S T A T E O F N E W Y O R K
________________________________________________________________________
5898--A
2019-2020 Regular Sessions
I N S E N A T E
May 16, 2019
___________
Introduced by Sen. GAUGHRAN -- 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
disability retirement benefits for certain participants in World Trade
Center rescue, recovery, or cleanup operations
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph 4 of subdivision d of section 605 of the retire-
ment and social security law is renumbered paragraph 5 and a new para-
graph 4 is added to read as follows:
4. NOTWITHSTANDING ANY OTHER LAW, RULE OR REGULATION TO THE CONTRARY,
ANY MEMBER WHO HAD AN ACTIVE MEMBERSHIP WHEN SUCH MEMBER PARTICIPATED IN
WORLD TRADE CENTER RESCUE, RECOVERY, OR CLEANUP OPERATIONS, AS SUCH
PARTICIPATION IS DEFINED IN SECTION TWO OF THIS CHAPTER, WHO INCURRED A
QUALIFYING WORLD TRADE CENTER CONDITION, AS DEFINED IN SECTION TWO OF
THIS CHAPTER, THAT IS DETERMINED TO HAVE BEEN INCURRED IN THE PERFORM-
ANCE AND DISCHARGE OF DUTY AND IS THE NATURAL AND PROXIMATE RESULT OF AN
ACCIDENT NOT CAUSED BY SUCH MEMBER'S OWN WILLFUL NEGLIGENCE, SHALL BE
PAID A PERFORMANCE OF DUTY DISABILITY RETIREMENT ALLOWANCE EQUAL TO
THREE-QUARTERS OF FINAL AVERAGE SALARY. THE PAYMENT OF SUCH PENSION
SHALL BE SUBJECT TO THE PROVISIONS OF SECTION SIXTY-FOUR OF THIS CHAP-
TER.
§ 2. Section 507 of the retirement and social security law is amended
by adding a new subdivision h-1 to read as follows:
H-1. NOTWITHSTANDING ANY OTHER LAW, RULE OR REGULATION TO THE CONTRA-
RY, ANY MEMBER WHO HAD AN ACTIVE MEMBERSHIP WHEN SUCH MEMBER PARTIC-
IPATED IN WORLD TRADE CENTER RESCUE, RECOVERY, OR CLEANUP OPERATIONS, AS
SUCH PARTICIPATION IS DEFINED IN SECTION TWO OF THIS CHAPTER, WHO
INCURRED A QUALIFYING WORLD TRADE CENTER CONDITION, AS DEFINED IN
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08565-03-9
S. 5898--A 2
SECTION TWO OF THIS CHAPTER, THAT IS DETERMINED TO HAVE BEEN INCURRED IN
THE PERFORMANCE AND DISCHARGE OF DUTY AND IS THE NATURAL AND PROXIMATE
RESULT OF AN ACCIDENT NOT CAUSED BY SUCH MEMBER'S OWN WILLFUL NEGLI-
GENCE, SHALL BE PAID A PERFORMANCE OF DUTY DISABILITY RETIREMENT ALLOW-
ANCE EQUAL TO THREE-QUARTERS OF FINAL AVERAGE SALARY. THE PAYMENT OF
SUCH PENSION SHALL BE SUBJECT TO THE PROVISIONS OF SECTION SIXTY-FOUR OF
THIS CHAPTER.
§ 3. This act shall take effect immediately and apply to all active
members who are determined to have incurred a qualifying World Trade
Center condition in the performance and discharge of duty that is the
natural and proximate result of an accident not caused by such member's
own willful negligence prior to the effective date of this act.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would amend the benefits of certain members of public
retirement systems who are subject to the provisions of Article 14 or
Article 15 of the Retirement and Social Security Law who contract any
form of disease or disability related to exposure to any elements in
connection with the World Trade Center rescue, recovery or cleanup oper-
ations. The annual accidental disability benefit would be 75% of a
member's final average salary less workers compensation, regardless of a
member's plan coverage. Currently, eligible members receive the acci-
dental disability benefit specified in the plan under which they are
covered, which for most Article 14 and 15 members is 1/3 of final aver-
age salary. This improved benefit would be payable only to current
members or their beneficiaries. Current retirees and their benefici-
aries would not be affected by this bill.
If this bill is enacted, the cost of the revised benefit will depend
upon the applicant's age, service, salary, plan, and benefit type other-
wise payable, but is expected to cost up to 4 times final average salary
per individual.
Insofar as this bill would affect the New York State and Local Employ-
ees' Retirement System, there are currently 610 active members, with a
combined salary of $6.4 million, who have filed an Application for World
Trade Center Notice who could potentially receive benefits under this
bill.
A precise cost for future years cannot be determined at this time.
However, pursuant to Section 25 of the Retirement and Social Security
Law, any increased cost would be borne entirely by the State of New York
and would require an itemized appropriation sufficient to pay the cost
of the provision. Every year a cost will be determined (and billed to
the State) based on those benefiting from this provision.
Summary of relevant resources:
The membership data used in measuring the impact of the proposed
change was the same as that used in the March 31, 2018 actuarial valu-
ation. Distributions and other statistics can be found in the 2018
Report of the Actuary and the 2018 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2015,
2016, 2017 and 2018 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, 2018
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.
S. 5898--A 3
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 18, 2019, and intended for use only during
the 2019 Legislative Session, is Fiscal Note No. 2019-102, prepared by
the Actuary for the New York State and Local Retirement System.
This bill would amend Sections 507 and 605 of the Retirement and
Social Security Law to allow any member of the New York State Teachers'
Retirement System who had an active membership when such member partic-
ipated in the World Trade Center rescue, recovery, or cleanup operations
and who incurred a qualifying World Trade Center condition determined to
have been incurred in the performance and discharge of duty to receive a
performance of duty disability retirement benefit equal to 75% of final
average salary. Currently an active member would receive an accidental
disability retirement benefit which is generally one-third of final
average salary. Members who become disabled or die as a result of a
qualifying World Trade Center condition are assumed to have become disa-
bled or died as a result of an accidental or on-the-job disability or
death. This bill would take effect immediately and apply to all active
members who are determined to have incurred a qualifying World Trade
Center condition in the performance and discharge of duty prior to the
effective date of this act.
The cost, or additional present value of benefits, is estimated to be,
on average, $320,000 for each member who receives this performance of
duty disability retirement benefit. Although the potential increase in
an affected member's benefit is estimated to be large, the additional
annual cost to the employers of members of the New York State Teachers'
Retirement System is estimated to be negligible if this bill is enacted
because it is anticipated there would be few applications received for
this performance of duty disability retirement benefit from our member-
ship.
Member 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 2019-26 dated May 10, 2019
prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2019 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:
SUMMARY OF BILL: With respect to the New York City Pension Funds and
Retirement Systems (NYCRS), the proposed legislation would amend
provisions of the Retirement and Social Security Law (RSSL) to grant to
active NYCRS members, who are subject to RSSL Articles 14 or 15 and
incur a World Trade Center (WTC) Qualifying Condition, a performance of
duty disability retirement equivalent to 75% of the member's Final Aver-
age Salary (FAS).
Effective Date: Upon Enactment.
S. 5898--A 4
IMPACT ON BENEFITS PAYABLE: Under the proposed legislation, the bene-
fits for active members of NYCRS who retire after the effective date
with a WTC Qualifying Condition would equal a retirement allowance of:
* 75% multiplied by FAS,
Reduced by:
* 100% of Workers' Compensation benefits (if any) payable (as required
by RSSL Section 64).
Please note that, generally, uniformed WTC retirees are currently
entitled to a 75% of FAS benefit (i.e. members of the New York City
Police Pension Fund (POLICE), the New York City Fire Pension Fund
(FIRE), and Sanitation, Correction, EMT, and Deputy Sheriff members of
the New York City Employees' Retirement System (NYCERS)). Therefore, the
application of the proposed legislation would likely be limited to
active Tier 3 and 4 civilian members of NYCERS, the Teachers' Retirement
System of the City of New York (NYCTRS), and the New York City Board of
Education Retirement System (BERS).
Although certain NYCERS members are ineligible for Workers' Compen-
sation benefits and therefore would not have their benefit subject to an
offset, for purposes of this Fiscal Note, it is assumed that the Work-
ers' Compensation offset provisions cited in Sections 1 and 2 of the
proposed legislation would not apply to NYCRS members because such
members are not paid retirement benefits under RSSL Article 2, which is
a requirement for the application of the offset provision contained in
RSSL Section 64.
FINANCIAL IMPACT - OVERVIEW: Although there are currently approximate-
ly 8,000 submitted WTC Notice of Participation Forms for applicable
active members of NYCERS, TRS, and BERS, the number of members from this
group, and any additional eligible members who could potentially benefit
from this proposed legislation in the future cannot be readily deter-
mined. Therefore, the estimated financial impact has been calculated on
a per event basis equal to the increase in the Present Value of Future
Benefits (PVFB) for an average member who is approved for WTC benefits
and who is assumed to benefit from the proposed legislation. In deter-
mining the increase in the PVFB for members who are assumed to benefit
from the proposed legislation, it has been assumed that 50% of the
members who would retire with a WTC benefit were those who would have
retired under an Ordinary Disability Retirement (ODR) benefit and that
the remaining 50% of members who would retire with a WTC benefit were
those who would have continued working if the proposed legislation were
not passed.
With respect to an individual member, the additional cost of this
proposed legislation could vary greatly depending on the member's length
of service, age, and salary history.
FINANCIAL IMPACT - PRESENT VALUES: Based on the census data and the
actuarial assumptions and methods described herein, the enactment of
this proposed legislation would increase the PVFB by approximately
$240,000, on average, for each occurrence of WTC benefits provided under
this proposed legislation.
FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: Enactment of this
proposed legislation would increase employer contributions, where such
amount would depend on the number of members affected as well as other
characteristics including the age, years of service, and salary history
of each member.
As there is insufficient data currently available to estimate the
number of members who might be approved for WTC benefits, the financial
impact would be recognized at the time of event. Consequently, changes
S. 5898--A 5
in employer contributions have been estimated assuming that the increase
in the PVFB will be financed over a time period comparable to that used
for actuarial losses under the Entry Age Normal cost method. Using this
approach, the additional PVFB would be amortized over a closed 15-year
period (14 payments under the One-Year Lag Methodology) using level
dollar payments.
Based on the Actuary's actuarial assumptions and methods in effect as
of June 30, 2018, the enactment of this proposed legislation is esti-
mated to increase annual employer contributions by approximately $28,000
for each WTC benefit provided under this proposed legislation. With
respect to the timing, increases in employer contributions would depend
upon when members would retire but, generally, increased employer
contributions will first occur the second fiscal year following approval
of the WTC benefit.
For example, if 10 members who would benefit from the proposed legis-
lation are approved for WTC benefits in the fiscal year ending June 30,
2019, then employer contributions could increase by about $280,000 per
year starting in fiscal year 2021.
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of the NYCRS to imple-
ment the proposed legislation.
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
CENSUS DATA: A large majority of the active NYCRS members who have
submitted WTC notices and who could potentially benefit from the
proposed legislation are members of NYCERS. Therefore, the estimates
presented herein are based on the census data used in the Preliminary
June 30, 2018 (Lag) actuarial valuation of NYCERS to determine the
Preliminary Fiscal Year 2020 employer contributions.
The approximate 8,000 active members who have submitted WTC Notice of
Participation Forms are a subset of the 61,985 active members in NYCERS
as of June 30, 2018 whose date of appointment is prior to September 11,
2001 and are not currently entitled to a WTC benefit equal to 75% of FAS
and, therefore, could potentially benefit from the proposed legislation.
These 61,985 active members had an average age of approximately 55.9
years, average service of approximately 22.0 years, and an average sala-
ry of approximately $81,900. This group consisted of 61,966 Tier 4
members and 19 Tier 6 members.
ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and annual
employer contributions presented herein have been calculated based on
the actuarial assumptions and methods in effect for the June 30, 2018
(Lag) actuarial valuations used to determine the Preliminary Fiscal Year
2020 employer contributions of NYCERS.
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the actuarial assumptions and methods used and are subject to
change based on the realization of potential investment, demographic,
contribution, and other risks. If actual experience deviates from actu-
arial assumptions, the actual costs could differ from those presented
herein. Costs are also dependent on the actuarial methods used, and
therefore different actuarial methods could produce different results.
Quantifying these risks is beyond the scope of this Fiscal Note.
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-
S. 5898--A 6
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 2019-30 dated June 7,
2019 was prepared by the Chief Actuary for the New York City Employees'
Retirement System, the New York City Teachers' Retirement System, and
the New York City Board of Education Retirement System. This estimate is
intended for use only during the 2019 Legislative Session.
