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S05903 Summary:

S05903 Actions:

S05903 Committee Votes:

S05903 Floor Votes:

S05903 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         5903--A
 
                               2019-2020 Regular Sessions
 
                    IN SENATE
 
                                      May 16, 2019
                                       ___________
 
        Introduced by Sens. GOUNARDES, COMRIE, GAUGHRAN, KAMINSKY, KAPLAN, SAVI-
          NO -- read twice and ordered printed, and when printed to be committed
          to   the   Committee  on  Civil  Service  and  Pensions  --  committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee

        AN ACT to amend the general  municipal  law,  in  relation  to  allowing
          certain  members of the New York city police pension fund to receive a
          membership date in the New York city police pension fund  attributable
          to  service  in  the  titles  of  police cadet program or police cadet
          program II in the New York city police department cadet program
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  The  general  municipal  law  is  amended by adding a new
     2  section 209-fff to read as follows:
     3    § 209-fff. Provisions relating to a membership date in  the  New  York
     4  city police pension fund attributable to service in the titles of police
     5  cadet  program  and  police cadet program II in the New York city police
     6  department cadet program. 1. Notwithstanding any provision of law to the
     7  contrary, upon election, any member of the New York city police  pension
     8  fund  who  is  subject  to article fourteen of the retirement and social
     9  security law, and who served in the  New  York  city  police  department
    10  cadet  program  in  the  title  of  police cadet program or police cadet
    11  program II prior to April first, two thousand twelve, but did  not  join
    12  the  New  York city employees' retirement system while serving in either
    13  such title, may purchase credit for the period of service in such titles
    14  in the New York city police department cadet program by paying into  the
    15  New  York  city police pension fund all member contributions plus inter-
    16  est, at a rate of five percent per annum, which would have been  payable
    17  to the New York city employees' retirement system under any provision of
    18  law  had  such  member  joined  the  New York city employees' retirement
    19  system on the earliest date that he or she was appointed to the title of
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD07917-05-9
        S. 5903--A                          2
 
     1  police cadet program or police cadet program II in  the  New  York  city
     2  police  department  cadet  program, provided such payment is made within
     3  five years after the effective date of this section.
     4    2.  Any  member  of the New York city police pension fund who acquires
     5  service credit pursuant to this section shall be entitled to all rights,
     6  benefits and privileges to which he or she would have been entitled  had
     7  his  or  her  membership  in the New York city police pension fund begun
     8  upon the earliest date that he or she was  appointed  to  the  title  of
     9  police  cadet  program  or  police cadet program II in the New York city
    10  police department cadet program, but in no event shall the service cred-
    11  it acquired pursuant to this section be deemed  to  be  service  in  the
    12  police  force  or  any  other  type  of service counted or creditable as
    13  service in the police force under section 13-218 of  the  administrative
    14  code  of  the  city  of  New  York, section five hundred thirteen of the
    15  retirement and social security law or any other  provision  of  law  for
    16  purposes  of  eligibility  for  benefits  and to determine the amount of
    17  benefits under the New York city police pension fund.
    18    § 2. This act shall take effect immediately.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY OF BILL: The attached draft legislation would amend the Gener-
        al Municipal Law by adding a new Section 209-fff to allow New York  City
        Police  Pension  Fund (POLICE) members subject to Article 14 of the RSSL
        (Tier 3, Tier 3 Revised, and Tier 3 Enhanced) to purchase prior  service
        as a cadet in the New York Police Department (NYPD) and use the appoint-
        ment  date as a cadet to determine the initial date of POLICE membership
        for plan or tier eligibility provided such purchase of service  is  made
        within five years of the effective date.
          Effective Date: Upon enactment.
          BACKGROUND:  Currently,  the  purchase  of  prior  NYPD  cadet service
        performed while not a member of the New York City Employees'  Retirement
        System  (NYCERS)  does  not  provide a retroactive date of membership in
        POLICE nor would it provide additional service retirement benefits.
          IMPACT ON  BENEFITS:  Under  the  proposed  legislation,  if  enacted,
        purchased  NYPD  cadet  service  performed  while not a member of NYCERS
        would entitle members with a cadet service date before July 1,  2009  to
        be deemed Tier 2 member with all the rights and privileges of such Tier,
        and  such  service  would  be included in the calculation of benefits as
        non-qualifying service credit.
          Also, under the proposed legislation, if enacted, purchased NYPD cadet
        service would entitle members with cadet service between  July  1,  2009
        and  April  1,  2012  who  joined POLICE after April 1, 2012 as a Tier 3
        Revised or Enhanced member to be deemed an original Tier 3  member  with
        all  the rights and privileges of a member who joined such Tier prior to
        April 1, 2012.
          Since eligibility for POLICE benefits  are  based  on  tier  or  plan,
        including  cadet service towards tier or plan eligibility would increase
        and/or accelerate the payability date of the benefits in accordance with
        applicable earlier tiers or plans.
          ADDITIONAL MEMBER CONTRIBUTIONS: For cadets who did not  join  NYCERS,
        the  member  would have to pay member contributions that would have been
        payable to NYCERS had they joined on  their  initial  cadet  appointment
        date, plus 5% annual interest.
          Member  contributions  for  POLICE  are determined by tier and plan as
        follows:
          * Tier 2 - contribution rates are based on entry age.
          * Tier 3 and Tier 3 Revised - Basic Member Contributions (BMC) of 3%.
        S. 5903--A                          3
 
          * Tier 3 Enhanced - BMC of 3%  plus  Additional  Member  Contributions
        currently equal to 1%.
          FINANCIAL  IMPACT  -  PRESENT  VALUES:  Based  on the data provided by
        POLICE and the actuarial assumptions and methods described  herein,  the
        enactment  of this proposed legislation would increase the Present Value
        of Future Benefits (PVFB) by approximately $37.6  million  and  decrease
        the Present Value of member contributions of approximately $7.5 million.
        The  net  result  is an increase in the Present Value of future employer
        contributions of approximately $45.1 million.
          Under the Entry Age Normal cost method used to determine the  employer
        contributions  to  POLICE,  there  would  be an increase in the Unfunded
        Accrued Liability (UAL) of approximately $17.0 million and  an  increase
        in the Present Value of future employer Normal Cost of $28.1 million.
          FINANCIAL  IMPACT  - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with
        Administrative  Code  of  the  City  of   New   York   (ACCNY)   Section
        13-638.2(k-2),  new  UAL attributable to benefit changes are to be amor-
        tized as determined by the Actuary  but  generally  over  the  remaining
        working  lifetime  of  those impacted by the benefit changes. As of June
        30, 2017, the remaining working  lifetime  of  the  affected  cadets  is
        approximately 15 years.
          For  the  purposes  of this Fiscal Note, the increase in UAL was amor-
        tized over a 15-year period (14 payments under the One-Year Lag  Method-
        ology  (OYLM))  using  level  dollar  payments.  This  payment  plus the
        increase in the Normal Cost results in an increase  in  annual  employer
        contributions of approximately $5.6 million each year.
          OTHER COSTS: Not measured in this Fiscal Note are the following:
          * The initial, additional administrative costs of POLICE and other New
        York City agencies to implement the proposed legislation.
          *  The  impact  of  this  proposed legislation on Other Postemployment
        Benefit (OPEB) costs.
          CONTRIBUTION TIMING: For the purposes  of  this  Fiscal  Note,  it  is
        assumed  that  the  changes  in  the  Present  Value  of future employer
        contributions and annual employer contributions would be  reflected  for
        the  first  time  in the June 30, 2019 actuarial valuation of POLICE. In
        accordance with the OYLM used to determine employer  contributions,  the
        increase  in  employer  contributions would first be reflected in Fiscal
        Year 2021.
          CENSUS DATA: The estimates presented herein are based  on  the  census
        data  used in the Preliminary June 30, 2018 (Lag) actuarial valuation of
        POLICE to determine the Preliminary Fiscal Year 2020  employer  contrib-
        utions.
          Additional  data for the cadets was provided by POLICE. There were 358
        affected cadets as of June 30, 2018. These members had an average age of
        approximately 31.3 years, average service of  approximately  7.5  years,
        and an average salary of approximately $113,500.
          ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value of
        future   employer   contributions   and  annual  employer  contributions
        presented herein have been calculated based on the actuarial assumptions
        and methods in effect for the June 30, 2018 (Lag)  actuarial  valuations
        used  to  determine  the  Preliminary Fiscal Year 2020 employer contrib-
        utions of POLICE. Additionally, 1.2 years of cadet service  was  assumed
        based  on the amount of cadet service previously purchased by members of
        POLICE.
          RISK AND UNCERTAINTY: The costs presented in this Fiscal  Note  depend
        highly  on the actuarial assumptions and methods used and are subject to
        change based on the realization of  potential  investment,  demographic,
        S. 5903--A                          4
 
        contribution,  and other risks. If actual experience deviates from actu-
        arial assumptions, the actual costs could differ  from  those  presented
        herein.  Costs  are  also  dependent  on the actuarial methods used, and
        therefore  different  actuarial methods could produce different results.
        Quantifying these risks is beyond the scope of this Fiscal Note.
          STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief  Actu-
        ary  for,  and  independent of, the New York City Retirement Systems and
        Pension Funds. I am a Fellow of the Society of  Actuaries,  an  Enrolled
        Actuary under the Employee Retirement Income and Security Act of 1974, a
        Member of the American Academy of Actuaries, and a Fellow of the Confer-
        ence  of Consulting Actuaries. I meet the Qualification Standards of the
        American Academy of Actuaries to render the actuarial opinion  contained
        herein.  To  the best of my knowledge, the results contained herein have
        been prepared in accordance with generally accepted actuarial principles
        and procedures and with the Actuarial Standards of  Practice  issued  by
        the Actuarial Standards Board.
          FISCAL  NOTE  IDENTIFICATION:  This Fiscal Note 2019-36 dated June 15,
        2019 was prepared by the Chief Actuary for  the  New  York  City  Police
        Pension  Fund.  This  estimate  is intended for use only during the 2019
        Legislative Session.