Senate Bill S8038A

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8038--A
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                               May 15, 2025
                                ___________
 
 Introduced  by  Sen. C. RYAN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
   -- committee discharged, bill amended, ordered  reprinted  as  amended
   and recommitted to said committee
 
 AN  ACT  to amend the retirement and social security law, in relation to
   enacting the "State Police  Retention  act";  and  providing  for  the
   repeal of such provisions upon expiration thereof
 
   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. The retirement and social security law is amended by adding a new
 section 381-c to read as follows:
   §  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
 
              

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07756-02-5
 S. 8038--A                          2

 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 THIRTY-SIX 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.
 UPON EXPIRATION OF THE TIME PERIOD SELECTED BY THE ELIGIBLE MEMBER, SUCH
 MEMBER'S PARTICIPATION IN DROP SHALL TERMINATE.
   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
 SUCH MEMBER'S 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.
   (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 SUCH MEMBER'S
 PERIOD 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 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  SERVICE
 RETIREMENT BENEFIT.
   (5) IF AN ELIGIBLE MEMBER REMAINS EMPLOYED AFTER SUCH MEMBER'S 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,
 S. 8038--A                          3
 
 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.
   § 3. This act shall take effect  immediately  and  shall  expire  five
 years  after  it  shall  have  become  a  law  when  upon  such date the
 provisions of this act shall be deemed repealed; provided, however, that
 the expiration of this act shall not  prevent  a  member  who  has  duly
 elected  to  participate  in DROP pursuant to the provisions of this act
 from completing the full period of DROP selected.
   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 main features of this DROP are:
   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 and Local  Police  and  Fire  Retirement  System
 (NYSLPFRS)  shall  consider DROP participants active members, and annual
 employer contributions shall continue to be made by  the  State  of  New
 York  to  the  NYSLPFRS  on behalf of such members. All loans and excess
 contributions shall be resolved by the date of entry into DROP.
   4. The length of participation in the DROP must be  specified  at  the
 time  of  election,  and may not be less than one year, nor exceed three
 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.
 S. 8038--A                          4
 
   5.  During  the  DROP  period,  the  monthly  pension of such affected
 members will be deferred and held by the NYSLPFRS 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 three years.
   The Partial Lump Sum program  currently  allows  NYSLPFRS  members  to
 receive  lump  sums up to 25% of the present value of their pensions. In
 combination 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 2025 Legislative Session, there
 will be an immediate past service cost  of  approximately  $205  million
 which 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.
   This  bill would be deemed to be repealed five years after it became a
 law and is therefore not expected to increase the future annual contrib-
 utions of the State of New York. However, if the anticipated  retirement
 experience  of members who are eligible for this benefit changes signif-
 icantly, there would be additional increases in employer costs.
   We  anticipate  significant  administrative  costs  to  implement  the
 provisions of this legislation.
   These  estimated costs are based on 1,958 affected members employed by
 the New York State Division of  State  Police,  with  annual  salary  of
 approximately $333 million as of March 31, 2024.
   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  May 16, 2025, and intended for use only during
 the 2025 Legislative Session, is Fiscal Note No. 2025-51. 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.