S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6152
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              March 31, 2023
                                ___________
 
 Introduced  by  Sen. JACKSON -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 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-FOUR.  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,
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD03457-03-3
              

 S. 6152                             2
 
 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-FOUR.  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-FOUR. 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-FOUR.  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 2024, the base benefit for computation
 S. 6152                             3
 
 of the annual COLA will be increased  annually  by  50%  of  the  annual
 inflation rate not to exceed 3% or be less than 1%.
   Insofar  as  this bill affects the New York State and Local Employees'
 Retirement System (NYSLERS), increased costs  would  be  shared  by  the
 State  of  New  York  and all participating employers in the NYSLERS. If
 this bill is enacted during the 2023 legislative session, there will  be
 an  increase in the present value of future costs of approximately $1.19
 billion.
 
                         Increase in present   Increase in future
           NYSLERS          value benefits        contributions
 
           Tiers 1 - 5       $976 million          $643 million
                Tier 6       $215 million          $549 million
                 Total       $1.19 billion         $1.19 billion
 
   In the NYSLERS, this benefit improvement will be funded by  increasing
 the  billing rates charged annually. The annual contribution required of
 all participating employers in the  NYSLERS  is  approximately  0.4%  of
 billable  salary,  or approximately $49 million to the State of New York
 and $71 million to the local participating employers in the fiscal  year
 ending  March  31,  2025. This PERMANENT ANNUAL COST will vary in subse-
 quent billing cycles with changes in the billing rate and salary of  the
 affected members.
   Insofar  as  this bill affects the New York State and Local Police and
 Fire Retirement System (NYSLPFRS), increased costs would  be  shared  by
 the  State  of New York and all participating employers in the NYSLPFRS.
 If this bill is enacted during the 2023 legislative session, there  will
 be  an  increase  in  the present value of future costs of approximately
 $173 million.
 
                         Increase in present   Increase in future
           NYSLPFRS         value benefits        contributions
 
           Tiers 1 - 5       $141 million          $83 million
                Tier 6       $32 million           $90 million
                 Total       $173 million          $173 million

   In the NYSLPFRS, this benefit improvement will be funded by increasing
 the billing rates charged annually. The annual contribution required  of
 all  participating  employers  in  the NYSLPFRS is approximately 0.4% of
 billable salary, or approximately $3.4 million to the State of New  York
 and  $14 million to the local participating employers in the fiscal year
 ending March 31, 2025. This PERMANENT ANNUAL COST will  vary  in  subse-
 quent  billing cycles with changes in the billing rate and salary of the
 affected members.
   Summary of relevant resources:
   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.
 S. 6152                             4
 
   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.
   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 March 30, 2023, and intended for use only during
 the 2023 Legislative Session, is Fiscal Note No.  2023-28,  prepared  by
 the Actuary for the New York State and Local Retirement System.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill 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 by fifty percent of annual inflation. Currently the
 base benefit amount to which the COLA percentage is applied is fixed  at
 $18,000  annually. The annual percentage increase shall be determined as
 fifty percent of 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 annual COLA base bene-
 fit adjustment would be effective beginning in September 2024.
   The annual cost to the employers of members  of  the  New  York  State
 Teachers'  Retirement  System  for this benefit is estimated to be $88.8
 million or 0.48% 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
 statements and can also be found in the System's Annual Report. Actuari-
 al assumptions and methods are provided in the System's Actuarial  Valu-
 ation Report.
   The  source  of this estimate is Fiscal Note 2023-11 dated February 7,
 2023 prepared by the Office  of  the  Actuary  of  the  New  York  State
 TeachersÆ Retirement System and is intended for use only during the 2023
 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 (limited to between 1% and 3%), starting
 on September 1, 2024, for the New York City Employees' Retirement System
 (NYCERS),  the  New  York City Teachers' Retirement System (NYCTRS), the
 New York City Board of Education 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 80% higher than the costs
 disclosed in the table below.
 S. 6152                             5
 
   Effective Date: Upon enactment.
   IMPACT  ON  BENEFITS:  Currently  the COLA provides an annual increase
 equal to a percentage of the maximum annual  retirement  allowance,  but
 limited to the first $18,000 of retirement allowance.
   The costs in the table below are based on providing for an increase in
 the  $18,000 limit starting on September 1, 2024 and each year thereaft-
 er.  This increase would be equal to the increase in the consumer  price
 index (CPI) in the one-year period ending on the prior March 31, rounded
 to  the  next  higher one-tenth of one percent, but not more than 3% nor
 less than 1%.
   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: The  estimated  financial  impact  to  NYCRS  is  an
 increase  in  Present  Value  of  Future  Benefits of approximately $1.4
 billion and an increase in Fiscal Year  2024  annual  employer  contrib-
 utions of approximately $734.1 million. The increase in Fiscal Year 2024
 annual  employer  contributions  of  $734.1  million  is estimated to be
 $605.7 million for New York City and $128.4 million for the other  obli-
 gors of NYCRS. A breakdown of the financial impact by System is shown in
 the table below.
                       Additional                  Estimated First Year
     NYCRS     Present Value of Future Benefits      Annual Employer
                      ($ Millions)                    Contributions*
                                                       ($ Millions)
 
     NYCERS              $ 576.2                         $ 298.5
     NYCTRS                446.0                           187.6
     BERS                   40.9                            14.9
     POLICE                251.8                           184.2
     FIRE                   79.2                            48.9
        Total          $ 1,394.1                         $ 734.1
     * Total employer contributions after the first year are estimated
       to be approximately $90 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.
   New  Unfunded  Accrued Liability (UAL) attributable to benefit changes
 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 amortized over periods ranging from 12 to  15
 years  depending  on  the  System  (11 to 14 payments under One-Year Lag
 Methodology) using level dollar payments.
   CENSUS DATA: The estimates presented herein are based  on  the  census
 data used in the June 30, 2022 actuarial valuation of NYCRS to determine
 the Preliminary Fiscal Year 2024 employer contributions.
   ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have
 been  calculated based on the actuarial assumptions and methods used for
 the Preliminary Fiscal Year 2024 employer contributions of NYCRS.
   For the purposes of this Fiscal Note, it is assumed that  the  changes
 would  be  reflected  for  the first time in the June 30, 2022 actuarial
 S. 6152                             6
 
 valuations of NYCRS used to determine employer contributions for  Fiscal
 Year 2024.
   RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
 highly on the realization of the actuarial assumptions used,  demograph-
 ics  of  the  impacted  population and other factors such as investment,
 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.
   Not measured in this Fiscal Note are the following:
   *  The  initial,  additional  administrative  costs  to  implement the
 proposed legislation.
   STATEMENT OF ACTUARIAL OPINION: I, Marek  Tyszkiewicz,  am  the  Chief
 Actuary  for,  and  independent of, the New York City Retirement Systems
 and Pension Funds. I am an Associate of the Society of Actuaries  and  a
 Member of the American Academy of Actuaries. I am a member of NYCERS but
 do  not  believe  it impairs my objectivity and 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 2023-12 dated  March  22,
 2023  was prepared by the Chief Actuary for the New York City Retirement
 Systems and Pension Funds. This estimate is intended for use only during
 the 2023 Legislative Session.