Section 399. Special annuity and custodial account programs authorized

1.
  An employer is hereby authorized  to  establish  by  resolution  special
  annuity  and  custodial  account  programs  which  shall provide for the
  purchase of contracts or establishment of custodial  accounts  providing
  retirement  and death benefits for or on behalf of employees electing to
  enter into an agreement with such employer providing for a reduction  of
  annual salary for the purpose of purchasing such contracts or for making
  contributions to such custodial accounts.
    2.  Where  the  employer  has  established  a  special  annuity and/or
  custodial account program authorized by this article, any  employee  may
  enter  into  an  agreement  with  his  employer for the reduction of his
  salary which is earned after the effective date of  such  agreement  and
  for  contributions  to  the  purchase  of  an  annuity  contract or to a
  custodial account for such employee by his employer in an  amount  equal
  to the reduction in salary so agreed on. The employer shall purchase the
  annuity contract or make contributions to the custodial account for such
  employee  entering  into such an agreement from the insurer or custodian
  designated pursuant to subdivision four of this  section.  Such  annuity
  contract  shall  be issued to, and become the property of, such employee
  whose rights therein shall be non-forfeitable except for failure to  pay
  future premiums or such custodial account shall be established on behalf
  of  such  employee whose rights therein are non-forfeitable. Neither the
  state, or a political subdivision thereof, nor an employer  shall  be  a
  party to any annuity contract purchased or custodial account established
  in  whole  or  in  part with payments pursuant to said agreement, and no
  retirement, death or other benefit shall be payable  by  the  state,  or
  political subdivision thereof, or by an employer under such agreement or
  such annuity contract or custodial account.
    3.  Subject  to  approval  and  filing, as hereinafter provided by the
  comptroller, any  such  agreement  shall  specify  the  amount  of  such
  reduction,  and  the  effective  date  thereof, and shall be binding and
  irrevocable as to both parties thereto during the continuation  of  such
  employee's  employment  with  the employer; provided, however, that such
  agreement may be terminated in  accordance  with  university  guidelines
  upon  notice  in  writing  by  either party. Such termination shall take
  effect at the beginning of the payroll period the first day of which  is
  nearest   to   the  thirtieth  day  following  the  day  on  which  such
  notification of termination was (i) received by  the  employer,  in  the
  event such termination is initiated by the employee, or (ii) sent to the
  employee in the event such termination is initiated by the employer.
    4. The board of trustees of state university with respect to the state
  university  and the community colleges, and the board of trustees of the
  city university with respect to employees of the city university of  New
  York,  shall  designate  the insurer or insurers from which such annuity
  contracts or in the case of custodial accounts, the company or companies
  from whom regulated investment company shares  shall  be  purchased.  In
  making  such  designation,  due  consideration shall be given to (a) the
  nature and extent of the rights and benefits to be provided by contracts
  for such special annuity or custodial account for  employees  and  their
  beneficiaries,  (b)  the  relation  of  such  rights and benefits to the
  amount  of  contributions  to  be  made  for  such  contracts,  (c)  the
  suitability  of  such  rights and benefits to the needs and interests of
  employees, and to the interests  of  employers  in  the  employment  and
  retention  of  employees,  and  (d)  the  authority  and  ability of the
  designated insurer or insurers or designated  company  or  companies  to
  provide rights and benefits under such contracts or custodial accounts.
    5.  The  board  of  trustees  of state university, with respect to the
  state university and the community colleges, and the board  of  trustees

  of  the city of New York with respect to the city university, are hereby
  authorized to provide for  the  administration  of  a  program  for  the
  purchase  of  such  special  annuities  or  establishment  of  custodial
  accounts,  and to perform or authorize the performance of such functions
  as may be necessary for such purpose in accordance with this section.
    6. No agreement for reduction of salary as authorized by this  section
  or  any termination thereof shall become effective until approved by and
  filed  with  the  comptroller.  Upon  such  approval  and   filing   the
  comptroller shall reduce an employee's salary pursuant to said agreement
  and  pay  an  amount  equal  to  the  amount agreed upon for such salary
  reduction as an employer  contribution  to  the  designated  insurer  or
  insurers  or  designated  custodian or custodians.   Notwithstanding the
  reductions of salary authorized by  this  article,  (i)  the  amount  of
  employer  and  employee contributions otherwise required on behalf of an
  employee electing the optional retirement program pursuant  to  articles
  eight-B  or  one  hundred twenty-five-A of this chapter, as the case may
  be, shall continue to be made  on  the  basis  of  the  salary  of  such
  employee without regard to such reduction, or (ii) in the event a member
  of a public retirement system in this state agrees to a reduction of his
  salary  in  accordance  with  this subdivision, such agreement shall not
  cause him to lose any benefits under such public  retirement  system  to
  which  he  would  be  otherwise entitled had he not agreed to reduce his
  salary for  the  purpose  of  having  a  special  annuity  purchased  or
  contributions  to  a  custodial  account  made  on  his  behalf, and any
  required employer and employee contributions shall continue to  be  made
  on  the  basis  of  the  salary  of such employee without regard to such
  reduction.  Any survivor's benefit payable pursuant to the civil service
  law shall be based upon the salary of such employee  without  regard  to
  the reduction authorized by this article.
    7.  Any  payroll  deduction,  other  than  income  tax withholdings as
  required by law, which may be required or authorized  pursuant  to  law,
  contract,  agreement,  or  any  other instrument, the amount of which is
  determined in relation to an employee's earnings, shall be based on  the
  salary  of such employee without regard to reduction thereof pursuant to
  any agreement authorized by this article.
    8. An employee agreeing to have his salary reduced in accordance  with
  this article shall be paid an amount equal to his salary less the amount
  of   the  reduction  pursuant  to  such  agreement  and  any  deductions
  authorized by law, such amount to  be  paid  in  equal  installments  in
  accordance with the payroll procedure otherwise appropriate.
    9. Payments for contracts providing for a special annuity or custodial
  account  shall  be  made by the comptroller to the designated insurer or
  insurers or designated custodians out of moneys otherwise  available  in
  accordance  with  law  for  salaries  of  the  employees  for  whom such
  annuities are purchased or contributions to such custodial accounts  are
  made.
    10.  Nothing  contained  in  this  section shall impair or prevent any
  agreements which have heretofore, or  may  hereafter  be,  entered  into
  between  Alfred  university  and  any  employee  of the state college of
  ceramics under the management and control of Alfred  university  as  the
  representative  of  the  state  university  trustees, or between Cornell
  university and any employee of the state colleges of  agriculture,  home
  economics,  veterinary  medicine  or industrial and labor relations, the
  state  agricultural  experiment  station  at  Geneva,   or   any   other
  institution  or  agency  under  the  management  and  control of Cornell
  university as  representative  of  the  state  university  trustees  for
  reduction  of  the basic annual salary of any such employee as otherwise
  fixed by or pursuant to  law  and  purchase  of  a  special  annuity  or

  contribution  to  a  custodial account on his behalf. In the case of any
  such employee whose salary is paid directly to him  by  the  state,  the
  comptroller is hereby authorized to reduce his salary in accordance with
  any  such agreement as certified on the appropriate payroll and upon the
  audit and warrant of the comptroller the amount of  any  such  reduction
  shall  be  paid  to Alfred university or Cornell university, as the case
  may be, out of moneys  appropriated  and  otherwise  available  for  the
  payment  of  such employee's salary, for the purchase by such university
  of a special annuity or contribution to a  custodial  account  for  such
  employee. No agreement for reduction of salary and purchase of a special
  annuity  or  contribution to a custodial account by any employee to whom
  this subdivision is applicable shall cause him to lose any  benefits  to
  which  he would otherwise be entitled by reason of membership in the New
  York state and local  employees'  retirement  system  and  any  required
  employer  and employee contributions to such system shall continue to be
  made on the basis of the salary of such employee without regard to  such
  reduction.  In  the  case  of  any  such  employee electing the optional
  retirement program the amount of  employer  and  employee  contributions
  otherwise  required shall continue to be made on the basis of the salary
  of such employee  without  regard  to  such  reduction.  Any  survivor's
  benefit  payable pursuant to the civil service law shall be based on the
  salary of any employee to whom this subdivision  is  applicable  without
  regard  to  his  agreement for reduction thereof. Subdivisions seven and
  eight of this section shall apply to employees to whom this  subdivision
  is  applicable  who  enter  into  agreements for reduction of salary and
  purchase of special annuities or contribution to a custodial account.