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A10273 Summary:

BILL NOA10273
 
SAME ASSAME AS S09389
 
SPONSORRules (Abbate)
 
COSPNSRColton, Englebright, Simon, Steck, Conrad
 
MLTSPNSR
 
Amd §§78-a & 378-a, R & SS L; amd §532-a, Ed L; amd §13-696, NYC Ad Cd
 
Relates to providing cost-of-living adjustments; provides that the base benefit amount shall be increased annually by reference to the consumer price index for each applicable calendar year beginning on September 1, 2022.
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A10273 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          10273
 
                   IN ASSEMBLY
 
                                      May 13, 2022
                                       ___________
 
        Introduced  by  COMMITTEE ON RULES -- (at request of M. of A. Abbate) --
          read once and referred to the Committee on Governmental Employees
 
        AN ACT to amend the retirement and social security  law,  the  education
          law  and  the administrative code of the city of New York, in relation
          to providing cost-of-living adjustments
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1. Subdivision c of section 78-a of the retirement and social
     2  security law, as added by chapter 125 of the laws of 2000, is amended to
     3  read as follows:
     4    c. Said cost-of-living adjustment shall be computed on a base  benefit
     5  amount  [not  to  exceed]  of  eighteen  thousand  dollars of the annual
     6  retirement allowance defined in subdivision b of this section, provided,
     7  however, such base benefit amount shall be increased annually by  refer-
     8  ence  to the consumer price index (all urban consumers, CPI-U, U.S. city
     9  average, all  items,  1982-84=100),  published   by   the United  States
    10  bureau  of labor statistics, for each applicable calendar year beginning
    11  on September first,  two  thousand  twenty-two.  The  annual  percentage
    12  increase  to  the  base  amount  shall equal fifty percent of the annual
    13  inflation, as determined from the increase in the consumer  price  index
    14  in   the   one year period ending on the March thirty-first prior to the
    15  cost-of-living adjustment  effective  on  the  ensuing September  first.
    16  Said percentage shall then be rounded up to the next higher one-tenth of
    17  one  percent  and  shall  not  exceed three percent nor be less than one
    18  percent.
    19    § 2. Subdivision c of section 378-a of the retirement and social secu-
    20  rity law, as added by chapter 125 of the laws of  2000,  is  amended  to
    21  read as follows:
    22    c.  Said cost-of-living adjustment shall be computed on a base benefit
    23  amount [not to exceed]  of  eighteen  thousand  dollars  of  the  annual
    24  retirement allowance defined in subdivision b of this section, provided,
    25  however,  such base benefit amount shall be increased annually by refer-
    26  ence to the consumer price index (all urban consumers, CPI-U, U.S.  city
    27  average,  all   items,  1982-84=100),  published  by  the United  States
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14047-03-2

        A. 10273                            2
 
     1  bureau of labor statistics, for each applicable calendar year  beginning
     2  on  September  first,  two  thousand  twenty-two.  The annual percentage
     3  increase to the base amount shall equal  fifty  percent  of  the  annual
     4  inflation,  as  determined from the increase in the consumer price index
     5  in  the  one year period ending on the March thirty-first prior  to  the
     6  cost-of-living  adjustment  effective  on  the  ensuing September first.
     7  Said percentage shall then be rounded up to the next higher one-tenth of
     8  one percent and shall not exceed three percent  nor  be  less  than  one
     9  percent.
    10    §  3. Subdivision c of section 532-a of the education law, as added by
    11  chapter 125 of the laws of 2000, is amended to read as follows:
    12    c. Said cost-of-living adjustment shall be computed on a base  benefit
    13  amount  [not  to  exceed]  of  eighteen  thousand  dollars of the annual
    14  retirement allowance defined in subdivision b of this section, provided,
    15  however, such base benefit amount shall be increased annually by  refer-
    16  ence  to the consumer price index (all urban consumers, CPI-U, U.S. city
    17  average, all  items,  1982-84=100),  published  by  the United    States
    18  bureau  of labor statistics, for each applicable calendar year beginning
    19  on September first,  two  thousand  twenty-two.  The  annual  percentage
    20  increase  to  the  base  amount  shall equal fifty percent of the annual
    21  inflation, as determined from the increase in the consumer  price  index
    22  in   the   one year period ending on the March thirty-first prior to the
    23  cost-of-living adjustment  effective  on  the  ensuing September  first.
    24  Said percentage shall then be rounded up to the next higher one-tenth of
    25  one  percent  and  shall  not  exceed three percent nor be less than one
    26  percent.
    27    § 4. Subdivision c of section 13-696 of the administrative code of the
    28  city of New York, as added by chapter  125  of  the  laws  of  2000,  is
    29  amended to read as follows:
    30    c.  Said cost-of-living adjustment shall be computed on a base benefit
    31  amount [not to exceed] of eighteen thousand dollars of the annual  fixed
    32  retirement allowance defined in subdivision b of this section, provided,
    33  however,  such base benefit amount shall be increased annually by refer-
    34  ence to the consumer price index (all urban consumers, CPI-U, U.S.  city
    35  average,  all   items,  1982-84=100),  published  by  the United  States
    36  bureau of labor statistics, for each applicable calendar year  beginning
    37  on  September  first,  two  thousand  twenty-two.  The annual percentage
    38  increase to the base amount shall equal  fifty  percent  of  the  annual
    39  inflation,  as  determined from the increase in the consumer price index
    40  in  the  one year period ending on the March thirty-first prior  to  the
    41  cost-of-living  adjustment   effective  on  the ensuing September first.
    42  Said percentage shall then be rounded up to the next higher one-tenth of
    43  one percent and shall not exceed three percent  nor  be  less  than  one
    44  percent.
    45    §  5. Notwithstanding any other provision of law to the contrary, none
    46  of the provisions of this act shall be subject  to  section  25  of  the
    47  retirement and social security law.
    48    § 6.  This act shall take effect immediately.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          This  bill  would  provide an increase in the defined benefit cost-of-
        living adjustment (COLA) for New York public retirement systems.  Start-
        ing with the payment in September 2022, the base benefit for computation
        of the annual COLA will be increased  annually  by  50%  of  the  annual
        inflation not to exceed 3% or be less than 1%.
          Insofar  as  this bill affects the New York State and Local Employees'
        Retirement System (ERS), the increased costs  would  be  shared  by  the

        A. 10273                            3
 
        State  of  New  York and the participating employers in the ERS. If this
        bill were enacted during the 2022 legislative session, the  increase  in
        the  present value of benefits would be approximately $1.03 billion. The
        estimated  first  year  cost  would  be approximately $47 million to the
        State of New York and approximately $67  million  to  the  participating
        employers in the ERS.
          Insofar  as  this bill affects the New York State and Local Police and
        Fire Retirement System (PFRS), the increased costs would  be  shared  by
        the  State  of  New York and the participating employers in the PFRS. If
        this bill were enacted during the 2022 legislative session, the increase
        in the present value of benefits would be  approximately  $148  million.
        The  estimated  first year cost would be approximately $3 million to the
        State of New York and approximately $12  million  to  the  participating
        employers in the PFRS.
          Summary of relevant resources:
          Membership  data as of March 31, 2021 was used in measuring the impact
        of the proposed change, the same data used in the April 1, 2021 actuari-
        al valuation. Distributions and other statistics can  be  found  in  the
        2021  Report  of the Actuary and the 2021 Comprehensive Annual Financial
        Report.
          The actuarial assumptions and methods used are described in  the  2020
        and  2021 Annual Report to the Comptroller on Actuarial Assumptions, and
        the Codes, Rules and Regulations of the State of  New  York:  Audit  and
        Control.
          The Market Assets and GASB Disclosures are found in the March 31, 2021
        New  York  State  and  Local  Retirement System Financial Statements and
        Supplementary Information.
          I am a member of the American Academy of Actuaries and meet the Quali-
        fication Standards to render the actuarial opinion contained herein.
          This fiscal note does not constitute a legal opinion on the  viability
        of  the  proposed change nor is it intended to serve as a substitute for
        the professional judgment of an attorney.
          This estimate, dated February 9,  2022,  and  intended  for  use  only
        during  the  2022  Legislative  Session,  is  Fiscal  Note  No. 2022-37,
        prepared by the Actuary for the New  York  State  and  Local  Retirement
        System.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          This  bill (legislative bill draft 14047-01-1) would amend subdivision
        c of Section 532-a of the Education Law to annually increase the current
        cost-of-living adjustment  (COLA)  base  benefit  amount,  currently  at
        $18,000,  by fifty percent of annual inflation. Currently the base bene-
        fit amount to which the COLA percentage is applied is fixed  at  $18,000
        annually.  The  annual  percentage increase shall be determined from the
        increase in the Consumer Price Index, published  by  the  United  States
        Bureau  of  Labor Statistics, in the one-year period ending on the March
        thirty-first prior to the COLA effective on the ensuing September first.
        The annual percentage increase shall not exceed  three  percent  nor  be
        less than one percent. This COLA base benefit adjustment would be effec-
        tive in September 2022.
          The  annual  cost  to  the  employers of members of the New York State
        Teachers' Retirement System for this benefit is estimated  to  be  $92.9
        million or .53% of payroll if this bill is enacted.
          Member  data  is  from  the  System's  most recent actuarial valuation
        files, consisting of data provided by the employers  to  the  Retirement
        System.  Data  distributions and statistics can be found in the System's
        Annual Report. System assets are as reported in the  System's  financial

        A. 10273                            4
 
        statements and can also be found in the System's Annual Report.  Actuar-
        ial assumptions and methods are provided in the System's Actuarial Valu-
        ation Report and the 2021 Actuarial Assumptions Report.
          The  source of this estimate is Fiscal Note 2022-10 dated February 10,
        2022 prepared by the Office of the Actuary of the New York State  Teach-
        ers'  Retirement  System  and  is  intended for use only during the 2022
        Legislative Session. I, Richard A. Young, am the Chief Actuary  for  the
        New  York State Teachers' Retirement System. I am a member of the Ameri-
        can Academy of Actuaries and I meet the Qualification Standards  of  the
        American  Academy of Actuaries to render the actuarial opinion contained
        herein.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY OF BILL: This proposed legislation, as it relates to  the  New
        York  City  Retirement  Systems  and  Pension Funds (NYCRS), would amend
        Section 13-696 of the Administrative  Code  of  the  City  of  New  York
        (ACCNY)  to  increase the Cost-of-Living Adjustment (COLA) base limit of
        $18,000 by 50% of CPI each year, starting on September 1, 2022, for  the
        New  York  City Employees' Retirement System (NYCERS), the New York City
        Teachers' Retirement System (NYCTRS), the New York City Board of  Educa-
        tion  Retirement  System  (BERS),  the New York City Police Pension Fund
        (POLICE), and the New York City Fire Pension Fund (FIRE).
          Note: To the extent that the implementation  of  the  proposed  legis-
        lation  deviates from the calculation method discussed herein, the costs
        for the proposed legislation may be as much as 70% higher than the costs
        disclosed in the table below.
          Effective Date: Upon enactment and first applicable to  the  September
        2022 COLA.
          IMPACT  ON  BENEFITS:  Certain  NYCRS  retirees  and beneficiaries are
        eligible to receive a COLA  pursuant  to  the  ACCNY  Section  13-696(a)
        (i.e.,  age  62  and  retired  for five years; age 55 and retired for 10
        years; disabled retirees who are retired for five years; and  accidental
        death  benefit  recipients  who have been receiving the benefit for five
        years). Spouses paid under a lifetime optional benefit generally receive
        50% of the COLA that would have been payable to the retiree.
          The COLA is equal to 50% of the increase in the consumer  price  index
        (CPI)  in  the  one-year period ending on the March 31 prior to the COLA
        effective on the ensuing September 1. The percentage is rounded  to  the
        next  higher  one-tenth of one percent and shall not be less than 1% nor
        more than 3%.
          The COLA currently provides for an annual increase equal to a percent-
        age of the annual retirement allowance otherwise payable, computed with-
        out optional modification, but limited to the first $18,000  of  retire-
        ment allowance.
          The  costs  in  the  table  below are based on providing for an annual
        increase equal to a percentage of the annual retirement allowance other-
        wise payable, but limited to the $18,000 limit, increased  on  September
        1, 2022 and each year thereafter by the COLA.
          The  alternate cost disclosed below uses the increasing $18,000 as the
        base for calculating COLA rather than as the  limit  of  the  retirement
        allowance subject to the COLA increase.
          FINANCIAL IMPACT - SUMMARY: The estimated financial impact to NYCRS of
        increasing  the $18,000 limit as described above is an increase in Pres-
        ent Value of Future Benefits (PVFB) of $1.5 billion and an  increase  in
        the  first  year  annual  employer  contributions of $800.5 million. The
        increase in first year annual employer contributions of  $800.5  million
        is  estimated  to be $658.9 million for New York City and $141.6 million

        A. 10273                            5
 
        for the other obligors of NYCRS. A breakdown of the financial impact  by
        System is shown in the table below.
                  NYCRS          Additional          Estimated First Year
                                 Present Value of    Annual Employer
                                 Future Benefits     Contributions*
                                 ($ Millions)        ($ Millions)
 
                  NYCERS         $626.1              $ 325.1
                  NYCTRS          476.3                202.0
                  BERS             44.1                 15.3
                  POLICE          278.1                203.7
                  FIRE             86.8                 54.4
                  Total          $1,511.4            $ 800.5
          *  Employer  contributions  after  the  first year are estimated to be
        approximately $100 million per year.
          As noted above, to the extent that the implementation of this proposed
        legislation, for purposes of calculating individual COLA  amounts,  uses
        the  increasing  $18,000  base for all retirees, the increase in PVFB is
        estimated to be approximately $2.5 billion.
          In accordance with ACCNY Section 13-638.2(k-2), new  Unfunded  Accrued
        Liability  (UAL)  attributable to benefit changes are to be amortized as
        determined by the Actuary but are generally amortized over the remaining
        working lifetime of those impacted by the benefit changes.
          For purposes of this Fiscal Note, it has been assumed  that  increases
        in  UAL attributable to current retirees would be recognized immediately
        and that increases in UAL attributable to active members would be  amor-
        tized  over  periods ranging from 12 to 15 years depending on the System
        (11 to 14 payments under the One-Year Lag Methodology (OYLM)).
          CONTRIBUTION TIMING: For the purposes  of  this  Fiscal  Note,  it  is
        assumed  that  the changes in the PVFB and annual employer contributions
        would be reflected for the first time in the Final June 30, 2021 actuar-
        ial valuations of NYCRS. In accordance with the OYLM used  to  determine
        employer  contributions,  the  increase  in employer contributions would
        first be reflected in Fiscal Year 2023.
          CENSUS DATA: The estimates presented herein are based  on  the  census
        data used in the Preliminary June 30, 2021 (Lag) actuarial valuations of
        NYCRS  to  determine  the Preliminary Fiscal Year 2023 employer contrib-
        utions.
          ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and  annual
        employer  contributions  presented  herein have been calculated based on
        the actuarial assumptions and methods in effect for the Preliminary June
        30, 2021 (Lag) actuarial valuations used to  determine  the  Preliminary
        Fiscal Year 2023 employer contributions of each respective NYCRS.
          RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
        highly on the realization of the actuarial assumptions used, as well  as
        certain demographic characteristics of NYCRS and other exogenous factors
        such  as investment, contribution, and other risks. If actual experience
        deviates from actuarial assumptions, the actual costs could differ  from
        those  presented herein. Costs are also dependent on the actuarial meth-
        ods used,  and  therefore  different  actuarial  methods  could  produce
        different  results.  Quantifying these risks is beyond the scope of this
        Fiscal Note.
          Not measured in this Fiscal Note are the following:
            * The initial,  additional  administrative  costs  to  each  of  the
            retirement systems and other New York City agencies to implement the
            proposed legislation.

        A. 10273                            6
 
          STATEMENT  OF  ACTUARIAL  OPINION: I, Michael J. Samet, am the Interim
        Chief Actuary for, and independent of,  the  New  York  City  Retirement
        Systems and Pension Funds. I am a Fellow of the Society of Actuaries and
        a  Member of the American Academy of 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 2022-50 dated May 12,
        2022 was prepared by the Interim Chief Actuary for  the  New  York  City
        Retirement  Systems and Pension Funds. This estimate is intended for use
        only during the 2022 Legislative Session.
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