STATE OF NEW YORK
STATE ETHICS COMMISSION

Advisory Opinion No. 89-04:

Application of §§73 and 73-a of the Public Officers Law to the New York State Teachers' Retirement System and Retirement Board members.

INTRODUCTION

The following advisory opinion is issued in response to an inquiry from the New York State Teachers' Retirement System as to the applicability of §§73 and 73-a of the Public Officers Law to the Retirement Board members and to employees of the Teachers' Retirement System.

Pursuant to the authority vested in the New York State Ethics Commission ("Commission") by §94(15) of the Executive Law, the Commission hereby renders its opinion that neither §73 nor §73-a of the Public Officers Law applies to the Retirement Board members or to employees of the Teachers' Retirement System. The Commission's opinion in this regard is supported by language of the Education Law and the Public Officers Law. This opinion, until and unless amended or revoked, shall be binding on the Commission unless material facts were omitted or misstated in the request for opinion.

DISCUSSION

The New York State Teachers' Retirement System is a public pension fund established pursuant to §502 of the Education Law. It is an independent entity which "shall have the powers and privileges of a corporation, and under its corporate name, or in the name of its nominees, all of its business shall be transacted, all funds invested, all warrants for money drawn and payments made, and all cash and securities and other property shall be held." [§502(2) of the Education Law (emphasis added)].

The general administration and responsibility for the proper operation of the Retirement System is vested in the Retirement Board in accordance with §504 of the Education Law. The Retirement Board consists of ten members, none of whom are appointed by the Governor.1 The Retirement Board is authorized to hire employees and compensate them at the rates and amounts it approves. In dealing with its employees, the System independently negotiates and executes its own collectively negotiated agreements in accordance with the provisions of the Taylor Law (Article 14, Civil Service Law).

The System's funds are held in trust by the Retirement Board which has exclusive responsibility for them. (§508 of the Education Law). Although §507 designates the State Treasurer as the custodian of the System's funds, the Court of Appeals, in Brigham v. McCabe, et al. 20 NY2d 525, 533 (1967), held that the role of the State Treasurer as a custodian was "of a clearly ministerial nature". The Court of Appeals pointed out that, under §507, he "may not disburse any of the System's funds except `upon warrants signed by a member of the Retirement Board, or an official thereof authorized to do so'".

The Commission must determine whether the Teachers' Retirement System is a "state agency" as defined in §73(i)(g) and §73-a(1)(b) of the Public Officers Law, which provide:

the term "state agency" shall mean any state department, or division, board, commission or bureau of any state department, any public benefit corporation, public authority or commission at least one of whose members is appointed by the Governor . . . .
As previously noted, the Retirement system is not a State department, and none of its members are appointed by the Governor. It is not a public benefit corporation, public authority or commission. As such, the Commission concludes that the term "state agency" does not apply to the Teachers' Retirement System.

In Matter of Hill v. NYS Teachers' Retirement System, 97 Misc2d 95, 99 (1978), the Court held the System is not a "state agency" for the purposes of rule making requirements of the State Administrative Procedure Act (SAPA). The definition of "agency" in §102 of the SAPA includes any "department, board, bureau, commission, division, office, council, committee or officer of the state or a public benefit corporation or public authority at least one of whose members is appointed by the Governor. . .". Because no Board members are appointed by the Governor, the Court found that the System is not an agency required to comply with the SAPA. The substance of the Commission's inquiry is much the same; the definition of agency under SAPA is very similar to the definition of "state agency" found in §§73 and 73-a of the Public Officers Law.

Having determined that the Teachers' Retirement System is not a State agency, the Commission similarly concludes that its governing board, the Retirement Board, is not a State agency by definition and is not composed of State Officers.

Finally, the Commission concludes that employees of the Teachers' Retirement System cannot be "state officers or employees" subject to §73 or §73-a of the Public Officers Law, in that they are not appointed to or employed by a State agency or as State Officer(s) as defined by the Ethics Law. Therefore, the requirements concerning business or professional activities and financial disclosure for State officers and employees contained in §§73 and 73-a of the Public Officers Law do not apply to the Retirement Board or to the employees of the Teachers' Retirement System.

All concur:

Elizabeth D. Moore, Chair

Joseph J. Buderwitz, Jr.
Angelo A. Costanza
Norman Lamm
Robert B. McKay, Members Dated: April 11, 1989


ENDNOTES

1. One member, elected by the Board of Regents of the University of the State of New York, who shall have been an executive officer of a bank; two members, elected by the Board of Regents of the University of the State of New York, who shall have been a trustee or member of the board of education of a school district, and at least one of whom shall have been an executive officer of an insurance company; two administrative officers of the New York State school system, appointed by the Commissioner of Education; the Comptroller of the State of New York or one member appointed by him; three members elected from among the members of the Retirement System; and one member who must be a retired teacher, appointed by the Retirement Board. The Comptroller, by virtue of his being a Statewide elected official is subject to the provisions of §§73 and 73-a, but not as a member of the Retirement Board.