S T A T E   O F   N E W   Y O R K
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                                   6823
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                               June 21, 2017
                                ___________
 
 Introduced  by  Sen.  LANZA  -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the administrative code of the  city  of  New  York,  in
   relation  to  extending  the benefits of the variable supplements fund
   for transit police members of the New York city employees'  retirement
   system

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1.  Paragraph (c) of subdivision 1 of section  13-191  of  the
 administrative  code  of the city of New York, as amended by chapter 577
 of the laws of 1992, is amended to read as follows:
   (c) "Beneficiary". Any person who receives a retirement  allowance  by
 reason  of  having  retired,  on  or after [July first, nineteen hundred
 eighty-seven] OCTOBER FIRST, NINETEEN HUNDRED  SIXTY-EIGHT  for  service
 (with  credit  for  twenty  or  more years of service toward the minimum
 period) as a transit police officer; provided, that no person who held a
 rank or position as a transit police superior  officer,  as  defined  in
 subdivision eighty-four of section 13-101 of this title who, on or after
 May  first,  nineteen  hundred ninety-two, subsequently became a transit
 police officer shall be considered a beneficiary unless such person  (1)
 subsequently  performed  at  least  three  years of service as a transit
 police officer  or  (2)  returned  to  service,  from  the  position  of
 sergeant,  as  a transit police officer during the eighteen month proba-
 tionary period, or such other probationary period as may  be  applicable
 or  (3) returned to service as a transit police officer during the three
 year period specified in paragraph (e) of  subdivision  one  of  section
 seventy-five  of  the civil service law, or (4) returned to service as a
 transit police officer as the result of a hearing conducted pursuant  to
 applicable law.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03869-04-7

              

 S. 6823                             2
 
   §  2. Paragraph (b) of subdivision 1 of section 13-192 of the adminis-
 trative code of the city of New York, as amended by chapter 720  of  the
 laws of 1994, is amended to read as follows:
   (b)  "Beneficiary".  Any person who receives a retirement allowance by
 reason of having retired, on or  after  [July  first,  nineteen  hundred
 eighty-seven,]  OCTOBER FIRST, NINETEEN HUNDRED SIXTY-EIGHT, for service
 (with credit for twenty or more years  of  service  toward  the  minimum
 period)  as  a  transit  police  member and as a transit police superior
 officer; provided, however, that where a person who held or holds a rank
 or position as a transit police superior officer, subsequently and on or
 after May first, nineteen hundred ninety-two became or becomes a transit
 police officer, and while a transit police officer, retired  or  retires
 for service under such circumstances that he or she would have qualified
 as  a  beneficiary  under the provisions of paragraph (c) of subdivision
 one of section 13-191 of this title (other than  the  proviso  thereof),
 but  did  not  or does not qualify as a beneficiary under such paragraph
 (c) because he or she was or is disqualified by the terms of such provi-
 so, such retiree shall nevertheless be deemed to be a beneficiary  under
 the provisions of this section.
   § 3. This act shall take effect December 1, 2017.
   FISCAL  NOTE.--PROVISIONS  OF  PROPOSED  LEGISLATION  - OVERVIEW: This
 proposed legislation would amend Administrative Code of the City of  New
 York  (ACCNY) Sections 13-191 and 13-192, both enacted by Chapter 844 of
 the Laws of 1987, to extend the eligibility provisions providing for the
 payment of Transit Police Officers' and Transit Superior Officers' Vari-
 able Supplements Funds (VSF) benefits to certain retirees.
   Specifically, this proposed legislation would provide for payments  to
 former  New  York City Employees' Retirement System (NYCERS) members who
 are retired for service from the  New  York  City  Transit  Police  (TP)
 between  October  1,  1968 and June 30, 1987 (Prior Retirees) with 20 or
 more years of service. These benefits would be paid from  the  following
 VSFs (referred to hereafter as the IMPACTED VSFs):
   * Transit Police Officers' Variable Supplements Fund (TPOVSF), and
   *   Transit   Police  Superior  Officers'  Variable  Supplements  Fund
 (TPSOVSF).
   The Effective Date of the proposed legislation would  be  December  1,
 2017.
   IMPACT ON BENEFITS - VSF PAYMENTS: Each of the IMPACTED VSFs currently
 provides  supplemental non-pension benefits to former NYCERS members who
 retired for service on or after July 1, 1987 as TP with 20 or more years
 of service.
   The amount of VSF benefits paid  is  currently  $12,000  per  Calendar
 Year.
   These VSF benefits are payable on an annual basis around December 15th
 to  eligible  former  NYCERS  members  for their lifetimes. There are no
 optional forms of payment. Upon the death of  the  NYCERS  retiree,  VSF
 payments cease.
   If  the  proposed  legislation  were to be enacted, all Prior Retirees
 would become immediately eligible for VSF benefits on the December  15th
 subsequent to the Effective Date and for each year thereafter.
   For purposes of the fiscal note, the Actuary has assumed that benefits
 payable  under  this  proposed  legislation  are prospective only (i.e.,
 there would be no retroactive payments for VSF benefits due  before  the
 Effective Date for such Prior Retirees).
   FINANCIAL  IMPACT  - ACTUARIAL PRESENT VALUE OF BENEFITS: Based on the
 census data and the actuarial assumptions and methods noted herein,  the

 S. 6823                             3
 
 enactment of the proposed legislation would increase the Actuarial Pres-
 ent Value (APV) of Benefits (APVB) of the IMPACTED VSFs by approximately
 $37.8 million as of June 30, 2016.
   The  Office  of  the  Actuary  notes that since there are currently no
 active TP members of NYCERS, the TP VSFs are limited to a  closed  group
 of  retired  members.  Accordingly,  there  is currently no mechanism in
 place for funding the TP VSFs where the VSFs' funding allocation  method
 normally  would  be  based  on the ratio of active TP member salaries to
 salaries of all active members in NYCERS. As a consequence,  a  transfer
 from  NYCERS  to  the IMPACTED VSFs would be necessary to fund the addi-
 tional VSF benefit obligations.
   FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS:  Based on the census
 data, the actuarial assumptions and methods noted herein,  and  assuming
 the  additional APV of Benefits is amortized over five years, the enact-
 ment  of  this  proposed  legislation  would  increase  annual  employer
 contributions  to NYCERS by approximately $9.5 million per year for five
 years.
   If enacted into law during the 2017 Legislative Session, the  increase
 in employer contributions would first be recognized in Fiscal Year 2019.
   OTHER  COSTS: Not measured in this Fiscal Note is the impact on admin-
 istrative costs.
   CENSUS DATA: The census data used for estimates of APVB  and  employer
 contributions  presented  herein include 2,145 TP retirees and benefici-
 aries who were included in the June  30,  2016  actuarial  valuation  of
 NYCERS.  Of  such  2,145 TP retirees and beneficiaries, there are 572 TP
 retirees who currently receive VSF benefits.
   Under this proposed legislation, an additional 482 TP Service Retirees
 who retired between October 1, 1968 and June 30, 1987 would  qualify  as
 Prior Retirees and would become eligible to receive VSF benefits.
   ACTUARIAL  ASSUMPTIONS  AND  METHODS: The additional employer contrib-
 utions presented here  have  been  calculated  based  on  the  actuarial
 assumptions  and methods in effect for the June 30, 2016 (Lag) actuarial
 valuations used to determine the Preliminary Fiscal Year  2018  Employer
 Contributions.
   In  accordance  with Section 13.638.2 (k-2) of the Administrative Code
 of the City of New York as enacted by Chapter 3 of the Laws of 2013, new
 Unfunded Actuarial Accrued  Liability  (UAAL)  attributable  to  benefit
 changes  are  to be amortized as determined by the Actuary but generally
 over the remaining working lifetimes of those impacted by these  benefit
 changes.  For  this  proposed legislation, the average remaining working
 lifetime is zero years because all those  that  would  be  impacted  are
 retired.  However, given the history of the amortization period used for
 other  legislation  impacting  primarily  retired  or soon-to-be-retired
 members, such as Retirement Incentive Programs, the Actuary is  inclined
 to  amortize  the  proposed  legislation over six years with the payment
 period beginning one year after the  establishment  of  the  UAAL.  This
 approach  is  consistent  with the One-Year Lag Methodology (OYLM) where
 the UAAL is considered to be amortized over six years with five years of
 payments beginning in the second year.
   STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief  Actu-
 ary for, and independent of, the New York City Pension Funds and Retire-
 ment Systems. I am a Fellow of the Society of Actuaries, a Fellow of the
 Conference  of Consulting 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.

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   FISCAL NOTE IDENTIFICATION: This Fiscal Note  2017-29  dated  June  9,
 2017, was prepared by the Chief Actuary for the New York City Employees'
 Retirement  System.  This  estimate  is intended for use only during the
 2017 Legislative Session.