S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5903--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2019
                                ___________
 
 Introduced by Sens. GOUNARDES, COMRIE, GAUGHRAN, KAMINSKY, KAPLAN, SAVI-
   NO -- read twice and ordered printed, and when printed to be committed
   to   the   Committee  on  Civil  Service  and  Pensions  --  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
 SYSTEM ON THE EARLIEST DATE THAT HE OR SHE WAS APPOINTED TO THE TITLE OF
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD07917-05-9

 S. 5903--A                          2
 
 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.
   * Tier 3 and Tier 3 Revised - Basic Member Contributions (BMC) of 3%.

 S. 5903--A                          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
 change based on the realization of  potential  investment,  demographic,

 S. 5903--A                          4
 
 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.