S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10273
 
                           I N  A S S E M B L Y
 
                               May 13, 2022
                                ___________
 
 Introduced  by  COMMITTEE ON RULES -- (at request of M. of A. Abbate) --
   read once and referred to the Committee on Governmental Employees
 
 AN ACT to amend the retirement and social security  law,  the  education
   law  and  the administrative code of the city of New York, in relation
   to providing cost-of-living adjustments
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. Subdivision c of section 78-a of the retirement and social
 security law, as added by chapter 125 of the laws of 2000, is amended to
 read as follows:
   c. Said cost-of-living adjustment shall be computed on a base  benefit
 amount  [not  to  exceed]  OF  eighteen  thousand  dollars of the annual
 retirement allowance defined in subdivision b of this section, PROVIDED,
 HOWEVER, SUCH BASE BENEFIT AMOUNT SHALL BE INCREASED ANNUALLY BY  REFER-
 ENCE  TO THE CONSUMER PRICE INDEX (ALL URBAN CONSUMERS, CPI-U, U.S. CITY
 AVERAGE, ALL  ITEMS,  1982-84=100),  PUBLISHED   BY   THE UNITED  STATES
 BUREAU  OF LABOR STATISTICS, FOR EACH APPLICABLE CALENDAR YEAR BEGINNING
 ON SEPTEMBER FIRST,  TWO  THOUSAND  TWENTY-TWO.  THE  ANNUAL  PERCENTAGE
 INCREASE  TO  THE  BASE  AMOUNT  SHALL EQUAL FIFTY PERCENT OF THE ANNUAL
 INFLATION, AS DETERMINED FROM THE INCREASE IN THE CONSUMER  PRICE  INDEX
 IN   THE   ONE YEAR PERIOD ENDING ON THE MARCH THIRTY-FIRST PRIOR TO THE
 COST-OF-LIVING ADJUSTMENT  EFFECTIVE  ON  THE  ENSUING SEPTEMBER  FIRST.
 SAID PERCENTAGE SHALL THEN BE ROUNDED UP TO THE NEXT HIGHER ONE-TENTH OF
 ONE  PERCENT  AND  SHALL  NOT  EXCEED THREE PERCENT NOR BE LESS THAN ONE
 PERCENT.
   § 2. Subdivision c of section 378-a of the retirement and social secu-
 rity law, as added by chapter 125 of the laws of  2000,  is  amended  to
 read as follows:
   c.  Said cost-of-living adjustment shall be computed on a base benefit
 amount [not to exceed]  OF  eighteen  thousand  dollars  of  the  annual
 retirement allowance defined in subdivision b of this section, PROVIDED,
 HOWEVER,  SUCH BASE BENEFIT AMOUNT SHALL BE INCREASED ANNUALLY BY REFER-
 ENCE TO THE CONSUMER PRICE INDEX (ALL URBAN CONSUMERS, CPI-U, U.S.  CITY
 AVERAGE,  ALL   ITEMS,  1982-84=100),  PUBLISHED  BY  THE UNITED  STATES
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD14047-03-2
 A. 10273                            2
 
 BUREAU OF LABOR STATISTICS, FOR EACH APPLICABLE CALENDAR YEAR  BEGINNING
 ON  SEPTEMBER  FIRST,  TWO  THOUSAND  TWENTY-TWO.  THE ANNUAL PERCENTAGE
 INCREASE TO THE BASE AMOUNT SHALL EQUAL  FIFTY  PERCENT  OF  THE  ANNUAL
 INFLATION,  AS  DETERMINED FROM THE INCREASE IN THE CONSUMER PRICE INDEX
 IN  THE  ONE YEAR PERIOD ENDING ON THE MARCH THIRTY-FIRST PRIOR  TO  THE
 COST-OF-LIVING  ADJUSTMENT  EFFECTIVE  ON  THE  ENSUING SEPTEMBER FIRST.
 SAID PERCENTAGE SHALL THEN BE ROUNDED UP TO THE NEXT HIGHER ONE-TENTH OF
 ONE PERCENT AND SHALL NOT EXCEED THREE PERCENT  NOR  BE  LESS  THAN  ONE
 PERCENT.
   §  3. Subdivision c of section 532-a of the education law, as added by
 chapter 125 of the laws of 2000, is amended to read as follows:
   c. Said cost-of-living adjustment shall be computed on a base  benefit
 amount  [not  to  exceed]  OF  eighteen  thousand  dollars of the annual
 retirement allowance defined in subdivision b of this section, PROVIDED,
 HOWEVER, SUCH BASE BENEFIT AMOUNT SHALL BE INCREASED ANNUALLY BY  REFER-
 ENCE  TO THE CONSUMER PRICE INDEX (ALL URBAN CONSUMERS, CPI-U, U.S. CITY
 AVERAGE, ALL  ITEMS,  1982-84=100),  PUBLISHED  BY  THE UNITED    STATES
 BUREAU  OF LABOR STATISTICS, FOR EACH APPLICABLE CALENDAR YEAR BEGINNING
 ON SEPTEMBER FIRST,  TWO  THOUSAND  TWENTY-TWO.  THE  ANNUAL  PERCENTAGE
 INCREASE  TO  THE  BASE  AMOUNT  SHALL EQUAL FIFTY PERCENT OF THE ANNUAL
 INFLATION, AS DETERMINED FROM THE INCREASE IN THE CONSUMER  PRICE  INDEX
 IN   THE   ONE YEAR PERIOD ENDING ON THE MARCH THIRTY-FIRST PRIOR TO THE
 COST-OF-LIVING ADJUSTMENT  EFFECTIVE  ON  THE  ENSUING SEPTEMBER  FIRST.
 SAID PERCENTAGE SHALL THEN BE ROUNDED UP TO THE NEXT HIGHER ONE-TENTH OF
 ONE  PERCENT  AND  SHALL  NOT  EXCEED THREE PERCENT NOR BE LESS THAN ONE
 PERCENT.
   § 4. Subdivision c of section 13-696 of the administrative code of the
 city of New York, as added by chapter  125  of  the  laws  of  2000,  is
 amended to read as follows:
   c.  Said cost-of-living adjustment shall be computed on a base benefit
 amount [not to exceed] OF eighteen thousand dollars of the annual  fixed
 retirement allowance defined in subdivision b of this section, PROVIDED,
 HOWEVER,  SUCH BASE BENEFIT AMOUNT SHALL BE INCREASED ANNUALLY BY REFER-
 ENCE TO THE CONSUMER PRICE INDEX (ALL URBAN CONSUMERS, CPI-U, U.S.  CITY
 AVERAGE,  ALL   ITEMS,  1982-84=100),  PUBLISHED  BY  THE UNITED  STATES
 BUREAU OF LABOR STATISTICS, FOR EACH APPLICABLE CALENDAR YEAR  BEGINNING
 ON  SEPTEMBER  FIRST,  TWO  THOUSAND  TWENTY-TWO.  THE ANNUAL PERCENTAGE
 INCREASE TO THE BASE AMOUNT SHALL EQUAL  FIFTY  PERCENT  OF  THE  ANNUAL
 INFLATION,  AS  DETERMINED FROM THE INCREASE IN THE CONSUMER PRICE INDEX
 IN  THE  ONE YEAR PERIOD ENDING ON THE MARCH THIRTY-FIRST PRIOR  TO  THE
 COST-OF-LIVING  ADJUSTMENT   EFFECTIVE  ON  THE ENSUING SEPTEMBER FIRST.
 SAID PERCENTAGE SHALL THEN BE ROUNDED UP TO THE NEXT HIGHER ONE-TENTH OF
 ONE PERCENT AND SHALL NOT EXCEED THREE PERCENT  NOR  BE  LESS  THAN  ONE
 PERCENT.
   §  5. Notwithstanding any other provision of law to the contrary, none
 of the provisions of this act shall be subject  to  section  25  of  the
 retirement and social security law.
   § 6.  This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill  would  provide an increase in the defined benefit cost-of-
 living adjustment (COLA) for New York public retirement systems.  Start-
 ing with the payment in September 2022, the base benefit for computation
 of the annual COLA will be increased  annually  by  50%  of  the  annual
 inflation not to exceed 3% or be less than 1%.
   Insofar  as  this bill affects the New York State and Local Employees'
 Retirement System (ERS), the increased costs  would  be  shared  by  the
 A. 10273                            3
 
 State  of  New  York and the participating employers in the ERS. If this
 bill were enacted during the 2022 legislative session, the  increase  in
 the  present value of benefits would be approximately $1.03 billion. The
 estimated  first  year  cost  would  be approximately $47 million to the
 State of New York and approximately $67  million  to  the  participating
 employers in the ERS.
   Insofar  as  this bill affects the New York State and Local Police and
 Fire Retirement System (PFRS), the increased costs would  be  shared  by
 the  State  of  New York and the participating employers in the PFRS. If
 this bill were enacted during the 2022 legislative session, the increase
 in the present value of benefits would be  approximately  $148  million.
 The  estimated  first year cost would be approximately $3 million to the
 State of New York and approximately $12  million  to  the  participating
 employers in the PFRS.
   Summary of relevant resources:
   Membership  data as of March 31, 2021 was used in measuring the impact
 of the proposed change, the same data used in the April 1, 2021 actuari-
 al valuation. Distributions and other statistics can  be  found  in  the
 2021  Report  of the Actuary and the 2021 Comprehensive Annual Financial
 Report.
   The actuarial assumptions and methods used are described in  the  2020
 and  2021 Annual Report to the Comptroller on Actuarial Assumptions, and
 the Codes, Rules and Regulations of the State of  New  York:  Audit  and
 Control.
   The Market Assets and GASB Disclosures are found in the March 31, 2021
 New  York  State  and  Local  Retirement System Financial Statements and
 Supplementary Information.
   I am a member of the American Academy of Actuaries and meet the Quali-
 fication Standards to render the actuarial opinion contained herein.
   This fiscal note does not constitute a legal opinion on the  viability
 of  the  proposed change nor is it intended to serve as a substitute for
 the professional judgment of an attorney.
   This estimate, dated February 9,  2022,  and  intended  for  use  only
 during  the  2022  Legislative  Session,  is  Fiscal  Note  No. 2022-37,
 prepared by the Actuary for the New  York  State  and  Local  Retirement
 System.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill (legislative bill draft 14047-01-1) would amend subdivision
 c of Section 532-a of the Education Law to annually increase the current
 cost-of-living adjustment  (COLA)  base  benefit  amount,  currently  at
 $18,000,  by fifty percent of annual inflation. Currently the base bene-
 fit amount to which the COLA percentage is applied is fixed  at  $18,000
 annually.  The  annual  percentage increase shall be determined from the
 increase in the Consumer Price Index, published  by  the  United  States
 Bureau  of  Labor Statistics, in the one-year period ending on the March
 thirty-first prior to the COLA effective on the ensuing September first.
 The annual percentage increase shall not exceed  three  percent  nor  be
 less than one percent. This COLA base benefit adjustment would be effec-
 tive in September 2022.
   The  annual  cost  to  the  employers of members of the New York State
 Teachers' Retirement System for this benefit is estimated  to  be  $92.9
 million or .53% of payroll if this bill is enacted.
   Member  data  is  from  the  System's  most recent actuarial valuation
 files, consisting of data provided by the employers  to  the  Retirement
 System.  Data  distributions and statistics can be found in the System's
 Annual Report. System assets are as reported in the  System's  financial
 A. 10273                            4
 
 statements and can also be found in the System's Annual Report.  Actuar-
 ial assumptions and methods are provided in the System's Actuarial Valu-
 ation Report and the 2021 Actuarial Assumptions Report.
   The  source of this estimate is Fiscal Note 2022-10 dated February 10,
 2022 prepared by the Office of the Actuary of the New York State  Teach-
 ers'  Retirement  System  and  is  intended for use only during the 2022
 Legislative Session. I, Richard A. Young, am the Chief Actuary  for  the
 New  York State Teachers' Retirement System. I am a member of the Ameri-
 can Academy of Actuaries and I meet the Qualification Standards  of  the
 American  Academy of Actuaries to render the actuarial opinion contained
 herein.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This proposed legislation, as it relates to  the  New
 York  City  Retirement  Systems  and  Pension Funds (NYCRS), would amend
 Section 13-696 of the Administrative  Code  of  the  City  of  New  York
 (ACCNY)  to  increase the Cost-of-Living Adjustment (COLA) base limit of
 $18,000 by 50% of CPI each year, starting on September 1, 2022, for  the
 New  York  City Employees' Retirement System (NYCERS), the New York City
 Teachers' Retirement System (NYCTRS), the New York City Board of  Educa-
 tion  Retirement  System  (BERS),  the New York City Police Pension Fund
 (POLICE), and the New York City Fire Pension Fund (FIRE).
   Note: To the extent that the implementation  of  the  proposed  legis-
 lation  deviates from the calculation method discussed herein, the costs
 for the proposed legislation may be as much as 70% higher than the costs
 disclosed in the table below.
   Effective Date: Upon enactment and first applicable to  the  September
 2022 COLA.
   IMPACT  ON  BENEFITS:  Certain  NYCRS  retirees  and beneficiaries are
 eligible to receive a COLA  pursuant  to  the  ACCNY  Section  13-696(a)
 (i.e.,  age  62  and  retired  for five years; age 55 and retired for 10
 years; disabled retirees who are retired for five years; and  accidental
 death  benefit  recipients  who have been receiving the benefit for five
 years). Spouses paid under a lifetime optional benefit generally receive
 50% of the COLA that would have been payable to the retiree.
   The COLA is equal to 50% of the increase in the consumer  price  index
 (CPI)  in  the  one-year period ending on the March 31 prior to the COLA
 effective on the ensuing September 1. The percentage is rounded  to  the
 next  higher  one-tenth of one percent and shall not be less than 1% nor
 more than 3%.
   The COLA currently provides for an annual increase equal to a percent-
 age of the annual retirement allowance otherwise payable, computed with-
 out optional modification, but limited to the first $18,000  of  retire-
 ment allowance.
   The  costs  in  the  table  below are based on providing for an annual
 increase equal to a percentage of the annual retirement allowance other-
 wise payable, but limited to the $18,000 limit, increased  on  September
 1, 2022 and each year thereafter by the COLA.
   The  alternate cost disclosed below uses the increasing $18,000 as the
 base for calculating COLA rather than as the  limit  of  the  retirement
 allowance subject to the COLA increase.
   FINANCIAL IMPACT - SUMMARY: The estimated financial impact to NYCRS of
 increasing  the $18,000 limit as described above is an increase in Pres-
 ent Value of Future Benefits (PVFB) of $1.5 billion and an  increase  in
 the  first  year  annual  employer  contributions of $800.5 million. The
 increase in first year annual employer contributions of  $800.5  million
 is  estimated  to be $658.9 million for New York City and $141.6 million
 A. 10273                            5
 
 for the other obligors of NYCRS. A breakdown of the financial impact  by
 System is shown in the table below.
           NYCRS          Additional          Estimated First Year
                          Present Value of    Annual Employer
                          Future Benefits     Contributions*
                          ($ Millions)        ($ Millions)
 
           NYCERS         $626.1              $ 325.1
           NYCTRS          476.3                202.0
           BERS             44.1                 15.3
           POLICE          278.1                203.7
           FIRE             86.8                 54.4
           Total          $1,511.4            $ 800.5
   *  Employer  contributions  after  the  first year are estimated to be
 approximately $100 million per year.
   As noted above, to the extent that the implementation of this proposed
 legislation, for purposes of calculating individual COLA  amounts,  uses
 the  increasing  $18,000  base for all retirees, the increase in PVFB is
 estimated to be approximately $2.5 billion.
   In accordance with ACCNY Section 13-638.2(k-2), new  Unfunded  Accrued
 Liability  (UAL)  attributable to benefit changes are to be amortized as
 determined by the Actuary but are generally amortized over the remaining
 working lifetime of those impacted by the benefit changes.
   For purposes of this Fiscal Note, it has been assumed  that  increases
 in  UAL attributable to current retirees would be recognized immediately
 and that increases in UAL attributable to active members would be  amor-
 tized  over  periods ranging from 12 to 15 years depending on the System
 (11 to 14 payments under the One-Year Lag Methodology (OYLM)).
   CONTRIBUTION TIMING: For the purposes  of  this  Fiscal  Note,  it  is
 assumed  that  the changes in the PVFB and annual employer contributions
 would be reflected for the first time in the Final June 30, 2021 actuar-
 ial valuations of NYCRS. In accordance with the OYLM used  to  determine
 employer  contributions,  the  increase  in employer contributions would
 first be reflected in Fiscal Year 2023.
   CENSUS DATA: The estimates presented herein are based  on  the  census
 data used in the Preliminary June 30, 2021 (Lag) actuarial valuations of
 NYCRS  to  determine  the Preliminary Fiscal Year 2023 employer contrib-
 utions.
   ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and  annual
 employer  contributions  presented  herein have been calculated based on
 the actuarial assumptions and methods in effect for the Preliminary June
 30, 2021 (Lag) actuarial valuations used to  determine  the  Preliminary
 Fiscal Year 2023 employer contributions of each respective NYCRS.
   RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
 highly on the realization of the actuarial assumptions used, as well  as
 certain demographic characteristics of NYCRS and other exogenous factors
 such  as investment, contribution, and other risks. If actual experience
 deviates from actuarial assumptions, the actual costs could differ  from
 those  presented herein. Costs are also dependent on the actuarial meth-
 ods used,  and  therefore  different  actuarial  methods  could  produce
 different  results.  Quantifying these risks is beyond the scope of this
 Fiscal Note.
   Not measured in this Fiscal Note are the following:
     * The initial,  additional  administrative  costs  to  each  of  the
     retirement systems and other New York City agencies to implement the
     proposed legislation.
 A. 10273                            6
 
   STATEMENT  OF  ACTUARIAL  OPINION: I, Michael J. Samet, am the Interim
 Chief Actuary for, and independent of,  the  New  York  City  Retirement
 Systems and Pension Funds. I am a Fellow of the Society of 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. 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 2022-50 dated May 12,
 2022 was prepared by the Interim Chief Actuary for  the  New  York  City
 Retirement  Systems and Pension Funds. This estimate is intended for use
 only during the 2022 Legislative Session.