S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7783
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                                May 6, 2025
                                ___________
 
 Introduced by Sens. JACKSON, HARCKHAM -- 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 d 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:
   d.  The  percentage  referred  to  in this section shall be determined
 annually by reference 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. Said percentage 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 AND EFFEC-
 TIVE THE FIRST DAY OF SEPTEMBER, TWO THOUSAND  TWENTY-SEVEN,  SHALL  NOT
 EXCEED FIVE PERCENT NOR BE LESS THAN ONE PERCENT.
   § 2. Subdivision d 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:
   d. The percentage referred to in  this  section  shall  be  determined
 annually  by reference 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. Said percentage shall equal fifty percent of the annual inflation,

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD08218-03-5
              

 S. 7783                             2
 
 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 AND EFFEC-
 TIVE THE FIRST DAY OF SEPTEMBER, TWO THOUSAND  TWENTY-SEVEN,  SHALL  NOT
 EXCEED FIVE PERCENT NOR BE LESS THAN ONE PERCENT.
   §  3. Subdivision d of section 532-a of the education law, as added by
 chapter 125 of the laws of 2000, is amended to read as follows:
   d. The percentage referred to in  this  section  shall  be  determined
 annually  by reference 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. Said percentage 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  AND  EFFEC-
 TIVE  THE  FIRST  DAY OF SEPTEMBER, TWO THOUSAND TWENTY-SEVEN, SHALL NOT
 EXCEED FIVE PERCENT NOR BE LESS THAN ONE PERCENT.
   § 4. Subdivision d 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:
   d.  The  percentage  referred  to  in this section shall be determined
 annually by reference 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. Said percentage 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 AND EFFEC-
 TIVE THE FIRST DAY OF SEPTEMBER, TWO THOUSAND  TWENTY-SEVEN,  SHALL  NOT
 EXCEED FIVE PERCENT NOR BE LESS THAN ONE PERCENT.
   § 5. 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 a payment in September 2027, the maximum percentage calculated
 for the annual cost of living increase shall increase from three percent
 to five percent.
   Insofar as this bill affects the New York State and  Local  Employees'
 Retirement  System (NYSLERS), the increased costs would be shared by the
 State of New York and the local participating employers in the  NYSLERS.
 If  this  bill  were  enacted  during  the 2025 Legislative Session, the
 increase in the present value of benefits would  be  approximately  $844
 million.
   In  NYSLERS,  this benefit improvement will be funded by (1) billing a
 past service cost to  cover  retrospective  benefit  increases  and  (2)
 increasing the billing rates charged annually to cover prospective bene-
 fit increases, as follows:
   (1) To fund retrospective costs, pursuant to Section 25 of the Retire-
 ment  and Social Security Law, the State of New York will be required to
 pay $819 million as of March 1, 2026.
 S. 7783                             3
 
   (2) To fund prospective costs, the annual contribution required of all
 participating employers in NYSLERS is 0.04%  of  billable  salary  ,  or
 approximately  $4.8  million  to the State of New York and approximately
 $7.3 million to the local participating employers. This PERMANENT ANNUAL
 COST  will vary in subsequent 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), the increased costs would be shared
 by the State of New York and the local participating  employers  in  the
 NYSLPFRS.    If  this  bill  were  enacted  during  the 2025 Legislative
 Session, the increase in the present value of benefits would be approxi-
 mately $91.7 million.
 
 NYSLPFRS                    Increase in present   Increase in required
                             value of benefits     contributions
 Pensioners                  $ 63.1 mn             $ 0.0 mn
 Actives Tiers 1-5 (Closed)  $ 17.6 mn             $ 37.1 mn
 Actives Tier 6 (Open)       $ 11.0 mn             $ 54.6 mn
   Total                     $ 91.7 mn             $ 91.7 mn
 
   In NYSLPFRS, this benefit improvement will be funded by increasing the
 billing rates charged annually to cover both retrospective and  prospec-
 tive  benefit increases. The annual contribution required of all partic-
 ipating employers in NYSLPFRS is 0.2% of billable  salary,  or  approxi-
 mately  $1.7  million  to  the  State of New York and approximately $7.5
 million to the local participating employers. This PERMANENT ANNUAL COST
 will vary in subsequent billing cycles with changes in the billing  rate
 and salary of the affected members.
   The  current corridor of 1% and 3% provides an average COLA percentage
 that is approximately equal  to  half  the  rate  of  inflation  over  a
 retiree's lifetime. By maintaining the 1% floor but increasing the maxi-
 mum  to  5%, this bill provides a larger retiree COLA percentage in high
 inflationary environments but results in more volatile employer contrib-
 ution rates. Prefunding COLA benefits cannot eliminate or  mitigate  the
 increased  volatility  in  the  billing  rates  caused  by  this benefit
 improvement.
   To develop the costs above, our models included a Monte  Carlo  method
 of 5,000 simulations, each consisting of 30-year CPI-U projections.
   In approximately 3,700 of the 5,000 simulations, inflation exceeded 6%
 at  least  once.  In  these  simulations, high inflationary environments
 persisted for a three-year period on average. Employer billing rates  in
 these  simulations  increased  approximately  1.9%  under this proposal,
 instead of 1.1% under current law.
   In approximately 1,400 of the 5,000  simulations,  inflation  exceeded
 10%  at least once. In these simulations, high inflationary environments
 persisted for a six-year period on average. Employer  billing  rates  in
 these  simulations  increased  approximately  4.2%  under this proposal,
 instead of 2.1% under current law.
   Summary of relevant resources:
   The inflation measurement used in  this  analysis  was  based  on  the
 February  2025  Consumer  Price Index for All Urban Consumers: U.S. City
 average, published by the U.S. Bureau of Labor Statistics.
   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
 S. 7783                             4
 
 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 April 22, 2025, and intended for use only  during
 the 2025 Legislative Session, is Fiscal Note No. 2025-95. 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.