Provides a temporary retirement incentive for certain public employees (Part A); provides an age 55/25 years temporary retirement incentive for certain public employees (Part B).
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A10595
SPONSOR: Rules (Abinanti) TITLE OF BILL:
An act to provide a temporary retirement incentive for certain public
employees (Part A); and to provide an age 55/25 years temporary retire-
ment incentive for certain public employees (Part B)
PURPOSE OR GENERAL IDEA OF BILL:
This bill would establish a temporary retirement incentive program for
certain state employees and other public employees to assist in stream-
lining the workforce while also achieving cost savings. This bill would
apply to members of the New York State and Local Employees Retirement
System; New York City Employees Retirement System; New York State Teach-
ers Retirement System; New York City Teachers Retirement System; and New
York City Board of Education Retirement-System. The members of the
Police and Fire Retirement Systems are not included because of the
existing 2C- and 25-year retirement options.
SUMMARY OF PROVISIONS:
Section 1 of the bill sets forth the components of the act that would
enable public employers to offer a temporary retirement incentive to
their employees, as well as to provide an age 55/25 years temporary
incentive for certain public employees.
Section 2 is the legislative findings. Part A - Section 1 of Part A of
the bill would define terms and establish eligibility requirements for
participation in the retirement incentive program. Eligibility would be
determined at employer discretion and excludes agency heads and elected
officials. An employer who elects to participate in the retirement
incentive program would be required to provide a 30 to 9Q-day open peri-
od to allow eligible employees adequate time to consider the incentive.
Eligibility is targeted to positions that can be eliminated for reasons
of economy, consolidation, abolition or curtailment of governmental
activities. An eligible position can also include a title into which an
employee could be transferred to avoid a layoff.
Section 2 of Part A of the bill would establish the criteria to be
considered in determining whether positions should be eligible for
participation in the retirement incentive program. This determination
would consider whether the abolition of positions within a title would
unacceptably reduce the level of patient care, pose health and safety
risks, or result in adverse budgetary implications.
Section 3 of Part A of the bill would provide that eligibility for the
retirement incentive would be first determined on the basis of seniority
and require eligible employees who intend to participate in the incen-
tive program to provide written notice to their, employer 21 days prior
to the end of the program's open period.
Section 4 of Part A of the bill would require certain employers to enact
a local law or resolution, as appropriate on or before August 31, 2020,
to take advantage of the program. School districts would need to enact
such law or resolution by July 30, 2020. This section would also provide
that the retirement incentive would not be available to persons other-
wise eligible to receive benefits under any other retirement incentive
or severance program, unless such person agrees to waive payment under
the other program. In addition, this section would authorize the Mayor
of the City of New York to declare employees of the community colleges
of the City University of New York ineligible for the program by filing
a notice with the University Chancellor within 30 days of the effective
date of this act.
Section 5 of Part A of the bill would require eligible employees to be
in active service on the effective date of this act and continue in
active service up to the date immediately preceding commencement of the
program open period. Eligible employees would need either to be current-
ly eligible to retire or be at least 50 years of age with ten or more
years of service. Employees who participate in a pension plan that
allows for retirement after 25 years of service without regard to age
would be eligible for the program as long as they meet the 25-year
requirement, which could be achieved with the service credit provided by
the incentive.
Section 6 of Part A of the bill would establish the retirement incentive
benefit as one-twelfth of a year of additional retirement service credit
for each year of pension service, up to a maximum of 3 years of addi-
tional retirement service credit. The benefit would be subject to
reduction for early retirement based on the employee's tier, age and
years. of service. Eligible employees who participate in an optional
retirement program would receive a retirement incentive of one-twelfth
for each year of, service multiplied by 15 percent multiplied by the
employee's annual salary, up to a maximum benefit equal to 45 percent
salary.
Section 7 of Part A of the bill would provide that state employees who
participate in the program may defer participation in the health insur-
ance program as well as the calculation of the value of available sick
leave credits to offset the retiree's share of health insurance premi-
ums. This section would also authorize the payment of certain leave
compensation in 3 installments over a 2-year period to New York City
employees.
Section 8 of Part A of the bin would require the elimination of any
position vacated by a state employee receiving the retirement incentive,
other than a position supported by Special Revenue Funds. An exception
to this rule is made where another state employee could be appointed,
transferred or reassigned to the vacated position to avoid a layoff.
This section would also authorize the Director of State Operations to
direct the Department of Civil Service to prepare a report designating
the title, grade level, .salary, and classification of each position
eliminated, each position into which another employee was appointed,
transferred, or reassigned and the former position of such employee, and
. each position eliminated as a result of an appointment, transfer, or
reassignment.
Section 9 of Part A of the bill would provide that local government
employers and the State University of New York would not be required to
eliminate positions vacated as a result of the retirement incentive if
they can demonstrate savings of at least one-half of the total amount of
the base salary of employees who receive the incentive for the 2-year
period subsequent to the program.
Section 10 of Part A of the bill would provide that the incentive cannot
result in an employee's pension exceeding the limits of Internal Revenue
Code (IRC) 415. However, if the IRC 415 limit is increased in subsequent
years, the retirement benefit which would otherwise have been paid to
any employees originally affected by the limit would be paid to the
extent permitted by the new IRC 415 limit.
Section 11 of Part A of the bill would require an employee receiving the
retirement incentive to forfeit the benefit of such incentive if that
employee reenters public service and joins or rejoins any public retire-
ment system in the State.
Section 12 of Part A of the bill would provide that the retirement
incentive is not subject to any maximum retirement benefit limitation
pursuant to Retirement and Social Security Law (R&SSL)..
Section 13 of Part A of the bill would make R&SSL 430, which requires an
employer to pay for any benefit or benefit improvement in the fiscal
year it becomes effective, inapplicable to any benefit or benefit
improvement provided by this bill.
Section 14 of Part A of the bill would require employers to pay the
pension costs of offering a retirement incentive program over a period
not to exceed 5 years commencing in the State fiscal year ending March
31, 2022.
Section 15 of Part A of the bill would prevent employees from receiving
either the benefits of Part B of this incentive program or the benefits
of any other incentive program authorized by the State in conjunction
with the benefits provided by this part of the bill.
Section 16 of Part A of the bill would provide for an immediate effec-
tive date. Part 3 - Section 1 of Part B of the bill would define terms
used in the bill and establish eligibility requirements for partic-
ipation in the retirement incentive program. Eligibility is determined
at employer discretion and excludes agency heads and elected officials.
An employer who elects to participate in the retirement incentive
program is required to provide a 90-day open period to allow eligible
employees adequate time to consider the incentive. Employees of the
executive branch or participating employers who have attained age
fifty-five and have at least twenty-five years of creditable service in
an eligible retirement system may participate in this part of the incen-
tive.
Section 2 of Part B of the bill would require State employers, partic-
ipating employers not empowered to act by local law which elect to
participate in Part B of the incentive, and New York City to establish a
commencement date. In the event State employers fail to establish a
commencement date, the default commencement date would be July 1, 2020.
Section 3 of Part B of the bill would provide that State employers and
participating employers may elect to provide employees the benefits of
Part B on or before September 1, 2020, provided that educational employ-
ers make such election by July 1, 2020. It would further provide that
the Executive Branch would be deemed to have opted in upon enactment.
Section 4 of Part B of the bill would provide that any eligible employee
that has been continuously in active service from February 1, 2020 to
the commencement date and who files an application for retirement during
the open period would be entitled to the benefits provided by this part
of the bill.
Section 5 of Part B of the bill would provide that an eligible employee
in an eligible retirement system who is entitled to the benefits
provided by this part of the bill who has attained the age of fifty-five
and has completed at least twenty-five years or more of service may
retire during the open period without a reduction of his or her retire-
ment benefit that would otherwise be imposed. This section also would
provide that the Director of State Operations, the chief executive offi-
cer of the City of New York, or the chief executive officer or governing
board of a participating employer may deny participation in the benefits
provided by this part of the bill if they determine an employee holds _a
and safety. that is deemed critical to the maintenance of public health
and safety.
Section 6 of Part B of the bill would require employers to pay the
pension costs of offering a retirement incentive program over a period
not to exceed 5 years commencing in the State fiscal year ending March
31, 2022.
Section 7 of Part B of the bill would provide for an immediate effective
date.
Section 3 of the bill would provide a severability clause.
Section 4 of the bill would provide for an immediate effective date.
JUSTIFICATION:
The COVID-19 pandemic has dramatically impacted the fiscal stability of
state and local governments. This bill would streamline the public
sector workforce and result in savings to the State and local govern-
ments through the elimination of specific positions determined to be
less critical to governmental operations.
The savings of this bill, however, would be at least be partially offset
by costs to the pension system and its members. The New York State and
Local Retirement System (NYSLRS) estimates that per-member cost (at
retirement) of the additional service credit benefit will average
approximately 65% of a member's final average salary. The NYSLRS esti-
mates that the per-member cost (at retirement) of the elimination of the
early retirement reductions at 25 years of service instead of at 30
years of service will average approximately 110% of a member's final
average salary. This cost will be borne by each employer electing the
incentive over a period not to exceed five years commencing with a
payment in the State fiscal. year ending March 31, 2022.
The New York State Teachers' Retirement System estimates that the Part A
cost, measured as the increase in the present value of benefit per
participating member will range from 5% to approximately 250% of final
average salary, depending on the member's age, years of service, and
tier at retirement. The Part B cost per participating member will range
from 3% to approximately 200% of final average salary, depending on the
member's age, year of service, and tier at retirement. The potential
number of members eligible to benefit under Part A is much greater than
under Part B.
Employers participating in Part A or Part B (or both) would pay the cost
of the retirement incentive over a period not to exceed five years,
beginning in the state fiscal year ending March 31, 2022. This program
is very similar to the two-part retirement incentive offered by the
State in 2010.
PRIOR LEGISLATIVE HISTORY:
New Bill
FISCAL IMPACT FOR STATE AND LOCAL GOVERNMENTS:
To be determined.
EFFECTIVE DATE:
This act would take effect immediately; provided, however, that the
applicable effective date of Parts A and B of this act shall be as
specifically set forth in the last section of such Parts.
