S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6441

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                             March 25, 2015
                               ___________

Introduced  by  M. of A. MAGNARELLI, BENEDETTO -- read once and referred
  to the Committee on Governmental Employees

AN ACT to amend the retirement and social security law, in  relation  to
  military service credit

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph (a) of subdivision  2  of  section  1000  of  the
retirement  and social security law, as added by chapter 548 of the laws
of 2000, is amended to read as follows:
  (a) hostilities participated in by the military forces of  the  United
States  in  Lebanon, from the [first] TWENTY-FIRST day of [June] AUGUST,
nineteen hundred [eighty-three] EIGHTY-TWO to the first day of December,
nineteen hundred eighty-seven, as established by receipt  of  the  armed
forces  expeditionary medal, the navy expeditionary medal, or the marine
corps expeditionary medal;
  S 2. 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.
  S 3. This act shall take effect immediately.
  FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
  This bill would amend subdivision 2 of section 1000 of the  Retirement
and  Social  Security  Law  by revising the starting date of hostilities
participated in by the military forces of the United States  in  Lebanon
from  June  1,  1983  to  August 21, 1982 for military service crediting
purposes. To obtain credit, a member must make payments as  required  in
Section  1000 of the Retirement and Social Security Law. Tier 1, 2, 3, 4
and 5 members are required to pay three percent of salary earned  during
the  twelve months of credited service immediately preceding the year in
which a claim is made for each year of military service. Tier 6  members
are  required  to  pay  six  percent  of salary earned during the twelve

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01762-04-5

              

A. 6441                             2

months of credited service immediately preceding the  year  in  which  a
claim is made for each year of military service.
  It is not possible to determine the total annual cost to the employers
of  members  of the New York State Teachers' Retirement System since the
total amount of service credit which would be claimed  under  this  bill
cannot  be  estimated.  However, the cost to the employers of members of
the New York State  Teachers'  Retirement  System  is  estimated  to  be
$21,700  per  year of service credited for Tier 1 and 2 members, $21,000
per year of service credited for Tier 3 and 4 members, $20,900 per  year
of  service  credited for Tier 5 members and $15,800 per year of service
credited for Tier 6 members if this bill is enacted. These  costs  would
be  offset by member payments required under Section 1000 of the Retire-
ment and Social Security Law.
  Employee 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
Comprehensive  Annual  Financial  Report  (CAFR).  System  assets are as
reported in the System's financial statements, and can also be found  in
the CAFR. Actuarial assumptions and methods are provided in the System's
Actuarial Valuation Report.
  The  source  of  this  estimate is Fiscal Note 2015-17 dated March 20,
2015 prepared by the Actuary of the New York State Teachers'  Retirement
System and is intended for use only during the 2015 Legislative Session.
I,  Richard  A.  Young,  am the Actuary for the New York State Teachers'
Retirement System. I am a member of the American  Academy  of  Actuaries
and  I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
  FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
  PROVISIONS OF PROPOSED LEGISLATION:  The  proposed  legislation  would
amend Retirement and Social Security Law ("RSSL") Section 1000, Subdivi-
sion  2,  Paragraph  (a),  to  change  the beginning date of the Lebanon
conflict from June 1, 1983 to August 21, 1982 to match the dates  recog-
nized  by the Federal Government. This would allow any member of the New
York City Retirement Systems ("NYCRS") who had military  service  during
the  hostilities  participated  in  by the military forces of the United
States in Lebanon between August 21, 1982 and May 31, 1983 the  opportu-
nity  to obtain service credit for that period of time if other require-
ments to obtain military service credit are met.
  The Effective Date of the proposed legislation would be  the  date  of
enactment.
  The  Actuary  has  presumed  that retirees as of the enactment of this
proposed legislation would not be eligible to purchase additional  mili-
tary service provided by this proposed legislation.
  IMPACT ON BENEFITS: For purposes of the respective NYCRS, each year of
military  service  credit  purchased  would  apply  toward providing the
member with a year of  benefit  accrual  under  the  particular  benefit
formula covering the member.
  The   NYCRS   include:  New  York  City  Employees  Retirement  System
("NYCERS"), New York City Teachers' Retirement  System  ("NYCTRS"),  New
York  City  Board of Education Retirement System ("BERS"), New York City
Police Pension Fund ("POLICE") and New York Fire Department Pension Fund
("FIRE").
  In certain circumstances, the member also may be entitled  to  utilize
such  military  service  as  qualifying  service for benefit eligibility
purposes.

A. 6441                             3

  For purposes of this Fiscal Note, it has been assumed that members who
purchase military service in accordance with this  proposed  legislation
would  generally  be  entitled to count such service for benefit accrual
purposes and for the purpose of qualifying for benefits.
  MEMBERS  IMPACTED: Insofar as this proposed legislation relates to the
NYCRS, the number of members who could  potentially  benefit  from  this
proposed legislation cannot be readily determined.
  For  illustrative  purposes  only,  a table is included in this Fiscal
Note presenting the estimated financial impact per member assuming  that
the  affected  member purchases service credit for the entire August 21,
1982 to May 31, 1983 period.
  FINANCIAL IMPACT - OVERVIEW: With respect to an individual member, the
additional cost  of  this  proposed  legislation  would  depend  on  the
member's  length  of  service  not  including the military service being
purchased, the years of military service being  purchased,  age,  salary
history and Plan in which the member participates.
  With  respect  to  employers  participating in the NYCRS, the ultimate
employer cost of this proposed legislation would be  determined  by  the
increase in benefits to be paid, the impact of certain benefits commenc-
ing  earlier,  shorter  working  lifetimes  and the reduction in certain
future member contributions.
  FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: With respect to the NYCRS
and based on the census data and assumptions herein,  the  enactment  of
this  proposed  legislation  would  increase the Actuarial Present Value
("APV") of  benefits  ("APVB")  by  approximately  $14,600  for  NYCERS,
$14,300  for NYCTRS, $8,800 for BERS, $25,000 for POLICE and $29,100 for
FIRE per year of service credit purchased as of June 30, 2015.
  In addition, with respect to the  NYCRS,  the  APV  of  future  member
contributions (primarily attributable to the payments by members of 3.0%
(6.0%  for  members who first join on and after April 1, 2012) of salary
per year of military service purchased) would increase by  approximately
$2,300 for NYCERS, $2,500 for NYCTRS, $1,400 for BERS, $3,500 for POLICE
and  $3,800 for FIRE per year of service credit purchased as of June 30,
2015.
  Consequently, with respect to the NYCRS, the APV of net future employ-
er contributions would increase by  approximately  $12,300  for  NYCERS,
$11,800  for NYCTRS, $7,400 for BERS, $21,500 for POLICE and $25,300 for
FIRE per year of service credit purchased as of June 30, 2015.
  FINANCIAL IMPACT  -  ADDITIONAL  EMPLOYER  COSTS:  Enactment  of  this
proposed  legislation  would increase employer costs, where such amounts
depend on the number of members affected and upon the amount of military
service being credited as well as other  characteristics  including  the
age, salary history and Plan in which the member participates.
  With  respect  to  the NYCRS, based on the Actuary's actuarial assump-
tions and methods in effect as of June 30, 2013, the enactment  of  this
proposed  legislation  is estimated to increase annual employer costs by
approximately $1,500 for NYCERS,  $1,400  for  NYCTRS,  $900  for  BERS,
$2,500  for  POLICE  and  $3,000  for  FIRE  per  year of service credit
purchased.
  The real cost of the enactment of this proposed legislation  would  be
the additional benefits paid.
  FINANCIAL  IMPACT - ADDITIONAL EMPLOYER CONTRIBUTIONS: With respect to
the NYCRS, increases in employer contributions would  depend  upon  when
the  members  purchase  the  military  service permitted by the proposed
legislation and such service is credited to  their  records,  but  would
ultimately be comparable to the increases in employer costs.

A. 6441                             4

  FINANCIAL  IMPACT  - SUMMARY: The following table summarizes the esti-
mated financial impact of this proposed legislation on the NYCRS  assum-
ing  one member in each System is eligible and purchases service for the
period from August 21, 1982 to May 31, 1983:

        Estimated Financial Impact to Allow Members of the NYCRS
               To Purchase Certain Military Service Credit
                           as of June 30, 2015

                   (Assumes One Member in Each System
                Purchases 0.778 Years{1} of Service Each)

                              ($ Thousands)
_
                                                              Estimated
                                        Additional            Additional
                       Additional      APV of Future             Annual
   Retirement           APV of           Employer              Employer
     System            Benefits       Contributions{2}          Costs{3}
_
   NYCERS                $11.39             $ 9.58              $ 1.17
   NYCTRS                 11.12               9.19                1.09
   BERS                    6.82               5.73                0.70
   POLICE                 19.48              16.71                1.95
   FIRE                   22.69              19.72                2.33
_
{1} .778 years represents the length of time from August 21, 1982 to May
31, 1983.
{2}  Equals  increase  in  APVB  minus  increase in APV of future member
contributions
{3} Estimated Additional Annual Employer Costs  are  determined  without
regard  to the funded status of the Retirement Systems and represent the
best estimates of the ultimate annual financial burden of  the  proposed
legislation  and  assume  that  any  additional  APV  of Future Employer
Contributions, as they arise, are amortized as actuarial losses over  15
years  (14 payments). Estimated Additional Annual Employer Contributions
would ultimately approximate estimated Additional Annual Employer Costs.
  If enacted during the 2015 Legislative Session and if  these  affected
members and their amount of military service being credited were identi-
fied  on  or  before  June  30, 2015, this proposed legislation would be
expected to increase  employer  contributions  to  the  NYCRS  beginning
Fiscal Year 2017.
  OTHER  COSTS:  The enactment of this proposed legislation would result
in some administrative expenses for the NYCRS and costs for Other  Post-
Employment Benefits ("OPEB").
  CENSUS DATA: The census data used for estimates of APV of benefits and
employer  contributions presented herein are the active members included
in the June 30, 2013 (Lag) actuarial valuations of NYCERS, NYCTRS, BERS,
POLICE and FIRE used to determine the Updated  Preliminary  Fiscal  Year
2015 employer contributions.
  ACTUARIAL  ASSUMPTIONS AND METHODS: The additional APV of benefits and
employer contributions presented herein have been estimated as  of  June
30,  2015  on  a  hypothetical basis for illustrative purposes with each
eligible member purchasing 0.78 years of military service.
  As benefiting from the provisions  of  this  proposed  legislation  is
dependent  upon  actions  by  Plan members and the timing and amounts of

A. 6441                             5

military service to be purchased are unknown, the financial impact would
likely be realized upon receipt by the Actuary of updated service credit
information.
  Consequently,  changes  in  employer contributions have been estimated
assuming the increase in the APV of Future Employer Contributions  would
be  financed  over  a  time period comparable to that used for actuarial
losses under the Entry Age Actuarial Cost Method. Using  this  approach,
the  Additional  APV of Future Employer Contributions would be amortized
over a closed 15-year period (14 payments under One-Year  Lag  Methodol-
ogy) using level dollar payments.
  ECONOMIC  VALUES OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impact of the proposed legislation discussed in  this
Fiscal  Note  are those appropriate for budgetary models and determining
annual employer contributions to the NYCRS.
  However, the  economic  assumptions  that  are  used  for  determining
employer  contributions do not develop risk-adjusted, economic values of
benefits.  Such risk-adjusted, economic values of benefits would  likely
differ significantly from those developed by the budgetary models.
  STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Acting
Chief Actuary for the New York City Retirement Systems. I am a Fellow of
the Society of Actuaries and a Member of the American Academy of Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
  FISCAL  NOTE  IDENTIFICATION:  This  estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal  Note  2015-15,  dated
March 16, 2015 prepared by the Acting Chief Actuary of the New York City
Retirement Systems.
  FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
  This  bill  would  extend the benefits of Chapter 548, Laws of 2000 to
members of public retirement systems in New York State who rendered  any
military service during the period of conflict in Lebanon from 9/21/82 -
12/1/87.  Currently,  the  period is defined to be 6/1/83 - 12/1/87. The
total service credit granted for any military service shall  not  exceed
three  (3)  years.  Members  must  have  at least five years of credited
service (not including military service).  Tier  1-5  members  would  be
required to make a payment of three percent of their most recent compen-
sation per year of additional service credit granted by this bill.  Tier
6  members  would  be required to make a payment of six percent of their
most recent compensation per year of additional service credit.
  If this bill is enacted, insofar as this proposal affects the New York
State and Local Employees' Retirement System (ERS), it is estimated that
the past service cost will average approximately 12% (9% for Tier 6)  of
an  affected  members'  compensation for each year of additional service
credit that is purchased.
  Insofar as this proposal affects the New York State and  Local  Police
and Fire Retirement System (PFRS), it is estimated that the past service
cost  will  average  approximately  17%  (14% for Tier 6) of an affected
members' compensation for  each  year  of  additional  service  that  is
purchased.
  The  exact  number  of  current  members as well as future members who
could be affected by this legislation cannot be readily determined.
  As this legislation states "None of the provisions of this  act  shall
be  subject  to  Section  25 of the Retirement and Social Security Law",
these past service costs would be shared by the State of  New  York  and
the participating employers in the ERS and the PFRS.
  Summary of relevant resources:

A. 6441                             6

  The  membership  data  used  in  measuring  the impact of the proposed
change was the same as that used in the March 31, 2014  actuarial  valu-
ation.    Distributions  and  other  statistics can be found in the 2014
Report of the  Actuary  and  the  2014  Comprehensive  Annual  Financial
Report.
  The  actuarial assumptions and methods used are described in the 2010,
2011, 2012, 2013 and 2014 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, 2014
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 estimate, dated January 12, 2015 and intended for use only during
the  2015  Legislative  Session, is Fiscal Note No. 2015-25, prepared by
the Actuary for the New  York  State  and  Local  Employees'  Retirement
System  and  the  New  York  State  and Local Police and Fire Retirement
System.