AAC-12-07-00002-P State-Administered Defined Contribution Service Award Programs for Volunteer Firefighters

3/21/07 N.Y. St. Reg. AAC-12-07-00002-P

NEW YORK STATE REGISTER

VOLUME XXIX, ISSUE 12

March 21, 2007

RULE MAKING ACTIVITIES

DEPARTMENT OF AUDIT AND CONTROL

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. AAC-12-07-00002-P

State-Administered Defined Contribution Service Award Programs for Volunteer Firefighters

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed action:

Addition of Part 154 to Title 2 NYCRR.

Statutory authority:

General Municipal Law, sections 214, 215, 216, 216-a, 216-b, 216-c, 217, 217-a, 218, 219-a; L. 2006, ch. 714, section 13

Subject:

State-administered defined contribution service award programs for volunteer firefighters.

Purpose:

To specify the procedures for the adoption and administration of State-administered defined contribution service award programs for volunteer firefighters and for the transfer to State administration of existing locally-administered defined contribution service award programs for volunteer firefighters.

Substance of proposed rule (Full text is posted at the following State website: www.osc.state.ny.us):

Section 154.1 describes the scope of Part 154, covering State-administered defined contribution service award programs for volunteer firefighters. A political subdivision may adopt a new defined contribution volunteer firefighter service award program to be administered by the State or may transfer to the State the responsibility for administering an existing defined contribution volunteer firefighter service award program previously administered locally, subject to the requirements of Part 154.

Section 154.2 defines terms used in Part 154.

Section 154.3 sets forth the requirements for a local government Sponsor to notify the Comptroller of the adoption of a new State-administered defined contribution volunteer firefighter service award program or the transfer of an existing defined contribution volunteer firefighter service award program from local administration to State administration.

Section 154.4 provides for the execution of an Adoption or Transfer Agreement between a local government Sponsor and the State. The Adoption or Transfer Agreement will cover the obligations of each local government Sponsor and set forth the locally-determined features of the State-administered defined contribution volunteer firefighter service award program.

Section 154.5 authorizes the collection of personal identifying information necessary for the administration of the program and requires that such information be protected from unlawful disclosure.

Section 154.6 provides procedures for the determination of service credit and the payment of contributions therefor.

Section 154.7 provides procedures for the determination of optional prior service credit for up to five years prior to the commencement of a defined contribution service award program and permits prior service costs to be paid in a lump sum or in annual installments over five years.

Section 154.8 provides procedures for the distribution of State-administered defined contribution volunteer firefighter service awards when a participant becomes eligible for such an award.

Section 154.9 provides procedures for a local government Sponsor to notify the Administrator of an amendment to a State-administered defined contribution volunteer firefighter service award program consistent with the provisions of General Municipal Law Article 11-A or the termination of State administration of a defined contribution volunteer firefighter service award program.

Section 154.10 provides for the Comptroller to serve as Administrator of State-administered service award programs or to retain an administrative service agency or a financial organization to administer all or any part of a defined contribution volunteer firefighter service award program, and specifies the duties of the Administrator.

Section 154.11 makes the Administrator responsible for the preparation of a program document setting forth the rights and obligations of Sponsors and participants and the procedures for administration of State-administered defined contribution volunteer firefighter service award programs.

Section 154.12 requires the Administrator to make reports to each Sponsor and to issue confidential account statements for each participant.

Section 154.13 provides for disclosure of a State-administered defined contribution volunteer firefighter service award program summary, and any modifications thereto, to each participant.

Section 154.14 sets forth the standards to be followed in the selection of administrative service agencies or financial organizations to act as service providers.

Section 154.15 requires a service provider to observe a fiduciary standard of care.

Section 154.16 prohibits service providers from using participant information to solicit or offer to participants in a State-administered defined contribution volunteer firefighter service award program any other product or service.

Text of proposed rule and any required statements and analyses may be obtained from:

William J. Murray, Office of the State Comptroller, 110 State St., 14th Fl., Albany, NY 12236-0001, [phone], e-mail: [e-mail]

Data, views or arguments may be submitted to:

Same as above.

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. Statutory Authority:

Chapter 714 of the Laws of 2006 amended Article 11-A of the General Municipal Law to authorize the establishment of an optional State-administered volunteer firefighter service award program. General Municipal Law sections 214, 215, 216, 216-a, 216-b, 216-c, 217, 217-a, and 219-a generally apply to such service award programs, and General Municipal Law section 218 specifically applies to defined contribution volunteer firefighter service award programs. General Municipal Law section 216-c[3] requires the Comptroller to promulgate rules and regulations governing State-administered volunteer firefighter service award programs, including, but not limited to, standards for the selection of service providers, the method and timing of the payments required to be made by the sponsors, reporting requirements, matters relating to the preparation of a plan document, application procedures for transfer into the State-administered program, and any other matter relating to the service award programs. Section 13 of Chapter 714 provided for the State-administered volunteer firefighter service award program to be effective as of June 1, 2007, and authorized the Comptroller to adopt the necessary rules and regulations on or before that date.

2. Legislative Objectives:

The regulations contained in this Part provide for the establishment and operation of an optional State-administered defined contribution volunteer firefighter service award program, including the creation of new State-administered defined contribution volunteer firefighter service award programs by local sponsors and the conversion of locally-administered defined contribution volunteer firefighter service award programs into State-administered programs. Regulations in a separate Part cover State-administered defined benefit volunteer firefighter service award programs.

3. Needs and Benefits:

The adoption of Part 154 will make it possible for local sponsors to choose to have defined contribution volunteer firefighter service award programs administered by the State.

4. Costs:

a. The major cost of the proposed rule to local governments that sponsor State-administered service award programs would be the fees charged by service providers retained by the Comptroller, through a competitive process, to serve as program Administrator and as trustee. Because these fees will be determined in future contracts entered into between the Comptroller and the service providers, the fees are currently indeterminate. Due to economies of scale, however, it is anticipated that the fees provided for in such contracts will be less than the fees for comparable services paid by the sponsors of locally-administered service award programs.

b. Costs to the agency and the State for the implementation and continuation of the rule are significant but indeterminate. The local sponsors will continue to be responsible for all the costs of operating and administering the programs, including the costs of administrative, actuarial, and investment services. Costs to local governments that sponsor defined contribution volunteer firefighter service award programs and transfer the responsibilities to the State are expected to eventually be less than current costs, since economies of scale should be realized as the number of State-administered programs increases.

c. The basis for the foregoing cost estimates is an analysis of the proposed regulations and the experience of the Office of the State Comptroller in supervising the accounts of political subdivisions of the State.

5. Local Government Mandates:

The rule requires local governments that establish new State-administered defined contribution volunteer firefighter service award programs or transfer existing locally-administered programs to State administration to follow prescribed procedures. The cost of financing existing obligations of a locally-administered service award program must be paid to the Comptroller when administrative responsibility is transferred to the State.

6. Paperwork:

Local governments seeking to establish new State-administered defined contribution volunteer firefighter service award programs or to transfer existing locally-administered programs to State administration are required to file a Notice of Adoption or Transfer with the Comptroller, to sign an Adoption or Transfer Agreement, and to periodically report the names, addresses, and other information relating to the volunteer firefighters who participate in the programs, and such other information as may be needed for the administration of the programs.

7. Duplication:

None.

8. Alternatives:

No significant alternatives were considered.

9. Federal Standards:

None.

10. Compliance Schedule:

None. Local government sponsors are authorized, but not required, to have service award programs administered through the Comptroller's office.

Regulatory Flexibility Analysis

1. Effect of rule:

The rule sets forth the requirements for adopting a State-administered defined contribution volunteer firefighter service award program or for transferring administrative responsibility to the State for an existing locally-administered defined contribution volunteer firefighter service award program. Small businesses will not be affected by adoption of the rule.

2. Compliance requirements:

None. Local government sponsors are authorized, but not required, to have service award programs administered through the Comptroller's office.

3. Professional services:

Notices of adoption or transfer and notices of amendment or termination must include an opinion of legal counsel assuring that the local government Sponsor has conducted the necessary proceedings and complied with the applicable laws and regulations.

4. Compliance costs:

The rule imposes no initial capital costs. The cost of obtaining required legal opinions will vary, depending on whether opinions are obtained from in-house or outside counsel. For local governments using outside counsel, the cost will vary according to the complexity of the defined contribution volunteer firefighter service award program which is the subject of the legal opinion. For an existing program, legal counsel will have to analyze the existing records, and costs will vary depending on the state of the records and the counsel's billing rate. The cost of financing existing obligations of a locally-administered service award program must be paid to the Comptroller when administrative responsibility is transferred to the State.

5. Economic and technological feasibility:

The rule imposes no technological requirements, and the economic feasibility of financing a defined contribution volunteer firefighter service award program depends upon the strength of a local government's revenue base, which is not affected by the rule.

6. Minimizing adverse impact:

Since the rule imposes no adverse impacts beyond the burdens that are already implicit in the establishment of a statutorily authorized service award program, no approaches for minimizing adverse impacts were considered.

7. Small business and local government participation:

Notice of the rule has been disseminated to statewide fire service organizations and posted on the agency's website.

Rural Area Flexibility Analysis

1. Types and estimated numbers of rural areas:

The rule will apply to every rural area in the State.

2. Reporting, recordkeeping, and other compliance requirements; and professional services:

The rule requires all local government sponsors of State-administered defined contribution volunteer firefighter service award programs, including those in rural areas, to keep records of the services rendered by volunteer firefighters, to report information to the State administrator, and to comply with the payment and other requirements of the program. At the time of commencing or terminating participation in a State-administered defined contribution volunteer firefighter service award program, local government sponsors, including those in rural areas, must obtain a legal opinion assuring that all necessary legal proceedings have been conducted and that the sponsor has complied with applicable laws and regulations.

3. Costs:

Costs for local government sponsors in rural areas will vary depending on the size of the affected volunteer fire company or volunteer fire department, the number of participating members, and the length of time a defined contribution volunteer firefighter service award program has been in existence.

4. Minimizing adverse impact:

Since the rule imposes no adverse impacts beyond the burdens that are already implicit in the establishment of a statutorily authorized service award program, no approaches for minimizing adverse impacts were considered.

5. Rural area participation:

Notice of the rule has been disseminated to statewide fire service organizations and posted on the agency's website.