S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5919--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 16, 2019
                                ___________
 
 Introduced by Sens. GOUNARDES, FUNKE, GAUGHRAN, KAMINSKY, SAVINO -- read
   twice  and  ordered  printed,  and when printed to be committed to the
   Committee on Cities -- recommitted  to  the  Committee  on  Cities  in
   accordance  with  Senate  Rule 6, sec. 8 -- committee discharged, bill
   amended, ordered reprinted as amended and recommitted to said  commit-
   tee
 
 AN  ACT  to  amend  the  administrative code of the city of New York, in
   relation to the pensionable earnings of first grade police officers
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section  14-111 of the administrative code of the city of
 New York is amended by adding two new subdivisions c and d  to  read  as
 follows:
   C.  WHEN A FIRST GRADE POLICE OFFICER SHALL HAVE SERVED IN THE RANK OF
 POLICE OFFICER FOR A PERIOD OF TWENTY-FIVE YEARS, HE OR SHE  SHALL  HAVE
 THE  SAME RIGHTS IN RESPECT TO THE POLICE PENSION FUND AS A POLICE OFFI-
 CER DESIGNATED TO ACT AS DETECTIVE OF THE THIRD  GRADE  WHO  SHALL  HAVE
 SERVED AS SUCH FOR A PERIOD OF TIME AGGREGATING TWO YEARS AT THE HIGHEST
 SALARY RATE FOR A DETECTIVE OF THE THIRD GRADE.
   D.  WHEN A FIRST GRADE POLICE OFFICER SHALL HAVE SERVED IN THE RANK OF
 POLICE OFFICER FOR A PERIOD OF THIRTY YEARS, HE OR SHE  SHALL  HAVE  THE
 SAME  RIGHTS  IN  RESPECT  TO  THE POLICE PENSION FUND AS A SERGEANT WHO
 SHALL HAVE SERVED AS SUCH FOR A PERIOD OF TIME AGGREGATING TWO YEARS  AT
 THE HIGHEST SALARY RATE FOR A SERGEANT.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
   SUMMARY  OF BILL: This proposed legislation would amend Section 14-111
 of the Administrative Code of the City of New York (ACCNY) to allow  for
 a  Police  Officer  1st  Grade  of  the  New York City Police Department
 (NYPD), who has been a Police Officer for at least 25 years, to have the
 same rights in respect to the New York City Police Pension Fund (POLICE)
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD02616-03-0

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 as a Police Officer designated to  act  as  a  Detective  3rd  Grade  by
 including,  for  pension purposes, the highest salary for such Detective
 aggregating for two years. This proposed legislation will also allow for
 a  Police  Officer  1st Grade of the NYPD, who has been a Police Officer
 for at least 30 years, to have the same rights in respect to POLICE as a
 Sergeant by including, for pension purposes, the highest salary for such
 Sergeants aggregating for two years.
   Effective Date: Upon enactment.
   IMPACT ON BENEFITS: The proposed legislation  would  permit  a  Police
 Officer  1st  Grade,  who have met certain service requirements, to have
 their pension calculations based on a higher salary.
   A Police Officer 1st Grade with at least 25 years  of  service  would,
 under  this  proposed  legislation,  if  enacted, receive an increase in
 their annual pension benefit of approximately $5,300 per year. A  Police
 Officer  1st  Grade  with at least 30 years of service would, under this
 proposed legislation, if enacted, receive an increase  in  their  annual
 pension  benefit  of  approximately $14,900 per year. This is due to the
 assumed higher salary and overtime, and  assumes  a  service  retirement
 benefit with 25 years and 30 years of service, respectively.
   Based on this increase and an estimate of the number of POLICE members
 that are expected to be impacted by this change, it is estimated that if
 this  proposed  legislation  is  enacted,  the annual increase in POLICE
 pension benefits paid will be approximately $0.5 million per year.
   With respect to an individual member, the impact on  benefits  due  to
 this  proposed  legislation could vary greatly depending on the member's
 age, years of service, retirement cause, and Tier.
   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) by approxi-
 mately $6.4 million every year.
   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 the member.
   Since the number of Police Officers 1st Grade that will retire with 25
 or more years of service or Police Officers 1st Grade that  will  retire
 with  30 or more years of service cannot be known in advance with credi-
 bility, the PVFB will be financed over the same  time  period  used  for
 actuarial  losses in accordance with Section 13-638.2(k-2) of the Admin-
 istrative Code of the City of New York. Using this approach,  the  addi-
 tional  UAL would be amortized over a closed 15-year period (14 payments
 under the One-Year Lag Methodology (OYLM)) using level dollar payments.
   Based on the Actuary's actuarial  assumptions  and  methods  described
 herein,  the  enactment  of  this  proposed  legislation is estimated to
 increase annual employer contributions  by  approximately  $0.8  million
 each year.
   The  costs  above  represent  the estimated impact for retirees in the
 first year the bill is enacted. Future years' costs in addition  to  the
 aforementioned  cost  would depend on the number of retirees who benefit
 under the legislation amongst other factors.
   CONTRIBUTION TIMING: For the purposes  of  this  Fiscal  Note,  it  is
 assumed  that  the changes in the PVFB and annual employer contributions
 would be reflected for the first time in the  June  30,  2020  actuarial
 valuation  of  POLICE.  In  accordance  with  the OYLM used to determine

 S. 5919--A                          3
 
 employer contributions, the increase  in  employer  contributions  would
 first be reflected in Fiscal Year 2022.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2019 (Lag) actuarial valuation  of
 POLICE  to  determine the Preliminary Fiscal Year 2021 employer contrib-
 ution. To estimate the number of retirees who could potentially  benefit
 from this proposed legislation, data from the prior actuarial valuations
 for POLICE was used. Below is a summary of the data from the prior valu-
 ations:
   *  Police Officer 1st Grade who retired with 25-29 years in rank - 661
 retired over the past 10 years.
   * Police Officer 1st Grade who retired with 30+ years in  rank  -  112
 retired over the past 10 years.
   Additional  salary data for Police Officers, Detectives, and Sergeants
 was provided by POLICE. Below is a summary of the data provided:
   * Salary (excluding overtime and outstanding wage contract increases)
   o Police Officer 1st Grade - $101,225
   o Detective 3rd Grade - $111,594
   o Sergeant - $123,933
   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,  2019
 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year
 2021 employer contributions of POLICE.
   Due  to the outstanding wage contract for Police Officers, Detectives,
 and Sergeants as of the date this Fiscal Note was released, the salaries
 provided for this analysis have been adjusted to reflect the  assumption
 of  pattern  bargaining  based on the first year of the recently settled
 Captains Endowment Association contract of 2.25% plus an additional 2.5%
 for Police Officers.
   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  POLICE  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 methods 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  to  implement  the
 proposed 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.

 S. 5919--A                          4
 
   FISCAL  NOTE  IDENTIFICATION:  This Fiscal Note 2020-56 dated June 26,
 2020 was prepared by the Chief Actuary for  the  New  York  City  Police
 Pension  Fund.  This  estimate  is intended for use only during the 2020
 legislative Session.