S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8855
 
                             I N  S E N A T E
 
                              March 21, 2024
                                ___________
 
 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 administrative code of the city of New York and  the
   education  law,  in  relation  to  the  transfer of board of education
   employees to the teachers' retirement system of the city of New York

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. Subdivision 7 of section 13-501 of the administrative code
 of the city of New York is amended by adding a new paragraph (c) to read
 as follows:
   (C) "TEACHER" SHALL ALSO MEAN ALL THOSE SERVING AS BOARD OF  EDUCATION
 EMPLOYEES  IN  A  TITLE REPRESENTED BY THE UNITED FEDERATION OF TEACHERS
 WHO FILE AN APPLICATION FOR MEMBERSHIP IN THE RETIREMENT ASSOCIATION  ON
 A FORM SUPPLIED BY THE RETIREMENT BOARD.
   §  2.  The  education law is amended by adding a new section 2575-f to
 read as follows:
   § 2575-F. TRANSFER OF EMPLOYEES REPRESENTED BY THE  UNITED  FEDERATION
 OF  TEACHERS  TO  THE  NEW  YORK  CITY  TEACHERS' RETIREMENT SYSTEM. ANY
 EMPLOYEE REPRESENTED BY THE UNITED  FEDERATION  OF  TEACHERS  WHO  IS  A
 MEMBER  OF  THE NEW YORK CITY BOARD OF EDUCATION RETIREMENT SYSTEM SHALL
 HAVE THE RIGHT TO TRANSFER THEIR MEMBERSHIP TO THE TEACHERS'  RETIREMENT
 SYSTEM OF THE CITY OF NEW YORK. TO AFFECT SUCH A TRANSFER, A MEMBER MUST
 GIVE  NOTICE  TO THE NEW YORK CITY BOARD OF EDUCATION RETIREMENT SYSTEM,
 WITHIN ONE YEAR OF SUCH MEMBER BECOMING ELIGIBLE FOR MEMBERSHIP  IN  THE
 SAID TEACHERS' RETIREMENT SYSTEM, OF SUCH MEMBER'S INTENTION TO TRANSFER
 TO THE SAID TEACHERS' RETIREMENT SYSTEM. MEMBERSHIP IN THE UNITED FEDER-
 ATION OF TEACHERS IS NOT REQUIRED TO BE COVERED UNDER THIS SECTION. UPON
 RECEIPT  OF  SUCH  NOTICE,  THE  NEW YORK CITY BOARD OF EDUCATION SYSTEM
 SHALL TRANSFER TO SUCH TEACHERS' RETIREMENT SYSTEM THE RESERVE  ON  SUCH
 MEMBERS'  BENEFITS  IN  THE  MANNER  PROVIDED BY SUBDIVISIONS C AND D OF
 SECTION FORTY-THREE OF  THE  RETIREMENT  AND  SOCIAL  SECURITY  LAW  AND
 NOTWITHSTANDING  SUBDIVISION  L OF SUCH SECTION. THE FORMER SYSTEM SHALL
 ALSO TRANSFER TO THE LATTER SYSTEM  THE  MEMBER'S  CONTRIBUTIONS,  WHICH
 SHALL  BECOME SUCH MEMBER'S CONTRIBUTIONS IN THE LATTER SYSTEM. A PERSON
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD14964-02-4
 S. 8855                             2

 SO TRANSFERRING SHALL BE DEEMED TO HAVE BEEN A MEMBER OF THE  SYSTEM  TO
 WHICH SUCH MEMBER HAS TRANSFERRED DURING THE ENTIRE PERIOD OF MEMBERSHIP
 SERVICE CREDITED TO SUCH MEMBER IN THE SYSTEM FROM WHICH SUCH MEMBER HAS
 TRANSFERRED.  SUCH TRANSFEREE SHALL BE ENTITLED TO ALL THE RIGHTS, PRIV-
 ILEGES AND BENEFITS OF THE SYSTEM TO WHICH THEY HAVE TRANSFERRED.
   § 3. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY: This proposed legislation would allow current and future full
 time  or part time New York City Department of Education employees serv-
 ing in New York City Board of Education Retirement System (BERS)  eligi-
 ble  titles  represented  by  the United Federation of Teachers (UFT) to
 join or transfer into the New  York  City  Teachers'  Retirement  System
 (TRS)  by filing a notice with BERS within one year of becoming eligible
 for such TRS membership.
 
           EXPECTED INCREASE (DECREASE) IN EMPLOYER CONTRIBUTIONS
           by Fiscal Year for the first 25 years ($ in Millions)
 
                               Year      NYC
 
                               2025      2.3
                               2026      2.3
                               2027      2.3
                               2028      2.4
                               2029      2.4
                               2030      2.4
                               2031      2.4
                               2032      2.4
                               2033      2.4
                               2034      2.4
                               2035      2.3
                               2036      2.3
                               2037      2.3
                               2038      1.1
                               2039      1.1
                               2040      1.0
                               2041      1.0
                               2042      1.0
                               2043      0.9
                               2044      0.9
                               2045      0.9
                               2046      0.8
                               2047      0.8
                               2048      0.8
                               2049      0.8
 
   The Employer Contribution impact shown  above  reflects  the  cost  of
 expected  benefit increases using TRS assumptions only. Not shown is any
 impact due to valuing impacted BERS members using TRS  assumptions.  The
 potential  impact  of assumption changes is discussed further below. The
 Employer Contribution impact beyond  Fiscal  Year  2049  is  not  shown.
 Projected contributions include future new hires that may be impacted.
 
            INITIAL INCREASE (DECREASE) IN ACTUARIAL LIABILITIES
                    as of June 30, 2023 ($ in Millions)
 S. 8855                             3
 
             Present Value (PV)                  Impacted
                                                 Group
 
             PV of Benefits:                     18.3
             PV of Employee Contributions:       (2.4)
             PV of Employer Contributions:       20.8
             Unfunded Accrued Liabilities:       9.0
 
                 AMORTIZATION OF UNFUNDED ACCRUED LIABILITY
 
                                                 Impacted
                                                 Group

             Number of Payments:                 13
             Fiscal Year of Last Payment:        2037
             Amortization Payment:               1.1 M
 
   Unfunded  Accrued Liability increases were amortized over the expected
 remaining working lifetime of those  impacted  by  the  benefit  changes
 using level dollar payments.
   IMPACT  ON CONTRIBUTIONS AND FUNDING: Employer contributions are actu-
 arially determined to fund expected benefit  payments  over  the  future
 working  lifetime  of  the members, with any gain or loss resulting from
 actual experience differing from expectations recognized separately.
   Applying TRS assumptions to members currently in BERS would change the
 funding pattern for these members, immediately increasing  the  employer
 contributions,  and  over time, gains and losses would ultimately offset
 any  changes  in  the  required  contributions.  Reevaluating  actuarial
 assumptions  (e.g.,  salary  scale, mortality, etc.) may be warranted if
 there is a significant change in  the  demographics  of  the  underlying
 population.  The  first-year  impact of valuing these BERS members using
 current TRS assumptions, assuming no change in  benefits,  is  an  addi-
 tional net increase in the employer contributions of $19.6 million.
   In  addition,  the transfer of reserves based on the accrued liability
 for members who switch between systems is  dependent  on  the  actuarial
 assumptions  utilized. The calculation of reserves based on BERS assump-
 tions would be less than the reserves calculated based  on  TRS  assump-
 tions.  The  net  impact will ultimately be reconciled through actuarial
 gains and losses but may vary  by  system.  The  accrued  liability  and
 expected  reserve  transfer  from BERS to TRS due to the proposed legis-
 lation is approximately $730 million.
   CENSUS DATA: The estimates presented herein are based  on  preliminary
 census  data  collected  as  of  June  30, 2023. The census data for the
 impacted population is summarized below.
 
                                                 BERS
             Active Members
             - Number Count:                     5,533
             - Average Age:                      47
             - Average Service:                  8.6
             - Average Salary:                   80,300
 
   IMPACT ON MEMBER BENEFITS: Employees  in  the  impacted  titles  would
 generally, except as provided below, be eligible for the same respective
 plans in TRS in which they are eligible to participate in BERS.
 S. 8855                             4
 
   Under the proposed legislation, if a member elects to join or transfer
 to TRS, members may be entitled to additional benefits. Among those, the
 following differences were valued for purposes of this Fiscal Note:
   * Unreduced Retirement with 30 years of service for Tier 4 members
   * Provisions for additional member contributions
   * Greater Accidental Disability Retirement benefits
   * Loans Factors applied to outstanding balances at retirement
   * Early Deferred Vested Retirement commencement
   Additional  differences may apply but were not valued for the purposes
 of this Fiscal Note.
   ASSUMPTIONS AND METHODS: The  estimates  presented  herein  have  been
 calculated  based  on the Revised 2021 Actuarial Assumptions and Methods
 of TRS. In addition:
   * New entrants were assumed to replace exiting members so  that  total
 payroll increases by 3% each year for impacted groups. New entrant demo-
 graphics were developed based on data for recent new hires and actuarial
 judgement.
   To  determine the impact of the elective nature of the proposed legis-
 lation, a subgroup of members in UFT represented  titles  was  developed
 based  on  who  is  assumed  to benefit actuarially by comparing the net
 present value of future employer costs of each  member's  benefit  under
 their current plan and under the comparable TRS plan.
   RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
 highly on the actuarial assumptions, methods,  and  models  used,  demo-
 graphics  of  the impacted population, and other factors such as invest-
 ment, contribution, and other risks. If actual experience deviates  from
 actuarial   assumptions,  the  actual  costs  could  differ  from  those
 presented herein. Quantifying these risks is beyond the  scope  of  this
 Fiscal Note.
   This  Fiscal  Note  is intended to measure pension-related impacts and
 does not include other potential costs (e.g., administrative  and  Other
 Postemployment Benefits).
   In  addition,  this  Fiscal  Note  does  not measure the impact of the
 significant transfer of member contributions and reserves from  BERS  to
 TRS.
   STATEMENT OF ACTUARIAL OPINION: Marek Tyszkiewicz and Gregory Zelikov-
 sky  are members of the Society of Actuaries and the American Academy of
 Actuaries. We are members of NYCERS but do not believe  it  impairs  our
 objectivity  and  we  meet  the  Qualification Standards of the American
 Academy of Actuaries to render the actuarial opinion  contained  herein.
 To  the  best  of  our 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 2024-32 dated  March  20,
 2024  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 2024 Legislative Session.