LBD16151-06-8
A. 11169 2
As a successor to the New York city off-track betting corporation, and
in the interest of properly funding the pension benefits of its former
employees and retirees in compliance with the state constitution, the
state will fulfill the past, present, and future obligations of the New
York city off-track betting corporation to the New York city employees'
retirement system as follows:
§ 2. Definitions. The following words and phrases as used in this act
shall have the following meanings unless a different meaning is plainly
required by context.
1. "Actuary" shall mean the actuary appointed by the board of trustees
of the New York city employees' retirement system pursuant to section
13-121 of the administrative code of the city of New York.
2. "City fiscal year" shall mean a fiscal year of the city of New York
as defined in section 226 of the New York city charter.
3. "Executive director" shall mean the executive director appointed by
the board of trustees of the New York city employees' retirement system
pursuant to paragraph 2 of subdivision a of section 13-103 of the admin-
istrative code of the city of New York.
4. "Interest" shall mean the rate per centum per annum of interest
specified in paragraph 2 of subdivision b of section 13-638.2 of the
administrative code of the city of New York.
5. "NYC administrative code" shall mean the administrative code of the
city of New York.
6. "NYCERS" shall mean the New York city employees' retirement system,
as established by chapter 427 of the laws of 1920.
7. "NYCOTB" shall mean the New York city off-track betting corpo-
ration, as established by chapter 144 of the laws of 1970 and continued
pursuant to article 6 of the racing, pari-mutuel wagering and breeding
law.
8. "State fiscal year" shall mean a fiscal year of the state as
defined in section 3 of the state finance law.
§ 3. Payment of the future annual contributions to be owed by NYCOTB
to NYCERS. Notwithstanding the provisions of any general or special
state law or local law to the contrary, in state fiscal year 2020 and in
each state fiscal year thereafter, the department of audit and control
shall take actions necessary to pay in full, subject to appropriation,
the annual contribution determined to be owed by NYCOTB to NYCERS under
the provisions of the NYC administrative code, including but not limited
to sections 13-127, 13-130, 13-133, and 13-638.2 thereof, for the corre-
sponding city fiscal year. On or prior to the date specified in section
13-133 of the NYC administrative code for the payment of annual contrib-
utions by NYCOTB, such moneys, to the extent of such appropriation,
shall be payable to NYCERS on the audit and warrant of the comptroller
of the state of New York on vouchers certified or approved by the execu-
tive director of NYCERS in the manner prescribed by law. Notwithstand-
ing the provisions of any general or special state law or local law to
the contrary, an annual contribution determined and paid under this
section shall not include any amount attributable to any annual contrib-
ution previously determined to be owed by NYCOTB to NYCERS for any city
fiscal year prior to the 2020 city fiscal year and not yet paid by
NYCOTB or the state.
§ 4. Payment of overdue annual contributions owed by NYCOTB to NYCERS.
a. Notwithstanding the provisions of any general or special state law or
local law to the contrary, on or before January 2, 2019, the actuary
shall determine the sum of all annual contributions previously deter-
mined to be owed by NYCOTB to NYCERS for any city fiscal year prior to
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the 2020 city fiscal year and not yet paid by NYCOTB, with interest.
Such interest, compounded annually, shall be computed on each such over-
due annual contribution from the date such contribution was required to
be paid pursuant to section 13-133 of the NYC administrative code
through January 1, 2019. This sum shall be known as the "amount to be
amortized".
b. Notwithstanding the provisions of any general or special state law
or local law to the contrary, on or before January 2, 2019, the actuary
shall further determine an amount that if paid in fifteen equal annual
installments beginning on January 1, 2020, would be sufficient to pay in
full the amount to be amortized with interest, compounded annually,
computed from January 2, 2019, to January 1, 2034. This amount shall be
known as the "annual amortization payment". Any annual amortization
payment subsequent to the initial annual amortization payment payable on
January 1, 2020, shall include the unpaid balance of any prior annual
amortization payment, with interest, compounded annually, computed from
the date such prior annual amortization payment was required to be paid
to the date that such subsequent annual authorization payment is
required to be paid.
c. Notwithstanding the provisions of any general or special state law
or local law to the contrary, in state fiscal year 2020 and in each
state fiscal year thereafter until the amount to be amortized, with
interest, is paid in full, the department of audit and control shall
take actions necessary to pay in full the annual amortization payment,
subject to appropriation. On or prior to January 1st of each such state
fiscal year, such moneys, to the extent of such appropriation shall be
payable to NYCERS on the audit and warrant of the comptroller of the
state of New York on vouchers certified or approved by the executive
director of NYCERS in the manner prescribed by law.
§ 5. Deposit of moneys. NYCERS shall deposit all moneys received
pursuant to this act in the contingent reserve fund specified in section
13-127 of the NYC administrative code.
§ 6. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: The proposed legislation provides a funding mech-
anism, through unconsolidated provisions of law, for the State of New
York (State), as a successor obligor, to appropriate funds to pay past,
present, and future New York City Off-Track Betting Corporation (NYCOTB)
employer contributions, with applicable interest, to the New York City
Employees' Retirement System (NYCERS) on behalf of former and retired
NYCOTB employees.
Effective Date: Upon enactment.
BACKGROUND: NYCOTB is a defunct public benefit corporation and is a
participating employer in NYCERS. NYCOTB retirees currently receive full
retirement benefits from NYCERS even though NYCOTB last made partial
employer contributions to NYCERS in fiscal years 2010 and 2011 and
completely ceased making employer contributions thereafter. Unpaid past
and future annual employer contributions, with applicable interest,
continue to accrue.
IMPACT ON EMPLOYER CONTRIBUTIONS: The proposed legislation would
require the Actuary of the City of New York (Actuary) to calculate the
cumulative owed past and current NYCOTB employer contributions, with
applicable interest, through and inclusive of fiscal year 2019 (the
Amount to be Amortized), on or before January 2, 2019, and amortize such
cumulative Amount in fifteen equal installments, with applicable inter-
est, to be paid by the State Comptroller, subject to appropriation,
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commencing on or before January 1, 2020 and ending by January 1, 2034
(the Annual Amortization Payment). The proposed legislation would
further require the calculation and, subject to State appropriation,
annual payment of future annual NYCOTB employer contributions in accord-
ance with applicable provisions of the Administrative Code of the City
of New York (ACCNY).
FINANCIAL IMPACT: Based on the actuarial assumptions and methods
described herein, the enactment of this proposed legislation would,
assuming full and timely payment, result in a potential total present
value cost to the State of approximately $270.1 million as of January 1,
2020. Any amount appropriated and paid by the State to NYCERS would be
applied as a credit to NYCOTB, and relieve any potential additional
successor, and any potential guarantor, including the City of New York,
of such amounts paid.
The following Table presents an estimate of the annual cost for Fiscal
Years 2020 through 2024 as of January 1, 2020.
Cost Attributable Cost Attributable to
to Employer Employer Contributions
Fiscal Contributions for Fiscal for Fiscal Years
Year Years Prior to 2020* Subsequent to 2019** Total
2020 $14,479,143 $13,021,623 $27,500,766
2021 $14,479,143 $13,346,228 $27,825,371
2022 $14,479,143 $13,679,859 $28,159,002
2023 $14,479,143 $14,023,465 $28,502,608
2024 $14,479,143 $14,376,862 $28,856,005
* Equal to a 15-year amortization of $141,106,026 as of January 1,
2020.
** Estimates of future employer contributions for OTB based on the
actuarial assumptions and methods in effect for the June 30, 2017 (Lag)
actuarial valuation, including an assumed investment return of 7.0% per
annum.
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2017 (Lag) actuarial valuation of
NYCERS to determine the Preliminary Fiscal Year 2019 employer contrib-
utions.
As of June 30, 2017, OTB had 1,211 retirees with an average age of
approximately 74.7 years, 285 terminated vested members with an average
age of approximately 52.1 years, and 4 inactive members with an average
age of approximately 61.3 years.
ACTUARIAL ASSUMPTIONS AND METHODS: The estimates of annual future
employer contributions presented herein have been calculated based on
the actuarial assumptions and methods in effect for the June 30, 2017
(Lag) actuarial valuations used to determine the Preliminary Fiscal Year
2019 employer contributions of NYCERS. Please note these assumptions and
methods are subject to change as this valuation is not considered final
until the end of Fiscal Year 2019.
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
(ERISA), a Member of the American Academy of Actuaries, and a Fellow of
the Conference of Consulting Actuaries. I meet the Qualification Stand-
ards of the American Academy of Actuaries to render the actuarial opin-
A. 11169 5
ion contained herein. To the best of my knowledge, the results contained
herein have been prepared in accordance with generally accepted actuari-
al principles and procedures and with the Actuarial Standards of Prac-
tice issued by the Actuarial Standards Board.
FISCAL NOTE IDENTIFICATION: This Fiscal Note 2018-33 dated June 11,
2018 was prepared by the Chief Actuary for the New York City Employees'
Retirement System. This estimate is intended for use only during the
2018 Legislative Session.