N.Y. State Finance Law § 5: Deferred compensation

§ 5. Deferred compensation. 1. The deferred compensation board is

hereby established, to consist of one member appointed by the governor,

one member appointed by the temporary president of the senate and one

member appointed by the speaker of the assembly. The board shall adopt

rules and regulations regarding the standards and requirements of all

deferred compensation plans established pursuant to this section,

including selection of financial organizations for investment purposes.

2. a. Notwithstanding any other provision of law, the deferred

compensation board shall establish a deferred compensation plan, under

the provisions of section four hundred fifty-seven of the internal

revenue code and regulations adopted pursuant thereto, for all state

employees and shall promulgate rules and regulations as soon as is

reasonably practicable following the appointment of all members of the

board for the appropriate administration of such a plan.

b. The board shall enter into written agreements with one or more

financial organizations to administer the deferred compensation plan for

state employees and to invest funds held pursuant to such plan. Any such

written agreement and deferred compensation plan shall conform with the

provisions of section four hundred fifty-seven of the internal revenue

code and regulations adopted pursuant thereto.

c. Within the discretion of the deferred compensation board and in

accordance with and subject to its fiduciary duty and obligations to the

deferred compensation plan for state employees and to the members and

beneficiaries of such plan and such other investment limitations as may

be prescribed by this chapter, the deferred compensation board is

authorized to establish an MWBE asset management and financial

institution strategy including reasonable goals for utilization of MWBE

asset managers, MWBE financial institutions and MWBE professional

service firms, which shall include, but shall not be limited to, the

following objectives:

(i) conducting procurement procedures in a manner that will assure the

inclusion of MWBE asset managers in any request for proposal or search

process for asset management services undertaken in accordance with the

rules and regulations and of the board;

(ii) subject to best execution policies, developing a strategy to (1)

conduct trades of public equity securities with MWBE financial

institutions and (2) conduct trades of fixed-income securities through

MWBE financial institutions;

(iii) conducting procurement procedures in a manner that will assure

the inclusion of MWBE financial institutions and other MWBE professional

service firms in procurements for services that include accounting,

banking, financial advisory, insurance, legal, research, valuation and

other financial and professional services that are undertaken in

accordance with the rules and regulations of the board;

(iv) cooperating with other fiduciary controlled entities and state

agencies and offices to identify MWBE asset managers, MWBE financial

institutions and MWBE professional service firms.

As used in this section, the terms "MWBE asset manager", "MWBE

financial institutions", "MWBE", "fiduciary-controlled entities" and

"best execution" shall have the meanings specified in section one

hundred seventy-six of the retirement and social security law.

d. The board is also authorized to:

(i) periodically provide notice of the existence of such strategy so

that MWBE asset managers, MWBE financial institutions and other MWBE

professional service firms are made aware of the opportunities made

available pursuant to this strategy;

(ii) within sixty days of the end of each fiscal year following the

effective date of this paragraph, the board shall report to the

governor, legislature and the chief diversity officer of the state of

New York on the participation of MWBE asset managers, MWBE financial

institutions and MWBE professional service providers in investment and

brokerage transactions with or as providers of services for the deferred

compensation plans, including a comparative analysis of such activity

relative to such activity with all asset managers, financial

institutions and professional service providers for the relevant period

and on the progress and the success of the efforts undertaken during

such period to achieve the goals of such strategy. Each report shall be

simultaneously published on the website of the deferred compensation

plans for not less than sixty days following its release to the governor

and the other recipients named above;

(iii) work with the other fiduciary-controlled entities to create a

database of such MWBE entities; and

(iv) periodically, but not less than annually, hold a conference to

promote such strategy in conjunction with the other fiduciary-controlled

entities.

e. The rules and regulations promulgated by the board shall establish

standards for the selection of financial organizations, authorized to do

business in this state, to participate in such plans, including, but not

limited to, the following criteria:

(i) rates of commission, brokerage and other fees, administrative

expenses and related service charges imposed by the financial

organization,

(ii) variety of types of investment opportunities offered by the

financial organization and/or among the financial organizations selected

and the ability to transfer among such opportunities,

(iii) the stability of the financial organization as evidenced by

experience, reputation, assets and holdings, ability to guarantee

specific rates of return,

(iv) ability to comply with reporting requirements to the board and to

participants in such a plan, and

(v) such other factors which would be considered by a prudent investor

in such a plan.

f. The president of the state civil service commission, subject to the

rules and regulations of the board, shall provide assistance to any

public employer as is appropriate to the provisions of this section.

g. At the request of a state employee the comptroller shall, by

payroll deduction, defer the payment of part of the compensation of such

employee as provided in a written statement by the employee and transfer

the amount so deferred to the authorized financial organization.

h. The board may hire such employees as it deems necessary and prudent

to assist in its administration. Such employees may be either:

(i) in the unclassified service of the state and, notwithstanding any

other provision of law to the contrary, shall be designated managerial

and, as such, eligible for benefits provided by subdivision two of

section eleven and subdivision (a) of section twelve of chapter four

hundred sixty of the laws of nineteen hundred eighty-two, as amended;

section one hundred fifty-eight of the civil service law; eligible to

participate in the state deferred compensation plan, the New York state

and local employees' retirement system; the health benefit plan for

state employees; and subject to coverage under sections seventeen and

eighteen of the public officers law, or

(ii) hired not as state employees but hired on a contractual basis.

3. a. Notwithstanding any other provision of law, every public

employer in the state may provide a deferred compensation plan for its

employees in accordance with standards, rules and regulations of the

deferred compensation board and the provisions of section four hundred

fifty-seven of the internal revenue code and regulations adopted

pursuant thereto.

b. For the purposes of this section, the term "public employer" shall

mean: a county, city, town, village or any other political subdivision

as defined in section one hundred thirty-one of the retirement and

social security law or civil division of the state; a school district or

any governmental entity operating a public school, college or

university; a public improvement or special district; a public

authority, commission or public benefit corporation; any other public

corporation, agency or instrumentality or unit of government which

exercises governmental powers under the laws of the state or any

instrumentality jointly created by this state and any other state or

states.

c. Subject to the rules and regulations promulgated by the board, a

public employer may establish a deferred compensation plan and enter

into written agreements with one or more financial organizations to

administer such deferred compensation plan for its employees and to

invest the funds held pursuant to such plan or such employer may elect

participation in the deferred compensation plan provided for state

employees. At the request of an employee of any such public employer,

the chief fiscal officer or other appropriate officer of the public

employer shall, by payroll deduction, defer the payment of part of the

compensation of such employee, as provided in a written statement by the

employee, and transfer the amount so deferred to the authorized

financial organization.

4. Notwithstanding the other provisions of this section, state

employees, otherwise eligible to participate in the deferred

compensation plan, who are in a negotiating unit represented by an

employee organization which negotiates pursuant to article fourteen of

the civil service law shall not be permitted to participate under the

provisions of this section until such time as such participation is

authorized pursuant to a collectively negotiated agreement between the

state and the employee organization; provided, however, that the state

need only negotiate whether or not such employees shall be included in

such plan.

5. Should a public employer elect to provide or elect to participate

in a deferred compensation plan for employees otherwise eligible to

participate in the plan, employees in a negotiating unit represented by

an employee organization which negotiates pursuant to article fourteen

of the civil service law shall not be permitted to participate under the

provisions of this section until such time as such participation is

authorized pursuant to a collectively negotiated agreement between the

public employer and the employee organization; provided, however, that

the public employer need only negotiate whether or not such employees

shall be included in such plan.

6. To the extent permitted by section four hundred fifty-seven of the

internal revenue code and regulations adopted pursuant thereto, any

compensation deferred by a state employee or an employee of a public

employer under an eligible deferred compensation plan established

pursuant to this section shall be considered part of annual compensation

by any retirement system or plan to which the state or public employer

contributes on behalf of said employee. However, this in no way shall be

construed to supersede the provision of section four hundred thirty-one

of the retirement and social security law or any other similar provision

of law which limits the salary base for computing retirement benefits

payable by a public retirement system.

7. Any benefit from a deferred compensation plan established pursuant

to this section shall be in addition to any retirement benefits provided

a state or public employee under any other provision of law.

8. a. The term "financial organization" shall mean an organization

authorized to do business in the state of New York and (A) which is an

authorized fiduciary to act as a trustee pursuant to the provisions of

an act of congress entitled "Employee Retirement Income Security Act of

1974" as such provisions may be amended from time to time, or an

insurance company; and (B) (i) is licensed or chartered by the state

department of financial services, (ii) is chartered by an agency of the

federal government, (iii) is subject to the jurisdiction and regulation

of the securities and exchange commission of the federal government, or

(iv) is any other entity otherwise authorized to act in this state as a

trustee pursuant to the provisions of an act of congress entitled

"Employee Retirement Income Security Act of 1974" as such provisions may

be amended from time to time.

b. The term "state employee" as used in this section shall mean an

employee or officer of the state, whose salary is paid directly by the

state and, for the limited purposes of this section shall be deemed to

include officers or employees in positions in the institutions under the

management and control of Cornell and Alfred universities, as

representatives of the board of trustees of the state university.