S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8181--A
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               June 6, 2019
                                ___________
 
 Introduced  by  M.  of A. ABBATE, DARLING, BRAUNSTEIN, DINOWITZ, WEPRIN,
   SOLAGES, MALLIOTAKIS, HEVESI, PHEFFER AMATO, QUART --  read  once  and
   referred  to the Committee on Governmental Employees -- recommitted to
   the Committee on Governmental Employees in  accordance  with  Assembly
   Rule  3,  sec.  2  --  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
   determination  of salary base for members of the city of New York fire
   department pension fund
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section  443 of the retirement and social security law is
 amended by adding a new subdivision h to read as follows:
   H. NOTWITHSTANDING ANY GENERAL, SPECIAL OR LOCAL LAW, CHARTER,  ADMIN-
 ISTRATIVE  CODE,  AGREEMENT,  RESOLUTION  OR  RULE  OR REGULATION TO THE
 CONTRARY, THE SALARY BASE FOR MEMBERS OF  THE  CITY  OF  NEW  YORK  FIRE
 DEPARTMENT PENSION FUND WHOSE EMPLOYMENT WITH THE FIRE DEPARTMENT OF THE
 CITY  OF  NEW YORK COMMENCED ON OR AFTER THE FIRST OF JULY, TWO THOUSAND
 TO WHOM THIS ARTICLE OTHERWISE APPLIES SHALL BE DETERMINED IN  THE  SAME
 MANNER  AS  THE  SALARY  BASE  FOR  MEMBERS OF THE CITY OF NEW YORK FIRE
 DEPARTMENT PENSION FUND WHOSE EMPLOYMENT WITH THE FIRE DEPARTMENT OF THE
 CITY OF NEW YORK COMMENCED BEFORE THE FIRST OF JULY, TWO THOUSAND.
   § 2. This act shall take effect immediately and shall apply to members
 of the city of New York fire department pension fund who retire  on  and
 after such effective date.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY  OF BILL: This proposed legislation would amend Section 443 of
 the Retirement and Social Security Law (RSSL) to change the salary  base
 for Tier 2 members of the New York City Fire Pension Fund (FIRE) who are
 hired  on  or  after July 1, 2000 to a salary base used for such members
 who joined prior to July 1, 2000.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD11504-06-0

 A. 8181--A                          2
 
   Effective Date: Upon enactment.
   IMPACT ON BENEFITS: Currently, Tier 2 FIRE plan benefits are primarily
 derived  from a salary base. For Tier 2 FIRE members hired prior to July
 1, 2000 (original Tier 2 members), the  salary  base  is  equal  to  the
 greater of
   (1) the pensionable earnings in the final 12 months of service, or
   (2)  the  average pensionable earnings earned in any consecutive three
 years of service.
   Pensionable earnings in the final 12 months of service may not  exceed
 120% of the previous 12 months' pensionable earnings. If the salary base
 is  based  on  the  highest  three  consecutive  years, no single year's
 pensionable earnings may exceed 120% of the average of the two  previous
 years' pensionable earnings.
   For  Tier  2  Fire  members hired on or after July 1, 2000 (new Tier 2
 members), the salary base is equal to the pensionable earnings earned in
 the final 12 months of service only.
   Under the proposed legislation, if enacted, the salary base  shall  be
 determined  the  same  for Tier 2 Fire members hired on or after July 1,
 2000 as it is for Tier 2 members hired prior to July 1, 2000.
   FINANCIAL IMPACT - PRESENT VALUES: Based on the actuarial  assumptions
 and methods described herein, the enactment of this proposed legislation
 would increase the Present Value of Future Benefits (PVFB) and the Pres-
 ent  Value  of  future  employer  contributions  by  approximately  $3.0
 million.
   Under the Entry Age Normal cost method used to determine the  employer
 contributions  to  FIRE,  there  would  be  an  increase in the Unfunded
 Accrued Liability (UAL) of approximately $0.1 million and an increase in
 the Present Value of future employer Normal Cost of $2.9 million.
   FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In  accordance  with
 Section 13-638.2(k-2) of the Administrative Code of the City of New York
 (ACCNY),  new UAL attributable to benefit changes are to be amortized as
 determined by the Actuary, but are generally amortized over the  remain-
 ing  working  lifetime  of  those impacted by the benefit changes. As of
 June 30, 2019, the remaining working lifetime  of  the  Tier  2  members
 hired on or after July 1, 2000 is approximately 13 years.
   For  the  purposes  of this Fiscal Note, the increase in UAL was amor-
 tized over a 13-year period (12 payments under the One-Year Lag  Method-
 ology  (OYLM))  using  level  dollar  payments.  This  payment  plus the
 increase in the Normal Cost results in an increase  in  annual  employer
 contributions of approximately $350,000 each year.
   CONTRIBUTION  TIMING:  For  the  purposes  of  this Fiscal Note, it is
 assumed that the  changes  in  the  Present  Value  of  future  employer
 contributions  and  annual employer contributions would be reflected for
 the first time in the June 30, 2019  actuarial  valuation  of  FIRE.  In
 accordance  with  the OYLM used to determine employer contributions, the
 increase in employer contributions would first be  reflected  in  Fiscal
 Year 2021.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2019 (Lag) actuarial valuation  of
 FIRE  to  determine  the  Preliminary Fiscal Year 2021 employer contrib-
 utions.
   There are 5,278 active Tier 2 Fire members hired on or after  July  1,
 2000  as  of June 30, 2019 and they have an average age of approximately
 41.3 years, average service of approximately 15.4 years, and an  average
 salary of approximately $132,800.

 A. 8181--A                          3
 
   ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value of
 future   employer   contributions   and  annual  employer  contributions
 presented herein have been calculated based on the actuarial assumptions
 and methods in effect for the June 30, 2019 (Lag)  actuarial  valuations
 used  to  determine  the  Preliminary Fiscal Year 2021 employer contrib-
 utions of FIRE.
   RISK AND UNCERTAINTY: The costs presented in this Fiscal  Note  depend
 highly  on the realization of the actuarial assumptions used, as well as
 certain demographic characteristics of FIRE and other exogenous  factors
 such  as investment, contribution, and other risks. If actual experience
 deviates from actuarial assumptions, the actual costs could differ  from
 those  presented herein. Costs are also dependent on the actuarial meth-
 ods used,  and  therefore  different  actuarial  methods  could  produce
 different  results.  Quantifying these risks is beyond the scope of this
 Fiscal Note.
   Not measured in this Fiscal Note are the following:
   * The initial, additional administrative costs of FIRE and  other  New
 York City agencies to implement the proposed legislation.
   * Pension  costs  for  Tier  2 members of New York City Police Pension
 Fund hired on or after July 1, 2000 who currently have the same  benefit
 formula  as  the  FIRE Tier 2 members hired on or after July 1, 2000 and
 who may obtain the same benefit improvement through parity  via  collec-
 tive bargaining or similar legislation.
   * The  impact  of  this  proposed  legislation on Other Postemployment
 Benefit (OPEB) costs.
   STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief  Actu-
 ary  for,  and  independent of, the New York City Retirement Systems and
 Pension Funds. I am a Fellow of the Society of  Actuaries,  an  Enrolled
 Actuary under the Employee Retirement Income and Security Act of 1974, a
 Member of the American Academy of Actuaries, and a Fellow of the Confer-
 ence  of Consulting Actuaries. I meet the Qualification Standards of the
 American Academy of Actuaries to render the actuarial opinion  contained
 herein.   To the best of my 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 2020-17 dated March 20,
 2020 was prepared by the Chief  Actuary  for  the  New  York  City  Fire
 Pension  Fund.    This estimate is intended for use only during the 2020
 Legislative Session.