S T A T E O F N E W Y O R K
I N S E N A T E
June 13, 2014
Introduced by Sen. FELDER -- read twice and ordered printed, and when
printed to be committed to the Committee on Civil Service and Pensions
AN ACT relating to granting retroactive retiree status to former New
York city public-school teacher Israel Baum
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Notwithstanding any provision of law to the contrary, Isra-
el Baum, a member of the New York city teachers' retirement system
having Tier III status, who was employed as a teacher by the New York
City Board of Education from February 1, 1974 until his death on Septem-
ber 20, 2009, and who became a member of the New York city teachers'
retirement system on October 1, 1977, and who, for reasons not ascriba-
ble to his own negligence, was not able to complete the retirement proc-
ess before his untimely death, shall be deemed to have officially
retired from the New York City Board of Education on September 20, 2009,
if, on or before December 31, 2014, Mr. Baum's widow, Rochelle Baum,
files a written application therefor, including a retirement benefit
option election and election of the beneficiary of such benefits, with
the head of the New York city teachers' retirement system; and upon
receipt of such application, the head of the New York city teachers'
retirement system shall calculate Israel Baum's retirement benefits
retroactive to September 20, 2009 and thereafter and pay such benefits
accordingly as if he had retired on September 20, 2009. The amount of
benefits payable pursuant to this act shall be reduced by the ordinary
death benefit which has been paid to Rochelle Baum, less the retroactive
sum of previous years that is owed to Mrs. Baum, the exact amount to be
calculated actuarially. Due to the length of his service, Mr. Baum was
eligible to retire with full pension benefits. Mr. Baum's intent to
retire was evidenced by the fact that he, along with his wife, Rochelle
Baum, attended a special seminar for teachers given in February 2009
called "Getting Ready for Retirement"; this seminar was expressly
designed for those members of the retirement system who were planning to
retire within the year. The Baums received a letter dated January 22,
2009 confirming their participation. At the seminar, the Baums were
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
S. 7834 2
given a package of documents and an overview regarding retirement proce-
dures and benefits. Mr. Baum also submitted an informal designated date
of retirement as requested. Subsequently, on June 22, 2009, Mr. and Mrs.
Baum attended a personal session at the Board of Education in downtown
Brooklyn for the purpose of discussing Mr. Baum's retirement. The Baums
discussed the various retirement allowance options and decided that they
would select Option 1 - Equal Pay Option, which would allow the benefi-
ciary to receive monthly payments equal to 100% of his reduced retire-
ment allowance payments. The beneficiary of Israel Baum's retirement
allowance was to be his wife, Rochelle Baum.
S 2. Any costs incurred as a result of the enactment of this act shall
be borne by the New York City Board of Education.
S 3. This act shall take effect immediately.
FISCAL NOTE -- Pursuant to Legislative Law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION: The proposed legislation would
authorize the New York City Teachers' Retirement System ("NYCTRS") to
pay pension benefits to the widow of Mr. Israel Baum (Mrs. Rochelle
Baum) as if Mr. Baum had retired for service on September 20, 2009 (his
date of death), elected a 100% Joint & Survivor form of payment and died
BACKGROUND: Mr. Baum became a Tier III member of NYCTRS on October 1,
He died on September 20, 2009 without having filed a Service Retire-
ment application with NYCTRS. Accordingly, NYCTRS paid on or around
February 18, 2010 an Ordinary Death Benefit equal to three times Mr.
Baum's last year's salary plus his accumulated contributions plus the
interest to his widow, Mrs. Rochelle Baum. These amounts are summarized
*Three times last year's salary $324,419.85
*Accumulated contributions 86,982.30
*Interest to date of payment 7,428.28
The proposed legislation, if enacted, would authorize NYCTRS to pay
pension benefits to Mrs. Baum as if Israel Baum had retired for service
on his date of death of September 20, 2009 and elected a 100% Joint &
Survivor option with Mrs. Baum as his beneficiary, offset by the Ordi-
nary Death Benefit ("ODB") that has previously been paid.
The 100% Joint & Survivor benefit that would be payable to Mrs. Baum
has been estimated to be approximately $59,900 per year. The actual
implementation of this legislation including any recognition of the
difference in taxability of the ODB as compared to the Service Retire-
ment benefit would be determined by NYCTRS if the proposed legislation
All costs associated with the implementation of this proposed legis-
lation would be borne by the New York City Board of Education.
The Effective Date of the proposed legislation would be the Date of
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: The estimated financial
impact of this proposed legislation has been calculated based on the
difference between (1) the Service Retirement benefits Mrs. Baum would
receive if this prosed legislation were enacted and (2) the ODB that has
already been paid to Mrs. Baum.
Based on the actuarial assumptions and methods described herein, the
enactment of this proposed legislation would increase the Actuarial
S. 7834 3
Present Value of Benefits ("APVB") and the Unfunded Actuarial Accrued
Liability ("UAAL") of NYCTRS by approximately $1,287,000 as of June 30,
2014 prior to offsetting for the ODB that Mrs. Baum has previously been
paid. This amount includes the monthly payment that Mrs. Baum would have
received from September 2009 to June 2014 and the post-retirement Death
Benefit that would have been paid to Mrs. Baum upon Mr. Baum's death
(had Mr. Baum retired for service on his date of death and elected the
100% Joint & Survivor benefit with Mrs. Baum as his beneficiary) brought
forward to June 30, 2014 in accordance with NYCTRS Policies and Proce-
dures regarding delayed interest calculations.
The ODB previously paid to Mrs. Baum brought forward with compound
interest of 7% per annum from September 20, 2009 to June 30, 2014 is
approximately $563,000. Therefore, the net increase in the APVB and UAAL
of NYCTRS would be approximately $724,000 as of June 30, 2014.
FINANCIAL IMPACT - ANNUAL EMPLOYER COSTS AND ANNUAL EMPLOYER CONTRIB-
UTIONS: In accordance with Section 13.638.2(k-2) of the Administrative
Code of the City of New York ("ACNY"), new UAAL attributable to benefit
changes are to be amortized as determined by the Actuary but generally
over the remaining working lifetime of those impacted by the benefit
changes. For this proposed legislation, Mrs. Baum would be collecting a
pension and therefore the entire increase in UAAL of $724,000 based on
the Actuary's actuarial assumptions and methods in effect on June 30,
2013 would be recognized in the first year.
CONTRIBUTION TIMING: If enacted during the 2014 Legislative Session on
or before June 30, 2014, the pension payable to Mrs. Baum would likely
first be reflected in the June 30, 2014 census data. In accordance with
the One-Year Lag methodology used to determine employer contributions,
increased employer contributions would be consistent with the increased
employer costs and would be determined for Fiscal Year 2016.
If enacted during the 2014 Legislative Session after June 30, 2014 but
on or before June 30, 2015, the pension payable to Mrs. Baum would like-
ly first be reflected in the June 30, 2015 census data and increased
employer contributions would be determined for Fiscal Year 2017.
ACTUARIAL ASSUMPTIONS AND METHODS: The additional APVB and UAAL for
employer contribution purposes presented herein have been calculated by
using the actuarial assumptions and methods in effect for the June 30,
2013 (Lag) actuarial valuation used to determine Fiscal Year 2015
employer contributions of NYCTRS.
ECONOMIC VALUES OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impact of the proposed legislation discussed in this
Fiscal Note are those appropriate for budgetary models and determining
annual employer contributions to NYCTRS.
However, the economic assumptions (current and proposed) that are used
for determining employer contributions do not develop risk-adjusted,
economic values of benefits. Such risk-adjusted, economic values of
benefits would likely differ significantly from those developed by the
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Chief
Actuary for the New York City Retirement Systems. 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.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2014 Legislative Session. It is Fiscal Note 2014-13, dated
April 7, 2014 prepared by the Chief Actuary for the New York City Teach-
ers' Retirement System.