The major policy issues relating to accounting for pension plans includes:

• Reporting pension plan assets in the State's financial reporting entity
• Reporting the State’s net pension liability
• Classification of the State's pension contribution liability
• Financial statement disclosures

REPORTING PENSION PLAN ASSETS IN THE STATE'S FINANCIAL REPORTING ENTITY

New York State acts as custodian of the New York State and Local Employees' Retirement System (ERS) and the New York State and Local Police and Fire Retirement System (PFRS), collectively known and reported as the New York State and Local Retirement System (System), and accordingly, the assets and liabilities held in a fiduciary capacity must be included within the State's reporting entity. The assets and liabilities of the System will be reported within the Fiduciary Funds in the State's Basic Financial Statements. The net position of the System will be presented as "net position – restricted for pension benefits" in order to emphasize the special nature of net position. A “Statement of Changes in Fiduciary Net Position” will be presented to report operating activity for the year.

REPORTING THE STATE'S NET PENSION LIABILITY

The ERS and PFRS are cost-sharing multiple-employer defined benefit pension plans. As such, in the Government-wide financial statements, the State is required to recognize a liability for its proportionate share of the collective net pension liability for both plans. The State is also required to recognize its proportionate share of pension expense and the deferred outflows of resources and deferred inflows of resources related to pensions. In the fund financial statements, the State’s proportionate share of the collective net pension liability is required to be recognized to the extent that the liability is normally expected to be liquidated with expendable available financial resources. Pension expenditures are recognized for the amount paid to the plan plus the change in the beginning and ending balances of amounts normally expected to be liquidated with expendable available resources.

CLASSIFICATION OF THE STATE'S PENSION CONTRIBUTION LIABILITY

As a result of the enactment of Chapter 33, Laws of 1986, the State pays its liability to the System on a current basis, i.e., the pension liability for the fiscal year ending March 31 will be paid by March 15. Costs associated with the various retirement incentive programs and employer amortizations are reported as pension contribution liabilities. The retirement incentive programs and employer amortizations are reported as long-term liabilities and expenses on the Government-wide financial statements to the extent they are not liquidated with current year resources.

The State's pension contribution expenditure reported in the Governmental Funds operating statement is based on salaries earned during the fiscal year then ended. The System's actuaries determine current pension costs by applying assumptions related to inflation, salary scale, investment rate of return, cost of living adjustments, mortality, retirement age, and other factors.

FINANCIAL STATEMENT DISCLOSURES

The State's financial statements will include the following footnote disclosures for each plan:

• A description of the pension plan, terms and benefits provided by the System, and contribution requirements
• The measurement date of the collective net pension liability, and the employer’s proportionate share of the collective net pension liability
• Employer accounting for the net pension liability, pension expense, and other pension-related amounts
• Factors that impact the net pension liability, such as expected rate of return, actuarial assumptions, and discount rate

In addition, Required Supplementary Information is presented for a ten-year period for each plan, as the information is available to be reported, including:

• Schedule of Proportionate Share of the Net Pension Liability and related ratios
• Schedule of Employer Contributions and related ratios

Guide to Financial Operations

REV. 01/05/2021