S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5737
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              March 23, 2023
                                ___________
 
 Introduced by M. of A. WALLACE, BUTTENSCHON -- read once and referred to
   the Committee on Governmental 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:

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD01299-02-3
 A. 5737                             2
              

 
   §  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
 "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.
 A. 5737                             3
 
   (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-
 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 New York State
 Division of State Police to elect to participate in a  Deferred  Retire-
 ment  Option Plan (DROP), deferring receipt of retirement benefits while
 continuing their current employment. The features of this DROP are:
 A. 5737                             4
 
   1. Members may elect to participate in the DROP upon the attainment of
 retirement eligibility.
   2.  The  service retirement benefit shall be the single life allowance
 determined based  on  the  service  and  final  average  salary  at  the
 commencement  of  DROP  participation.  However,  once  a member's total
 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 single life allowance.
   3. The New York State Police and Fire Retirement System  (PFRS)  shall
 consider  DROP participants active members, and annual employer contrib-
 utions 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  affected
 members  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  affected  members  shall  receive
 their deferred payments, and shall also begin to receive their previous-
 ly determined pensions.
   Section  212  of  the  Retirement  and  Social  Security Law generally
 prevents service retirees from receiving salaries of more  than  $35,000
 for public employment before attaining age 65. This proposal would allow
 members  to receive a full salary and retirement benefits simultaneously
 for up to 5 years.
   The Partial Lump Sum program currently allows PFRS members to  receive
 lump  sums up to 25% of the present value of their pensions. In combina-
 tion with this proposal, an affected member could potentially receive  a
 lump  sum  exceeding  65%  of  the present value of their pension.  This
 significantly reduces the value of ongoing  pension  payments  over  the
 member's remaining lifetime.
   If  this  bill  is  enacted during the 2023 legislative session, it is
 estimated there would be an increase in the annual contributions for the
 State of New York of approximately 1.4% of salary for the  police  offi-
 cers employed by the New York State Division of State Police.
   In  addition  to the annual contributions discussed above, 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 75%  of  salary  for
 the  affected  members.  This  past  service  cost of approximately $510
 million will be borne by the State of New York as  a  one-time  payment.
 This estimate assumes that payment will be made on March 1, 2024.
   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.
   This  cost  is based on 4,671 police officers employed by the New York
 State Division of State Police with an estimated total active salary for
 fiscal year ending 2023 of $680 million.
   Summary of relevant resources:
 A. 5737                             5
 
   Membership data as of March 31, 2022 was used in measuring the  impact
 of the proposed change, the same data used in the April 1, 2022 actuari-
 al  valuation.  Distributions  and  other statistics can be found in the
 2022 Report of the Actuary and the 2022 Annual  Comprehensive  Financial
 Report.
   The  actuarial assumptions and methods used are described in the 2020,
 2021, and 2022 Annual Report to the  Comptroller  on  Actuarial  Assump-
 tions,  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, 2022
 New York State and Local  Retirement  System  Financial  Statements  and
 Supplementary Information.
   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 March 1, 2023, and intended for use only during
 the 2023 Legislative Session, is Fiscal Note No.  2023-34,  prepared  by
 the Actuary for the New York State and Local Retirement System.