S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10538
 
                           I N  A S S E M B L Y
 
                               July 6, 2022
                                ___________
 
 Introduced  by  COMMITTEE  ON  RULES -- (at request of M. of A. Wallace,
   Buttenschon) -- read once and referred to  the  Committee  on  Govern-
   mental Employees
 
 AN  ACT  to amend the retirement and social security law, in relation to
   enacting the "State Police Retention act"
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  Short title.  This act shall be known and may be cited as
 the "State Police Retention act".
   § 2. Legislative findings. Front  line  public  employees  have  faced
 unprecedented  adverse health effects as the result of employer mandates
 to require state police officers to remain on-duty and physically  pres-
 ent  at  their work locations during the deadly COVID-19 pandemic. These
 crucial  public  employees  mandated  to  continue  conducting   crucial
 services  to  the  public  during the most deadly period of the COVID-19
 pandemic displayed exemplary service, while often at a health  detriment
 to  the  employee  and their family. Prior to the state mandating worker
 quarantines, state police officers were already on the  front  lines  of
 the pandemic transporting crucial medical supplies, test kits as well as
 COVID-19  samples  throughout  the  state to laboratories established to
 test suspected COVID-19 submissions in order to gain an  early  foothold
 in  statewide  treatment  protocols.  Besides  the  strenuous  work they
 already perform, additional duties as part of the early tracking, trans-
 porting and testing of COVID-19 samples has resulted in a large  contin-
 gent  of  state police officers to retire earlier than expected and thus
 reduced overall manpower allotments that does not keep up with  mandated
 duty  requirements.  This legislation offers an inducement to retain our
 most valued senior state police officers while affording  more  time  to
 hire, train and deploy replaced public employees.
   § 3. The retirement and social security law is amended by adding a new
 section 381-c to read as follows:
   §  381-C. DEFERRED RETIREMENT OPTION PLAN PAYABLE TO MEMBERS AND OFFI-
 CERS OF THE DIVISION OF STATE  POLICE.  A.  DEFERRED  RETIREMENT  OPTION
 PLAN.    DEFERRED  RETIREMENT  OPTION  PLAN, (HEREINAFTER REFERRED TO AS
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD15385-02-2
 A. 10538                            2
 
 "DROP"), IS A RETIREMENT PLAN UNDER WHICH AN ELIGIBLE MEMBER  MAY  ELECT
 TO  PARTICIPATE, DEFERRING RECEIPT OF RETIREMENT BENEFITS WHILE CONTINU-
 ING EMPLOYMENT WITH THE DIVISION OF STATE POLICE. FOR  THE  PURPOSES  OF
 THIS  SECTION, AN "ELIGIBLE MEMBER" IS ANY MEMBER OR OFFICER EMPLOYED BY
 THE DIVISION OF STATE POLICE. DURING THE PERIOD OF CONTINUED EMPLOYMENT,
 THE ELIGIBLE MEMBER'S MONTHLY RETIREMENT BENEFIT SHALL BE  DEFERRED  AND
 HELD  BY  THE RETIREMENT SYSTEM ON BEHALF OF THE MEMBER PLUS INTEREST AT
 AN EFFECTIVE RATE OF ONE AND ONE-HALF PERCENT FOR THE SPECIFIC PERIOD OF
 PARTICIPATION IN DROP AS PROVIDED IN SUBDIVISION C OF THIS SECTION. UPON
 COMPLETION OF THE DROP PERIOD, THE ELIGIBLE  MEMBER  SHALL  RECEIVE  THE
 TOTAL AMOUNT OF RETIREMENT BENEFITS DEFERRED UNDER DROP WITHOUT OPTIONAL
 MODIFICATION  AS  PERMITTED  BY SUBDIVISIONS D AND E OF THIS SECTION AND
 SHALL BEGIN TO RECEIVE THE PREVIOUSLY  DETERMINED NORMAL SERVICE RETIRE-
 MENT BENEFIT WITH OPTIONAL MODIFICATION AS FURTHER PROVIDED IN  SUBDIVI-
 SION D OF THIS SECTION.
   B.  PARTICIPATION  IN  DROP.  ANY  ELIGIBLE  MEMBER  WHO  IS CURRENTLY
 EMPLOYED BY THE DIVISION OF STATE POLICE AND QUALIFIES TO RETIRE  PURSU-
 ANT  TO  SECTION  THREE  HUNDRED EIGHTY-ONE-B OF THIS TITLE BY REASON OF
 COMPLETING TWENTY YEARS OF CREDITABLE SERVICE MAY ELECT  TO  PARTICIPATE
 IN DROP.
   C.  ELECTION IN DROP. SUCH ELECTION SHALL BE ON A FORM PREPARED BY THE
 COMPTROLLER AND MAY BE FOR ANY PERIOD  OF  TIME  NOT  LESS  THAN  TWELVE
 MONTHS  OR  MORE  THAN  SIXTY  MONTHS DURATION. ANY MEMBER WHO ELECTS TO
 PARTICIPATE IN DROP SHALL BE CONSIDERED RETIRED ON THE DAY FOLLOWING THE
 EXPIRATION OF THE DROP PERIOD, PROVIDED, HOWEVER,  THAT  ALL  LOANS  AND
 EXCESS  CONTRIBUTIONS  SHALL  BE RESOLVED BY THE DATE OF ENTRY INTO DROP
 AND NO ADDITIONAL LOANS OR EXCESS CONTRIBUTIONS SHALL BE PERMITTED AFTER
 THE DATE OF ENTRY INTO DROP. UPON EXPIRATION OF THE TIME PERIOD SELECTED
 BY THE ELIGIBLE MEMBER, SUCH MEMBER'S PARTICIPATION IN DROP SHALL TERMI-
 NATE.
   D. BENEFITS PAYABLE UNDER DROP. (1) EFFECTIVE WITH THE DATE OF PARTIC-
 IPATION IN DROP, THE ELIGIBLE MEMBER'S NORMAL SERVICE RETIREMENT BENEFIT
 SHALL BE CALCULATED, USING CREDITABLE SERVICE AND FINAL  AVERAGE  SALARY
 AS  IF THE EFFECTIVE DATE OF RETIREMENT WAS THE DATE OF ENTRY INTO DROP.
 THE AMOUNT DEFERRED PURSUANT TO DROP SHALL BE CALCULATED BASED UPON  THE
 ELIGIBLE MEMBER'S ZERO OPTION RETIREMENT ALLOWANCE UNTIL SUCH MEMBER HAS
 OBTAINED  THE  APPLICABLE  MAXIMUM  SERVICE  RETIREMENT LIMIT BASED UPON
 YEARS OF SERVICE. ANY ADDITIONAL PARTICIPATION IN DROP  AFTER  A  MEMBER
 HAS  OBTAINED  THE  MAXIMUM SERVICE RETIREMENT LIMIT BASED UPON YEARS OF
 SERVICE SHALL BE CALCULATED BASED UPON SIXTY  PERCENT  OF  THE  MEMBER'S
 FULL  ANNUAL RETIREMENT ALLOWANCE. IN ADDITION, FOR THE PURPOSES OF THIS
 SECTION, THE ANNUAL RETIREMENT ALLOWANCE FOR ANY  MEMBER  ELECTING  DROP
 SHALL  BE  CALCULATED USING A THREE-YEAR FINAL AVERAGE SALARY AS DEFINED
 ELSEWHERE IN THIS ARTICLE. THE ELIGIBLE MEMBER SHALL, HOWEVER, ELECT HIS
 OR HER OPTIONAL RETIREMENT BENEFIT AT THE COMPLETION OF THE DROP PERIOD.
   (2) IF THE ELIGIBLE MEMBER DIES PRIOR TO COMPLETION OF THE  PERIOD  OF
 PARTICIPATION  IN  DROP, THE ELIGIBLE MEMBER SHALL BE TREATED AS IF SUCH
 DROP ELECTION DID NOT EXIST. IN LIEU OF THE DROP PAYMENT, A DEATH  BENE-
 FIT  SHALL  BE PAYABLE CONSISTENT WITH THE TERMS OF THIS CHAPTER AND ALL
 SALARY AND SERVICE REPORTED FOR SUCH ELIGIBLE  MEMBER  DURING  THE  DROP
 PERIOD  SHALL  BE  CONSIDERED IN CALCULATING THE ELIGIBLE MEMBER'S DEATH
 BENEFIT.
   (3) IF  THE  ELIGIBLE  MEMBER  IS  APPROVED  FOR  DISABILITY  BENEFITS
 PROVIDED  IN  THIS  CHAPTER  DURING THE DROP PERIOD, THE ELIGIBLE MEMBER
 SHALL BE TREATED AS IF THE DROP ELECTION DID NOT EXIST. IN LIEU  OF  THE
 DROP  PAYMENT, A DISABILITY RETIREMENT BENEFIT SHALL BE PAYABLE CONSIST-
 A. 10538                            3
 
 ENT WITH THE TERMS OF THIS CHAPTER AND ALL SALARY AND  SERVICE  REPORTED
 FOR  SUCH  ELIGIBLE MEMBER DURING THE DROP PERIOD SHALL BE CONSIDERED IN
 CALCULATING THE ELIGIBLE MEMBER'S DISABILITY RETIREMENT BENEFIT.
   (4) IF AN ELIGIBLE MEMBER OTHERWISE FAILS TO COMPLETE HIS OR HER PERI-
 OD  OF SERVICE AS ELECTED PURSUANT TO SUBDIVISION C OF THIS SECTION, THE
 ELIGIBLE MEMBER SHALL BE TREATED AS IF SUCH DROP ELECTION DID NOT EXIST.
 IN LIEU OF THE DROP PAYMENT, THE NORMAL SERVICE RETIREMENT BENEFIT SHALL
 BE PAYABLE CONSISTENT WITH THE TERMS OF THIS CHAPTER AND ALL SALARY  AND
 SERVICE  REPORTED  FOR SUCH ELIGIBLE MEMBER DURING THE DROP PERIOD SHALL
 BE CONSIDERED IN CALCULATING THE ELIGIBLE  MEMBER'S  SERVICE  RETIREMENT
 BENEFIT.
   (5)  IF  AN  ELIGIBLE MEMBER REMAINS EMPLOYED AFTER HIS OR HER PARTIC-
 IPATION IN DROP IS TERMINATED, SUCH MEMBER SHALL FORFEIT ALL DROP  BENE-
 FITS  AND  CONTINUE  EMPLOYMENT  AS IF SUCH DROP ELECTION DID NOT EXIST.
 SUCH MEMBER SHALL THEN BE ELIGIBLE TO ELECT  DROP  CONSISTENT  WITH  THE
 TERMS OF THIS SECTION.
   (6)  IF  AN  ELIGIBLE MEMBER IS APPROVED FOR DISABILITY BENEFITS AFTER
 BENEFITS PAYABLE PURSUANT TO DROP HAVE BEEN PAID,  THE  ELIGIBLE  MEMBER
 MAY  ELECT  TO RECEIVE THE DISABILITY BENEFITS IN LIEU OF DROP BENEFITS,
 BUT SUCH DISABILITY BENEFITS SHALL BE ACTUARIALLY ADJUSTED FOR ANY BENE-
 FITS PAID UNDER DROP.
   E. METHOD OF PAYMENT. AT THE CONCLUSION OF THE MEMBER'S  PARTICIPATION
 IN DROP, THE RETIREMENT SYSTEM SHALL PAY THE DEFERRED SERVICE RETIREMENT
 BENEFITS IN ONE OF THE FOLLOWING METHODS AS ELECTED BY THE MEMBER:
   (1) LUMP SUM: ALL ACCRUED DROP BENEFITS, PLUS INTEREST, LESS WITHHOLD-
 ING  AS  REQUIRED  BY THE INTERNAL REVENUE SERVICE, SHALL BE PAID TO THE
 DROP PARTICIPANT OR ELIGIBLE BENEFICIARY OR AS OTHERWISE  DETERMINED  BY
 OPERATION OF LAW;
   (2)  DIRECT  ROLLOVER: ALL ACCRUED DROP BENEFITS, PLUS INTEREST, SHALL
 BE PAID FROM THE RETIREMENT  SYSTEM  TO  A  CUSTODIAN  OF  THE  ELIGIBLE
 RETIREMENT  PLAN  OR OTHER ELIGIBLE PLAN OR ACCOUNT AS PROVIDED PURSUANT
 TO THE INTERNAL REVENUE CODE AS DIRECTED BY THE MEMBER OR ELIGIBLE BENE-
 FICIARY;
   (3) PARTIAL LUMP SUM: A PORTION OF THE DROP BENEFITS SHALL BE PAID  TO
 THE  DROP PARTICIPANT OR ELIGIBLE BENEFICIARY, LESS WITHHOLDING REQUIRED
 BY THE INTERNAL REVENUE SERVICE AND THE REMAINING DROP BENEFITS  MAY  BE
 ROLLED OVER AS OTHERWISE PERMITTED BY THE INTERNAL REVENUE CODE.
   FOR  PURPOSES  OF THIS SUBDIVISION, THE TERM "ELIGIBLE BENEFICIARY" IS
 ONE WHO QUALIFIES TO ROLLOVER BENEFITS FROM A QUALIFIED BENEFIT PLAN  OR
 ACCOUNT  AS  PROVIDED BY THE INTERNAL REVENUE CODE. THE FORMS OF PAYMENT
 PROVIDED BY THIS SUBDIVISION SHALL COMPLY WITH THE MINIMUM  DISTRIBUTION
 REQUIREMENTS OF THE INTERNAL REVENUE CODE.
   F.  REGULATIONS.  THE COMPTROLLER SHALL PRESCRIBE SUCH RULES AND REGU-
 LATIONS AS MAY BE NECESSARY FOR THE EFFECTIVE ADMINISTRATION AND  IMPLE-
 MENTATION OF THE PROVISIONS OF THIS SECTION.
   § 4. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill  would  allow  police  officers employed by the division of
 state police to elect to participate in  a  Deferred  Retirement  Option
 Plan  (DROP),  deferring receipt of retirement benefits while continuing
 their current employment. The features of this DROP are:
   1. Members may elect to participate in the DROP upon the attainment of
 retirement eligibility.
   2. The service retirement benefit shall be the option  zero  allowance
 determined  based  on  the  service  and  final  average  salary  at the
 commencement of DROP  participation.  However,  once  a  member's  total
 A. 10538                            4
 
 service  credit  (including  service  during the DROP period) exceeds 32
 years, the monthly payment into the DROP account will be limited to  60%
 of the option zero allowance.
   3.  The  Police  and Fire Retirement System (PFRS) shall consider DROP
 participants active members, and  annual  employer  contributions  shall
 continue  to  be  made by the State of New York to the PFRS on behalf of
 such members.
   4. The length of participation in the DROP must be  specified  at  the
 time  of  election, and may not be less than 1 year, nor exceed 5 years.
 However, if the affected member should leave employment before or  after
 the  scheduled DROP termination date, such member shall forfeit all DROP
 benefits, and shall be treated as though there were no DROP election.
   5. During the DROP period, the monthly pensions of  such  participants
 will  be  deferred and held by the PFRS on their behalf and shall accrue
 interest at 1.5%. Such account,  with  interest  accumulation,  must  be
 distributed in full at the end of the specified DROP period.
   6. If an affected member should die or become disabled during the DROP
 period,  such  member  would  be  treated  as  though there were no DROP
 election.
   7. Upon termination from DROP, such participants shall  receive  their
 deferred  payments,  and  shall  also  begin to receive their previously
 determined pensions.
   Section 212 of  the  Retirement  and  Social  Security  Law  generally
 requires  the  immediate suspension of the service retirement benefit in
 the event a retiree under age 65 returns to public employment and  earns
 in  any  calendar  year  an amount greater than $35,000.   This proposal
 would allow members to receive both their  full  salary  and  retirement
 benefits for up to a 5-year period.
   The  Partial  Lump  Sum (PLS) program currently allows PFRS members to
 receive lump sums equal to 25% of the present value of  their  pensions.
 Under this proposal, certain members could receive lump sums which would
 exceed  40%  of  the present value of their pensions, in addition to the
 PLS lump sums.
   If this bill is enacted, there would be past service costs which would
 depend on the current salary, age and length of service of the  affected
 members.  It  is  estimated  that the past service cost per member would
 average approximately 100% of salary. This cost would be billed  to  the
 State  of  New  York  when  a  state  police officer receives their DROP
 payout.
   If the anticipated retirement experience of members who  are  eligible
 for  this  benefit  changes  significantly in the future, there would be
 additional increases in employer costs.
   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.
 A. 10538                            5
 
   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  May 12, 2022, and intended for use only during
 the 2022 Legislative Session, is Fiscal Note No. 2022-132,  prepared  by
 the Actuary for the New York State and Local Retirement System.