILL:
An act to amend the retirement and social security law, in relation to
participation by free association libraries in the New York state and
local employees' retirement system
PURPOSE:
The bill would allow additional free association libraries to partic-
ipate in the State retirement system, providing their librarians and
other employees' equity with those free association libraries, which are
currently in the retirement system, as well as with public libraries
operating under other forms of governance.
SUMMARY OF PROVISIONS:
Section 1. Adds a new section 31-g to the retirement and social security
law allowing free association libraries, which meet enumerated stand-
ards, to join the retirement system and providing for administration of
the process. To be eligible, libraries must be chartered by the State
Board of Regents, receive the majority of their revenues from public
sources, provide for public voting on both their budgets and their trus-
tees and file appropriate reports with the State Comptroller.
Section 2. Provides the effective date.
JUSTIFICATION:
Public libraries in New York generally operate under one of four types
of governance. Some are agencies or departments of a municipality, so
the library staff are employees of the municipality and are thus members
of the retirement system. Others are special districts created by
special State legislation and their retirement system participation may
be established by their enabling legislation. Others are voter estab-
lished "school district public libraries", which are eligible to partic-
ipate in ,the State retirement system pursuant to section 31-a of the
retirement and social security law.
The fourth type of public library governance is the free association
library. Free association libraries are subject to the same rights and
responsibilities pursuant to the education law as are public libraries
operating under other types of governance. Funding for these libraries
typically, is provided by the municipality (or municipalities) in which
they submitted in accordance with Assembly Rule DI, Sec 1(f) serve, In
addition to the annual contributions discussed above, there will be a
deficiency cost to the electing corporation which will be payable for a
25-year period. This cost will depend on the age, service, salary, plan
and tier of the affected employees.
Internal Revenue Service (IRS) plan qualification issues: permitting
participation of non-governmental employees in the NYSLERS could jeop-
ardize the governmental plan status of the Retirement System ("the
System") and its exemption from the Employees Retirement Income Security
Act (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 the more than one million
participants.
Prior to the enactment of this legislation, we recommend that a favora-
ble 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 $38,000 for the services of
the IRS, and $1,000 per hour for legal consultants.
Summary of relevant resources:
Membership data as of March 31, 2024 was used in measuring the impact of
the proposed change, the same data used in the April 1, 2024 actuarial-
al valuation. Distributions and other statistics can be found in the
2024 Report of the Actuary and the 2024 Annual Comprehensive Financial
Report. The actuarial assumptions and methods used are described in the
2024 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, 2024 New York State and Local Retirement System Financial Statements
and Supplementary Information.
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 February 24, 2025, and intended for use only during
the 2025 Legislative Session, is Fiscal Note No. 2025-67. As Chief Actu-
ary of the New York State and Local Retirement System, I, Aaron Schottin
Young, hereby certify that this analysis complies with applicable Actu-
arial Standards of Practice as well as the Code of Professional Conduct
and Qualification Standards for Actuaries Issuing Statements of Actuari-
al Opinion of the American Academy of Actuaries, of which I am a member.
EFFECTIVE DAME:
Immediately.
