Senate Bill S7004

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7004
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                              March 28, 2025
                                ___________
 
 Introduced  by  Sens.  HELMING, ASHBY, GALLIVAN, MURRAY, WALCZYK -- 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, in relation to
   providing state correction officers with  a  special  optional  twenty
   year retirement plan

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. The retirement and social security law is amended by adding
 a new article 14-C to read as follows:
                               ARTICLE 14-C
          OPTIONAL RETIREMENT PLAN FOR STATE CORRECTION OFFICERS
 SECTION 561. DEFINITIONS.
         562. OPTIONAL TWENTY YEAR  RETIREMENT  PLAN  FOR  CERTAIN  STATE
                CORRECTION OFFICERS.
         563. ADDITIONAL  PENSION  BENEFIT FOR MEMBERS OF OPTIONAL TWENTY
                YEAR RETIREMENT PLAN.
         564. CONSISTENT PROVISIONS.
   § 561. DEFINITIONS. FOR PURPOSES OF THIS ARTICLE:
   (A) "MEMBER" SHALL MEAN A PERSON WHO IS EMPLOYED AS A STATE CORRECTION
 OFFICER OR OTHER STATE EMPLOYEE WHO IS ENGAGED  DIRECTLY  IN  CORRECTION
 OFFICER DUTIES.
   (B)  "RETIREMENT  SYSTEM"  SHALL  MEAN  THE  NEW  YORK STATE AND LOCAL
 EMPLOYEES' RETIREMENT SYSTEM.
   (C) "CREDITABLE SERVICE" SHALL INCLUDE ANY AND ALL SERVICES  PERFORMED
 AS A STATE CORRECTION OFFICER. CREDIT FOR SERVICE AS A MEMBER OR OFFICER
 OF  THE STATE POLICE OR AS A PAID FIREFIGHTER, POLICE OFFICER OR OFFICER
 OF ANY ORGANIZED FIRE DEPARTMENT OR POLICE FORCE OR  DEPARTMENT  OF  ANY
 COUNTY,  CITY,  VILLAGE,  TOWN,  FIRE DISTRICT OR POLICE DISTRICT, SHALL
 ALSO BE DEEMED TO BE CREDITABLE SERVICE AND SHALL BE INCLUDED IN COMPUT-
 ING YEARS OF TOTAL SERVICE FOR  RETIREMENT  PURSUANT  TO  THIS  SECTION,
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD01334-03-5
              

 S. 7004                             2
 
 PROVIDED  SUCH SERVICE WAS PERFORMED BY THE MEMBER WHILE CONTRIBUTING TO
 THE RETIREMENT SYSTEM PURSUANT TO THE  PROVISIONS  OF  THIS  ARTICLE  OR
 ARTICLE EIGHT OF THIS CHAPTER.
   §  562.  OPTIONAL  TWENTY  YEAR  RETIREMENT  PLAN  FOR  CERTAIN  STATE
 CORRECTION OFFICERS. (A) ANY MEMBER OF THE RETIREMENT SYSTEM  MAY  ELECT
 TO BECOME A MEMBER PURSUANT TO THE PROVISIONS OF THIS SECTION WITHIN ONE
 YEAR  AFTER  THE EFFECTIVE DATE OF THIS ARTICLE OR WITHIN ONE YEAR AFTER
 SUCH PERSON BECOMES A MEMBER.
   (B) ELECTIONS MADE PURSUANT TO THIS SECTION SHALL BE  IN  WRITING  AND
 SHALL  BE  DULY  ACKNOWLEDGED AND FILED WITH THE COMPTROLLER. ANY MEMBER
 WHO FILES SUCH AN ELECTION PURSUANT TO  THIS  SECTION  MAY  WITHDRAW  IT
 AFTER IT HAS BEEN FILED FOR AT LEAST A YEAR. SUCH WITHDRAWAL SHALL BE BY
 WRITTEN NOTICE DULY ACKNOWLEDGED AND FILED WITH THE COMPTROLLER.
   (C) A MEMBER PARTICIPATING ON THE BASIS OF THIS SECTION AT THE TIME OF
 RETIREMENT  SHALL  BE  ENTITLED TO RETIRE AFTER THE COMPLETION OF TWENTY
 YEARS OF TOTAL CREDITABLE SERVICE OR UPON THE ATTAINMENT OF  AGE  SIXTY-
 TWO,  BY  FILING  AN  APPLICATION  THEREFOR  IN A MANNER SIMILAR TO THAT
 PROVIDED IN THIS CHAPTER.
   (I) UPON COMPLETION OF TWENTY YEARS OF SUCH SERVICE AND  UPON  RETIRE-
 MENT,  EACH  SUCH MEMBER SHALL RECEIVE A PENSION SUFFICIENT TO PROVIDE A
 RETIREMENT ALLOWANCE EQUAL TO ONE-FORTIETH OF THE FINAL  AVERAGE  SALARY
 FOR  EACH  YEAR  OF  TOTAL  CREDITABLE  SERVICE FOR WHICH SUCH MEMBER IS
 OTHERWISE ENTITLED BUT NOT EXCEEDING IN THE AGGREGATE ONE-HALF OF  THEIR
 FINAL AVERAGE SALARY.
   (II)  UPON  ATTAINMENT  OF  AGE  SIXTY-TWO AND UPON RETIREMENT WITHOUT
 COMPLETION OF TWENTY YEARS OF  SUCH  SERVICE,  EACH  SUCH  MEMBER  SHALL
 RECEIVE  A PENSION SUFFICIENT TO PROVIDE A RETIREMENT ALLOWANCE EQUAL TO
 ONE-FORTIETH OF THE FINAL AVERAGE SALARY FOR  EACH  YEAR  OF  CREDITABLE
 SERVICE.  EVERY  SUCH  MEMBER  SHALL  ALSO  BE ENTITLED TO AN ADDITIONAL
 PENSION EQUAL TO THE PENSION FOR ANY OTHER CREDITABLE  SERVICE  RENDERED
 AS  OTHERWISE  PROVIDED  FOR IN THIS CHAPTER.  THIS LATTER PENSION SHALL
 NOT INCREASE THE TOTAL ALLOWANCE TO MORE THAN ONE-HALF  OF  THEIR  FINAL
 AVERAGE SALARY.
   (D)  THE  INCREASED  PENSIONS  TO  SUCH  MEMBERS,  AS PROVIDED BY THIS
 SECTION, SHALL BE PAID FROM ADDITIONAL CONTRIBUTIONS MADE BY  THE  STATE
 ON  ACCOUNT  OF SUCH MEMBERS. THE ACTUARY OF THE RETIREMENT SYSTEM SHALL
 COMPUTE THE ADDITIONAL CONTRIBUTION REQUIRED FOR EACH MEMBER WHO  ELECTS
 TO  RECEIVE THE SPECIAL BENEFITS PROVIDED UNDER THIS SECTION. SUCH ADDI-
 TIONAL CONTRIBUTIONS SHALL BE COMPUTED ON  THE  BASIS  OF  CONTRIBUTIONS
 DURING  THE  PROSPECTIVE  SERVICE  OF  SUCH  MEMBER WHICH WILL COVER THE
 LIABILITY OF  THE  RETIREMENT  SYSTEM  FOR  SUCH  EXTRA  PENSIONS.  UPON
 APPROVAL  OF  THE  COMPTROLLER,  SUCH  ADDITIONAL CONTRIBUTIONS SHALL BE
 CERTIFIED BY THEM.  THE AMOUNT THEREOF SHALL BE INCLUDED IN  THE  ANNUAL
 APPROPRIATION  OF THE STATE. SUCH AMOUNT SHALL BE PAID ON THE WARRANT OF
 THE COMPTROLLER TO THE  PENSION  ACCUMULATION  FUND  OF  THE  RETIREMENT
 SYSTEM.
   (E)  IN  COMPUTING  THE TWENTY YEARS OF COMPLETED SERVICE OF A MEMBER,
 FULL CREDIT SHALL BE GIVEN FOR MILITARY SERVICE AS DEFINED  IN  SUBDIVI-
 SIONS  TWENTY-NINE-A  AND  THIRTY  OF  SECTION THREE HUNDRED TWO OF THIS
 CHAPTER.
   (F) EVERY MEMBER PARTICIPATING ON THE BASIS OF THIS SECTION  SHALL  BE
 SEPARATED  FROM  THE  SERVICE ON THE LAST DAY OF THE CALENDAR MONTH NEXT
 SUCCEEDING THE CALENDAR MONTH IN WHICH SUCH MEMBER  ATTAINS  AGE  SIXTY-
 TWO,  PROVIDED,  HOWEVER,  THAT  SUCH  A  MEMBER WHO ATTAINED THE AGE OF
 SIXTY-TWO BEFORE THE EFFECTIVE DATE OF THIS ARTICLE, TO BE ELIGIBLE  FOR
 A  PENSION  COMPUTED  IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION,
 S. 7004                             3
 
 SHALL BE SEPARATED FROM THE SERVICE WITHIN THREE MONTHS OF  SUCH  EFFEC-
 TIVE DATE.
   (G)  THE PROVISIONS OF THIS SECTION SHALL BE CONTROLLING NOTWITHSTAND-
 ING ANY OTHER PROVISION OF THIS ARTICLE TO THE CONTRARY.
   (H) THE BENEFITS PROVIDED BY  THIS  SECTION  SHALL  BE  PAYABLE  TO  A
 MEMBER,  UNLESS AT THE DATE OF RETIREMENT SUCH MEMBER WOULD OTHERWISE BE
 ENTITLED TO A GREATER BENEFIT UNDER OTHER PROVISIONS OF THIS CHAPTER HAD
 SUCH MEMBER WITHDRAWN FROM THIS SECTION, IN  WHICH  EVENT  SUCH  GREATER
 BENEFITS SHALL BE PAYABLE.
   §  563. ADDITIONAL PENSION BENEFIT FOR MEMBERS OF OPTIONAL TWENTY YEAR
 RETIREMENT PLAN. (A) A PARTICIPATING EMPLOYER MAY ELECT TO MAKE CONTRIB-
 UTIONS FOR THE PURPOSE OF PROVIDING AN ADDITIONAL  PENSION  PURSUANT  TO
 THIS  SECTION  FOR  MEMBERS  WHO  ARE  ENTITLED TO A PENSION PURSUANT TO
 SECTION FIVE HUNDRED SIXTY-TWO OF THIS ARTICLE.   EVERY MEMBER  EMPLOYED
 BY  THE  STATE MAY ELECT TO BE COVERED BY THE PROVISIONS OF THIS SECTION
 BY FILING WITH THE COMPTROLLER, A DULY EXECUTED  AND  ACKNOWLEDGED  FORM
 PREPARED BY THE COMPTROLLER FOR THAT PURPOSE.
   (B)  UPON RETIREMENT, EACH SUCH MEMBER SHALL RECEIVE, FOR EACH YEAR OF
 SERVICE IN EXCESS OF TWENTY, AN ADDITIONAL PENSION WHICH SHALL BE  EQUAL
 TO ONE-SIXTIETH OF THE FINAL AVERAGE SALARY; PROVIDED, HOWEVER, THAT THE
 TOTAL ALLOWANCE PAYABLE PURSUANT TO THIS SECTION SHALL NOT EXCEED THREE-
 QUARTERS OF SUCH MEMBER'S FINAL AVERAGE SALARY.
   §  564. CONSISTENT PROVISIONS. NOTHING CONTAINED IN THIS ARTICLE SHALL
 BE CONSTRUED TO OTHERWISE AFFECT THE APPLICABILITY  OF  ARTICLE  ELEVEN,
 FOURTEEN  OR FIFTEEN OF THIS CHAPTER. ANY OTHER PROVISIONS OF THIS CHAP-
 TER RELATING TO MANDATORY CONTRIBUTION TO THE  RETIREMENT  SYSTEM  BASED
 UPON A MEMBER'S DATE OF MEMBERSHIP IN SUCH SYSTEM SHALL NOT BE DEEMED TO
 BE AFFECTED BY THE PROVISIONS OF THIS ARTICLE, AND ANY MEMBER WHO ON THE
 EFFECTIVE  DATE  OF THIS ARTICLE IS NOT REQUIRED TO CONTRIBUTE SHALL NOT
 BE REQUIRED TO MAKE ANY CONTRIBUTIONS AS A RESULT OF THIS  SECTION.  FOR
 THOSE  MEMBERS  REQUIRED  TO  CONTRIBUTE  TO THE RETIREMENT SYSTEM, SUCH
 CONTRIBUTION SHALL BE TREATED IN THE SAME MANNER AS SPECIFIED  FOR  SUCH
 MEMBERS IN ARTICLE FOURTEEN OR FIFTEEN OF THIS CHAPTER.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This bill would add Article 14-C to the Retirement and Social Security
 Law,  creating optional twenty-year plans covering, upon their election,
 any New York State correction officers or other State employees  engaged
 directly  in  correction  officer duties. The retirement benefit will be
 equal to fifty percent of final average salary (FAS) after twenty  years
 of service. The State may further elect to provide for additional sixti-
 eths  for  service  in  excess of twenty years. Any member who elects to
 become covered under this new Article 14-C is  expected  to  lose  their
 Section 507-b performance of duty (POD) disability benefit.
   All  service rendered as a State correction officer, a member or offi-
 cer of the State Police, a paid firefighter, a  police  officer,  or  an
 officer of any organized fire department or police force will be credit-
 able.  The  retirement  benefit is not to exceed seventy-five percent of
 FAS.
   If this bill is enacted during the 2025 Legislative Session, we antic-
 ipate that there will be an increase in the annual contributions of  the
 State  of New York of approximately $61 million for the twenty-year plan
 and an additional $18 million (for $79 million total) to  provide  addi-
 tional  60ths for the fiscal year ending March 31, 2026. In future years
 these costs will vary but are expected to average 3.2% and 4.1% of sala-
 ry annually, respectively.
 S. 7004                             4
 
   In addition to the annual contributions discussed above, there will be
 an immediate past service cost of approximately  $756  million  for  the
 twenty-year  plan  and  an  additional  $534  million (for $1.29 billion
 total) to provide additional sixtieths. The cost 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, 2026.
   These estimated costs are based on 15,926 affected members employed by
 the State of New York, with annual salary of approximately $1.5  billion
 as of March 31, 2024.
   Internal  Revenue  Service  (IRS)  plan qualification issues: granting
 State employees engaged directly in  correction  officer  duties,  other
 than  State  correction officers, service credit towards retirement in a
 twenty-year plan could jeopardize the governmental plan  status  of  the
 Retirement  System  (the  System)  and  its exemption from the Employees
 Retirement Income Security Act (ERISA). This development could result in
 the loss of qualified status, which would mean the loss of tax benefits.
 This result would substantially impair the System's value  to  our  more
 than one million participants.
   Prior to the enactment of this legislation, we recommend that a favor-
 able ruling be obtained from the IRS stating that these provisions would
 not  harm  the  qualification status of the System. It is estimated that
 the costs to obtain such a ruling would be $50,000 for the  services  of
 the IRS, and $1,000 per hour for legal consultants.
   Summary of relevant resources:
   Membership  data as of March 31, 2024 was used in measuring the impact
 of the proposed change, the same data used in the April 1, 2024 actuari-
 al valuation. Distributions and other statistics can  be  found  in  the
 2024  Report  of the Actuary and the 2024 Annual Comprehensive Financial
 Report.  The actuarial assumptions and methods used are described in the
 2024 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, 2024 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 26, 2025, and intended for use only during
 the 2025 Legislative Session, is Fiscal Note No. 2025-21. As Chief Actu-
 ary of the New York State and Local Retirement System, I, Aaron Schottin
 Young, hereby certify that this analysis complies with applicable  Actu-
 arial  Standards of Practice as well as the Code of Professional Conduct
 and Qualification Standards for Actuaries Issuing Statements of Actuari-
 al Opinion of the American Academy of Actuaries, of which I am a member.