Opn. No. ( 1977 )

HON. ARTHUR LEVITT State Comptroller

This is in reply to your letter of August 29, 1977 in which you request my opinion as to two questions in respect to the provisions of Chapter 837 of the Laws of 1977.

Chapter 837 (effective August 11, 1977) provides as follows:

"Section 1. Notwithstanding any other provision of law to the contrary, on and after the effective date of this act a political subdivision, as defined in section one hundred thirty-one of the retirement and social security law, shall be prohibited from discontinuing coverage of its employees under the provisions of the federal social security act (42 U.S.C.A. § 301 et seq.) as amended.

"§ 2. This act shall take effect immediately."

Pursuant to the Social Security Act (42 U.S.C. § 418) a political subdivision may terminate coverage of its employees upon giving two years advance notice in writing. The notice of termination may be rescinded by the political subdivision prior to the date on which coverage ends. You state that at the present time twenty-one political subdivisions have filed notices of intention to terminate social security coverage of their employees.

You ask whether Chapter 837 requires either the State Social Security Agency or the twenty-one political subdivisions to rescind the twenty-one notices of intention to terminate coverage.

The coverage which is provided to the political subdivisions in question is as a result of an agreement entered into between the Secretary of Health, Education and Welfare of the United States and the State of New York effective October 1, 1953. (See also Retirement and Social Security Law, Article 3.)

Paragraph F of the agreement states:

"The State, upon giving at least two years' advance notice in writing to the Secretary, may terminate this agreement, either in its entirety or with respect to the coverage of its employees or of those of any political subdivision * * *."

In Secretary of Health, Education and Welfare v. Snell (416 F.2d 840,843 [5th Cir., 1969]), the Court noted that "states are given considerable discretion in including and excluding under § 418 agreements." Chapter 837 of the Laws of 1977 amounts to an exercise of such discretion by the New York State Legislature.

The agreement between New York State and its political subdivisions extending social security coverage to the employees of the subdivision, whereby the political subdivision reserves the right to terminate its participation by giving such advance written notice, expressly provides (Paragraph V) that its terms are subject to modification by or pursuant to laws that may hereafter be enacted by the State Legislature.

In view of the fact that it is only through the State that political subdivisions obtain the Federal old age and survivors insurance coverage and in view of the unequivocal language of Chapter 837 that, after the effective date thereof (August 11, 1977), a political subdivision "shall be prohibited from discontinuing coverage of its employees", and since the election to terminate by the political subdivisions in question is not complete and may be rescinded prior to effective date thereof, it is my opinion that Chapter 837 has eo instante eliminated the option that a political subdivision formerly possessed to terminate coverage of its employees under the provisions of the Federal Social Security Act.

Thus, the pending twenty-one notices of intention to terminate coverage are now rescinded as a matter of law. In other words, any political subdivision which has not actually terminated its coverage under the Social Security Act as of August 11, 1977 is barred from terminating such coverage whether or not the required notice was filed and rescission, of such notice either by the State or the political subdivision is not required to effectuate the terms of the statute. Of course, sound administrative practice and other practical considerations may dictate that your Department notify the affected political subdivisions of the consequences of Chapter 837 of the Laws of 1977. The State should also notify the Secretary of Health, Education and Welfare of the United States.