S T A T E   O F   N E W   Y O R K
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                                  7620--A
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 14, 2019
                                ___________
 
 Introduced  by  M.  of  A.  ABBATE,  CRUZ, ROZIC, PHEFFER AMATO, D'URSO,
   SOLAGES, BRAUNSTEIN, ORTIZ,  COLTON,  PERRY,  BARNWELL,  D. ROSENTHAL,
   DenDEKKER, LENTOL, WEPRIN, M. G. MILLER -- Multi-Sponsored by -- M. of
   A.  HEVESI  -- read once and referred to the Committee on Governmental
   Employees -- 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:
 
   Section 1. The general municipal  law  is  amended  by  adding  a  new
 section 209-fff to read as follows:
   §  209-FFF.  PROVISIONS  RELATING TO A MEMBERSHIP DATE IN THE NEW YORK
 CITY POLICE PENSION FUND ATTRIBUTABLE TO SERVICE IN THE TITLES OF POLICE
 CADET PROGRAM AND POLICE CADET PROGRAM II IN THE NEW  YORK  CITY  POLICE
 DEPARTMENT CADET PROGRAM. 1. NOTWITHSTANDING ANY PROVISION OF LAW TO THE
 CONTRARY,  UPON ELECTION, ANY MEMBER OF THE NEW YORK CITY POLICE PENSION
 FUND WHO IS SUBJECT TO ARTICLE FOURTEEN OF  THE  RETIREMENT  AND  SOCIAL
 SECURITY  LAW,  AND  WHO  SERVED  IN THE NEW YORK CITY POLICE DEPARTMENT
 CADET PROGRAM IN THE TITLE OF  POLICE  CADET  PROGRAM  OR  POLICE  CADET
 PROGRAM  II  PRIOR TO APRIL FIRST, TWO THOUSAND TWELVE, BUT DID NOT JOIN
 THE NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM WHILE SERVING  IN  EITHER
 SUCH TITLE, MAY PURCHASE CREDIT FOR THE PERIOD OF SERVICE IN SUCH TITLES
 IN  THE NEW YORK CITY POLICE DEPARTMENT CADET PROGRAM BY PAYING INTO THE
 NEW YORK CITY POLICE PENSION FUND ALL MEMBER CONTRIBUTIONS  PLUS  INTER-
 EST,  AT A RATE OF FIVE PERCENT PER ANNUM, WHICH WOULD HAVE BEEN PAYABLE
 TO THE NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM UNDER ANY PROVISION OF
 LAW HAD SUCH MEMBER JOINED  THE  NEW  YORK  CITY  EMPLOYEES'  RETIREMENT
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD07917-04-9

 A. 7620--A                          2
 
 SYSTEM ON THE EARLIEST DATE THAT HE OR SHE WAS APPOINTED TO THE TITLE OF
 POLICE  CADET  PROGRAM  OR  POLICE CADET PROGRAM II IN THE NEW YORK CITY
 POLICE DEPARTMENT CADET PROGRAM, PROVIDED SUCH PAYMENT  IS  MADE  WITHIN
 FIVE YEARS AFTER THE EFFECTIVE DATE OF THIS SECTION.
   2.  ANY  MEMBER  OF THE NEW YORK CITY POLICE PENSION FUND WHO ACQUIRES
 SERVICE CREDIT PURSUANT TO THIS SECTION SHALL BE ENTITLED TO ALL RIGHTS,
 BENEFITS AND PRIVILEGES TO WHICH HE OR SHE WOULD HAVE BEEN ENTITLED  HAD
 HIS  OR  HER  MEMBERSHIP  IN THE NEW YORK CITY POLICE PENSION FUND BEGUN
 UPON THE EARLIEST DATE THAT HE OR SHE WAS  APPOINTED  TO  THE  TITLE  OF
 POLICE  CADET  PROGRAM  OR  POLICE CADET PROGRAM II IN THE NEW YORK CITY
 POLICE DEPARTMENT CADET PROGRAM, BUT IN NO EVENT SHALL THE SERVICE CRED-
 IT ACQUIRED PURSUANT TO THIS SECTION BE DEEMED  TO  BE  SERVICE  IN  THE
 POLICE  FORCE  OR  ANY  OTHER  TYPE  OF SERVICE COUNTED OR CREDITABLE AS
 SERVICE IN THE POLICE FORCE UNDER SECTION 13-218 OF  THE  ADMINISTRATIVE
 CODE  OF  THE  CITY  OF  NEW  YORK, SECTION FIVE HUNDRED THIRTEEN OF THE
 RETIREMENT AND SOCIAL SECURITY LAW OR ANY OTHER  PROVISION  OF  LAW  FOR
 PURPOSES  OF  ELIGIBILITY  FOR  BENEFITS  AND TO DETERMINE THE AMOUNT OF
 BENEFITS UNDER THE NEW YORK CITY POLICE PENSION FUND.
   § 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.

 A. 7620--A                          3
 
   * Tier 3 and Tier 3 Revised - Basic Member Contributions (BMC) of 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

 A. 7620--A                          4
 
 change  based  on  the realization of potential investment, demographic,
 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.