This bill has been amended

Bill S4761-2013

Clarifies the maximum salary which may be used to calculate the ordinary death benefit of members of the public retirement systems of the state

Clarifies the maximum salary which may be used to calculate the ordinary death benefit of members of the public retirement systems of the state.

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  • Apr 22, 2013: REFERRED TO CIVIL SERVICE AND PENSIONS

Memo

BILL NUMBER:S4761

TITLE OF BILL: An act to amend the retirement and social security law, in relation to clarifying the maximum salary which may be used to calculate the ordinary death benefit of members of the public retirement systems of the state

Purpose of the Bill:

This bill is intended to clarify the maximum salary which may be used in the calculation of the paragraph 2 ordinary death benefit pursuant to Retirement and Social Security Law §§ 448(c), 508(c) and 606(c).

Summary and Justification:

This bill amends Retirement and Social Security Law §§ 448(c), 508(c) and 606(c) to clarify the maximum salary used to calculate the ordinary death benefit for members with a date of membership on or after July 1, 1973. Currently, these provisions specify that the paragraph 2 death benefit is to be calculated using the member's regular compensation earned during the member's last twelve months of service in full pay status as a member, provided such salary shall exclude any form of termination pay, any lump sum payment for deferred compensation sick leave, any lump sum payment for accumulated vacation credit or any other payment for time not worked. Additionally, for the purposes of the paragraph 2 ordinary death benefit calculation under these provisions, a member's salary shall not exceed the maximum salary specified in Civil Service Law Section § 130.

In 2011, Section 130 of the Civil Service Law was amended by Chapter 491 which was signed into law August 17, 2011, and retroactive to April 1, 2011. Unlike prior amendments to Civil Service Law § 130, Chapter 491 reduced, rather than increased, the maximum salary specified in that section. The maximum salary specified under Civil Service Law § 130(1)(d) has been $163,772 since April of 2007, when it was repealed and added by part B of Chapter 10 of the Laws of 2008. After the enactment of Chapter 491, the maximum salary specified under Civil Service Law § 130(1)(c) is $163,033.

In 2012, Chapters 15, 37, 67, 257 and 261 made further amendments to the provisions of Section 130 of the Civil Service Law and enacted various negotiated state labor agreements. The amendments made by these subsequent chapters did not rectify the amendments made by Chapter 491 of the Laws of 2011. Moreover, yet another maximum salary is provided for under Chapter 37 of the Laws of 2012.

The amendments reducing the maximum salary specified in Civil Service Law § 130 for the purposes of the paragraph 2 ordinary death benefit raise a potential constitutional problem in the calculation of such benefit and it is for this reason that the Retirement System seeks the amendments proposed in this bill. Article V, Section 7 of the New York Constitution prohibits any diminishment or impairment of retirement system benefits of existing members and retirees. Thus, while the Legislature may be free to change Civil Service Law § 130 as applicable to the salaries of state workers, Article V. Section 7 would, by its application, prevent any reduction in death benefits of affected members caused by using the reduced Civil Service Law § 130

maximum salary in the calculation of a paragraph 2 ordinary death benefit.

The amendments proposed in this bill would remedy the administrative difficulty of having multiple maximum salaries and avoid the possible constitutional problem by providing a permanent alternative maximum salary to be used in the ordinary death benefit calculation. Further, these amendments would assure a uniform maximum salary applicable to all retirement system members and retirees without regard to date of membership. The amendments proposed in this bill would allow the retirement systems to calculate the paragraph 2 ordinary death benefit using a maximum salary which shall not be less than the maximum salary provided for under Civil Service Law § 130, as it was added by part B of Chapter 10 of the Laws of 2008, or the maximum salary specified under Civil Service Law § 130, as thereafter amended, whichever is greater. As the provision of in-service death benefits is ancillary to the main mission of retirement systems to provide retirement security, the ordinary death benefit provisions were intended to provide a uniform calculation for the death benefit. As such, the amendments proposed in the bill are consistent with such intent. The permanent alternative maximum salary would mediate any risk of constitutional challenge and maintain a uniform calculation of the death benefit provided in Retirement and Social Security Law §§ 448(c), 508(c) and 606(c).

Effective Date of the Bill:

This bill shall take effect immediately and shall be deemed to have been in full force and effect on and after April 1, 2011.

Other Agencies to Whom the Bill May Be of Interest:

Division of the Budget, Department of Financial Services, State Comptroller and New York City.

Budgetary Implications of the Bill:

The annual cost to the employers of members Of the New York State Teachers' Retirement System is estimated to be negligible if this bill is enacted.


Text

STATE OF NEW YORK ________________________________________________________________________ 4761 2013-2014 Regular Sessions IN SENATE April 22, 2013 ___________
Introduced by Sen. GOLDEN -- (at request of the New York State Teachers' Retirement System) -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions AN ACT to amend the retirement and social security law, in relation to clarifying the maximum salary which may be used to calculate the ordi- nary death benefit of members of the public retirement systems of the state THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision c of section 448 of the retirement and social security law, as amended by chapter 510 of the laws of 1974, is amended to read as follows: c. For the purpose of this section, salary shall be the regular compensation earned during the member's last twelve months of service in full pay status as a member or, if he OR SHE had not completed twelve months of service prior to the date of death, but was subject to the provisions of subdivision b of this section, the compensation he OR SHE would have earned had he OR SHE worked for the twelve months prior to such date; provided, however, for the purpose of this section salary shall exclude any form of termination pay (which shall include any compensation in anticipation of retirement), or any lump sum payment for deferred compensation sick leave, or accumulated vacation credit or any other payment for time not worked (other than compensation received while on sick leave or authorized leave of absence) and in no event shall it exceed the maximum salary specified in section one hundred thirty of the civil service law, AS ADDED BY PART B OF CHAPTER TEN OF THE LAWS OF TWO THOUSAND EIGHT, OR THE MAXIMUM SALARY SPECIFIED IN SECTION ONE HUNDRED THIRTY OF THE CIVIL SERVICE LAW, AS HEREAFTER AMENDED, WHICHEVER IS GREATER.
S 2. Subdivision c of section 508 of the retirement and social securi- ty law, as added by chapter 617 of the laws of 1986, is amended to read as follows: c. For the purpose of this section, salary shall be the regular compensation earned during the member's last twelve months of service in full pay status as a member or, if he OR SHE had not completed twelve months of service prior to the date of death, but was subject to the provisions of subdivision b of this section, the compensation he OR SHE would have earned had he OR SHE worked for the twelve months prior to such date; provided, however, for the purpose of this section salary shall exclude any form of termination pay (which shall include any compensation in anticipation of retirement), or any lump sum payment for deferred compensation sick leave, or accumulated vacation credit or any other payment for time not worked (other than compensation received while on sick leave or authorized leave of absence) and in no event shall it exceed the maximum salary specified in section one hundred thirty of the civil service law, AS ADDED BY PART B OF CHAPTER TEN OF THE LAWS OF TWO THOUSAND EIGHT, OR THE MAXIMUM SALARY SPECIFIED IN SECTION ONE HUNDRED THIRTY OF THE CIVIL SERVICE LAW, AS HEREAFTER AMENDED, WHICHEVER IS GREATER. S 3. Subdivision c of section 606 of the retirement and social securi- ty law, as added by chapter 617 of the laws of 1986, is amended to read as follows: c. For the purpose of this section, salary shall be the regular compensation earned during the member's last twelve months of service in full pay status as a member or, if he OR SHE had not completed twelve months of service prior to the date of death, but was subject to the provisions of subdivision b of this section, the compensation he OR SHE would have earned had he OR SHE worked for the twelve months prior to such date; provided, however, for the purpose of this section salary shall exclude any form of termination pay (which shall include any compensation in anticipation of retirement), or any lump sum payment for deferred compensation sick leave, or accumulated vacation credit or any other payment for time not worked (other than compensation received while on sick leave or authorized leave of absence) and in no event shall it exceed the maximum salary specified in section one hundred thirty of the civil service law, AS ADDED BY PART B OF CHAPTER TEN OF THE LAWS OF TWO THOUSAND EIGHT, OR THE MAXIMUM SALARY SPECIFIED IN SECTION ONE HUNDRED THIRTY OF THE CIVIL SERVICE LAW, AS HEREAFTER AMENDED, WHICHEVER IS GREATER. S 4. This act shall take effect immediately and shall be deemed to have been in full force and effect on and after April 1, 2011. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: This bill would amend Sections 448, 508 and 606 of the Retirement and Social Security Law to clarify the maximum salary used to calculate the paragraph 2 death benefit for Tier 2, 3, 4, 5 and 6 members of the New York State Teachers' Retirement System. The maximum salary used to calculate the paragraph 2 death benefit shall not be less than the maxi- mum salary specified in Section 130 of the Civil Service Law, as it was added by part B of Chapter 10 of the Laws of 2008, or the maximum salary specified in Section 130 of the Civil Service Law, as thereafter amended, whichever is greater. Chapter 491 of the Laws of 2011 slightly lowered the salary limit for death benefit calculation purposes, yet the current limit is constitutionally protected for current members.

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