S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6135
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2019
                                ___________
 
 Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 AN  ACT  to  amend  the  administrative code of the city of New York, in
   relation to increasing benefits payable by  the  correction  officers'
   variable supplements fund to beneficiaries

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 13-194 of the administrative code of  the  city  of
 New York is amended by adding a new subdivision 12 to read as follows:
   12. IN ADDITION TO THE PAYMENTS SET FORTH IN PARAGRAPHS (C) AND (D) OF
 SUBDIVISION  FOUR OF THIS SECTION, THERE SHALL BE PAID TO EACH BENEFICI-
 ARY ON OR ABOUT THE DECEMBER FIFTEENTH NEXT SUCCEEDING HIS OR  HER  DATE
 OF  RETIREMENT,  AN  AMOUNT  EQUAL TO THE VARIABLE SUPPLEMENTS PAYMENTS,
 SUBJECT TO THE PROVISIONS OF ITEMS (I) AND (II) OF SUBPARAGRAPH  ONE  OF
 PARAGRAPH  (E) OF SUBDIVISION FOUR OF THIS SECTION, THAT HE OR SHE WOULD
 HAVE RECEIVED, HAD HE OR SHE RETIRED ON THE DATE OF HIS OR HER  EARLIEST
 ELIGIBILITY  FOR SERVICE RETIREMENT, IN THE PERIOD MEASURED FROM (1) THE
 LATER OF (I) SUCH EARLIEST ELIGIBILITY DATE AND (II) JANUARY FIRST,  TWO
 THOUSAND EIGHTEEN AND (2) HIS OR HER DATE OF RETIREMENT.
   § 2. This act shall take effect immediately.
 
 
 
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD04286-01-9



              

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  6135--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2019
                                ___________
 
 Introduced by Sen. GOUNARDES -- 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 administrative code of the  city  of  New  York,  in
   relation  to  increasing  benefits payable by the correction officers'
   variable supplements fund to beneficiaries
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section  13-194 of the administrative code of the city of
 New York is amended by adding a new subdivision 12 to read as follows:
   12. IN ADDITION TO THE PAYMENTS SET FORTH IN PARAGRAPHS (C) AND (D) OF
 SUBDIVISION FOUR OF THIS SECTION, THERE SHALL BE PAID TO EACH  BENEFICI-
 ARY  ON  OR ABOUT THE DECEMBER FIFTEENTH NEXT SUCCEEDING HIS OR HER DATE
 OF RETIREMENT, AN AMOUNT EQUAL TO  THE  VARIABLE  SUPPLEMENTS  PAYMENTS,
 SUBJECT  TO  THE PROVISIONS OF ITEMS (I) AND (II) OF SUBPARAGRAPH ONE OF
 PARAGRAPH (E) OF SUBDIVISION FOUR OF THIS SECTION, THAT HE OR SHE  WOULD
 HAVE  RECEIVED, HAD HE OR SHE RETIRED ON THE DATE OF HIS OR HER EARLIEST
 ELIGIBILITY FOR SERVICE RETIREMENT, IN THE PERIOD MEASURED FROM (1)  THE
 LATER  OF (I) SUCH EARLIEST ELIGIBILITY DATE AND (II) JANUARY FIRST, TWO
 THOUSAND EIGHTEEN AND (2) HIS OR HER DATE OF RETIREMENT.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This bill provides certain New York  City  Employees'
 Retirement  System  (NYCERS) correction officers a lump sum benefit upon
 retirement, commonly referred to as a Deferred  Retirement  Option  Plan
 (DROP),  equal  to the amount of Correction Officer Variable Supplements
 Fund (COVSF) payments such officer would have received if he or she  had
 retired  at  the  later  of their respective earliest service retirement
 eligibility date or January 1, 2018.
   Effective Date: Upon enactment.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD04286-02-9

 S. 6135--A                          2
 
   BACKGROUND: Correction officers who  participate  in  NYCERS  and  who
 retire with immediate payability of a service retirement at their earli-
 est  service  retirement  eligibility date (e.g. after 20 or 25 years of
 credited service) are entitled to receive supplemental non-pension COVSF
 benefits in the amount of $12,000 per calendar year. Correction officers
 who  continue to work beyond their earliest service retirement eligibil-
 ity date are ineligible to receive COVSF payments until retirement, even
 though they would be eligible to retire from service and  receive  COVSF
 benefits.
   IMPACT ON BENEFITS: This bill would provide to NYCERS correction offi-
 cers  who  continue  to  work  beyond  their earliest service retirement
 eligibility date a lump sum DROP payment consisting of the annual  COVSF
 payment  each year beyond the later of their earliest service retirement
 date or January 1, 2018 (i.e. the COVSF payments the retiree would  have
 received if he or she had retired at his or her earliest service retire-
 ment eligibility date or January 1, 2018, whichever is later).
   The DROP does not apply to deaths or to disability retirement, even if
 those  events  occur  after  the earliest service retirement eligibility
 date.
   FINANCIAL IMPACT - PRESENT VALUES: Based on the actuarial  assumptions
 and methods described herein, the enactment of this proposed legislation
 would  increase  the Present Value of Future Benefits (PVFB) by approxi-
 mately $104.9 million.
   Under the Entry Age Normal cost method used to determine the  employer
 contributions  to  NYCERS,  there  would  be an increase in the Unfunded
 Accrued Liability (UAL) of approximately $57.3 million and  an  increase
 in the Present Value of future employer Normal Cost of $47.6 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, 2018, the remaining working lifetime of NYCERS  correction  officers
 is approximately 12 years.
   For  the  purposes  of this Fiscal Note, the increase in UAL was amor-
 tized over a 12-year period (11 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 $11.9 million each year.
   OTHER COSTS: Not measured in this Fiscal Note are the following:
   * The initial, additional administrative costs of NYCERS 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, 2018 actuarial valuation of NYCERS. In
 accordance with the OYLM used to determine employer  contributions,  the
 increase  in  employer  contributions would first be reflected in Fiscal
 Year 2020.
   CENSUS DATA: The estimates presented herein are based  on  the  census
 data  used in the Preliminary June 30, 2018 (Lag) actuarial valuation of
 NYCERS to determine the Preliminary Fiscal Year 2020  employer  contrib-
 utions.

 S. 6135--A                          3
 
   The 10,330 NYCERS correction officers as of June 30, 2018 had an aver-
 age  age  of  approximately 39.0 years, average service of approximately
 8.8 years, and an average salary of approximately $88,700.
   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 NYCERS.
   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,
 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  2019-23  dated  May  24,
 2019  was prepared by the Chief Actuary for the New York City Employees'
 Retirement System. This estimate is intended for  use  only  during  the
 2019 Legislative Session.