S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8172
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               July 7, 2021
                                ___________
 
 Introduced by M. of A. CUSICK -- read once and referred to the Committee
   on Governmental Employees
 
 AN  ACT  to  amend  the  general  municipal law, in relation to allowing
   certain members of the New York city fire department pension  fund  to
   receive a membership date in the New York city fire department pension
   fund  attributable to service in the titles of police cadet program or
   police cadet program II in the New York city police  department  cadet
   program
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 209-fff of the general municipal law, as  added  by
 chapter 431 of the laws of 2019, is amended to read as follows:
   §  209-fff.  Provisions  relating to a membership date in the New York
 city police pension fund OR THE FIRE DEPARTMENT PENSION  FUND  attribut-
 able  to  service in the titles of police cadet program and police cadet
 program II in the New York city  police  department  cadet  program.  1.
 Notwithstanding any provision of law to the contrary, upon election, any
 member  of  the  New  York city police pension fund OR THE NEW YORK CITY
 FIRE DEPARTMENT PENSION FUND who is subject to article fourteen  of  the
 retirement  and social security law, and who served in the New York city
 police department cadet program in the title of police cadet program  or
 police  cadet  program II prior to April first, two thousand twelve, but
 did not join the New York city employees' retirement system while  serv-
 ing  in either such title, may purchase credit for the period of service
 in such titles in the New York city police department cadet  program  by
 paying  into  the New York city police pension fund OR THE NEW YORK CITY
 FIRE DEPARTMENT PENSION FUND all member contributions plus interest,  at
 a  rate  of five percent per annum, which would have been payable to the
 New York city employees' retirement system under any  provision  of  law
 had such member joined the New York city employees' retirement system on
 the  earliest  date  that he or she was appointed to the title of police
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD09337-02-1

 A. 8172                             2
 
 cadet program or police cadet program II in the  New  York  city  police
 department  cadet  program,  provided  such  payment is made within five
 years after the effective date of this section.
   2. Any member of the New York city police pension fund OR THE NEW YORK
 CITY  FIRE  DEPARTMENT PENSION FUND who acquires service credit pursuant
 to this section shall be entitled to all rights, benefits and privileges
 to which he or she would have been entitled had his or her membership in
 the New York city police pension fund OR THE NEW YORK CITY FIRE  DEPART-
 MENT  PENSION  FUND  begun  upon  the  earliest  date that he or she was
 appointed to the title of police cadet program or police  cadet  program
 II in the New York city police department cadet program, but in no event
 shall  the service credit acquired pursuant to this section be deemed to
 be: (A) service in the police force or any other type of service counted
 or creditable as service in the police force under section 13-218 of the
 administrative code of the city of New York[,]; (B) SERVICE IN THE  FIRE
 DEPARTMENT  OF THE CITY OF NEW YORK OR ANY OTHER TYPE OF SERVICE COUNTED
 OR CREDIBLE AS SERVICE IN SUCH FIRE DEPARTMENT UNDER SECTION  13-318  OF
 THE  ADMINISTRATIVE  CODE  OF THE CITY OF NEW YORK; OR (C) SERVICE UNDER
 section five hundred thirteen of the retirement and social security  law
 or  any  other provision of law for purposes of eligibility for benefits
 and to determine the amount of benefits under the New York  city  police
 pension fund OR THE NEW YORK CITY FIRE DEPARTMENT PENSION FUND.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This proposed legislation would amend Section 209-fff
 of  the  General Municipal Law (GML) to allow New York City Fire Pension
 Fund (FIRE) members subject to Article 14 of the Retirement  and  Social
 Security  Law  (RSSL)  (Tier  3, Tier 3 Revised, and Tier 3 Enhanced) to
 purchase prior service as a cadet in  the  New  York  Police  Department
 (NYPD)  and use the appointment date as a cadet to determine the initial
 date of FIRE membership for  plan  or  tier  eligibility  provided  such
 purchase of service is made within five years of October 29, 2019.
   Effective Date: Upon enactment.
   BACKGROUND:  Currently,  the  purchase  of  prior  NYPD  cadet service
 performed while not a member of the New York City Employees'  Retirement
 System  (NYCERS)  does  not  provide a retroactive date of membership in
 FIRE, nor would it provide additional service  retirement  benefits  for
 members subject to Article 14 of the RSSL.
   IMPACT  ON  BENEFITS:  Under  the  proposed  legislation,  if enacted,
 purchased NYPD cadet service performed while  not  a  member  of  NYCERS
 would  entitle such member with a cadet service date before July 1, 2009
 to be deemed a Tier 2 member with all the rights and privileges of  such
 Tier,  and such service would be included in the calculation of benefits
 as non-qualifying service credit.
   Also, under the proposed legislation, if enacted, purchased NYPD cadet
 service would entitle members with cadet service between  July  1,  2009
 and  April  1,  2012  who  joined  FIRE  after April 1, 2012 as a Tier 3
 Revised or Enhanced member to be deemed an original Tier 3  member  with
 all  the rights and privileges of a member who joined such Tier prior to
 April 1, 2012.
   IMPACT ON PAYABILITY: Since eligibility for FIRE benefits are based on
 tier or plan, including cadet service towards tier or plan,  eligibility
 would  increase  and/or  accelerate  the  payability date of benefits in
 accordance with applicable earlier tiers or plans.
   ADDITIONAL MEMBER CONTRIBUTIONS: For cadets who did not  join  NYCERS,
 the  member  would have to pay member contributions that would have been

 A. 8172                             3
 
 payable to NYCERS had they joined on  their  initial  cadet  appointment
 date, plus 5.0% annual interest.
   Member  contributions  for  FIRE  are  determined  by tier and plan as
 follows:
     * Tier 2 - contribution rates are based on entry age.
     * Tier 3 and Tier 3 Revised - Basic Member  Contributions  (BMC)  of
     3.0%.
     * Tier 3 Enhanced - BMC of 3.0% plus Additional Member Contributions
     currently  equal  to  2.1%. The additional contribution rate of 2.1%
     can be raised to 3.0% based on a financial analysis performed by the
     Actuary every three years. At no time  can  the  total  contribution
     rate exceed 6.0%.
   FINANCIAL  IMPACT  -  OVERVIEW: There is no data available to estimate
 the number of FIRE members who have prior service as a cadet  and  would
 potentially benefit from this proposed legislation. Therefore, the esti-
 mated  financial  impact has been calculated on a per event basis for an
 average FIRE member who is either currently a Tier 3  member  and  could
 benefit  from the enactment of this proposed legislation by being deemed
 a Tier 2 member, or is currently a Tier 3 Revised or Enhanced member who
 could benefit by being deemed an original Tier 3 member.
   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 Present Value of Future
 Benefits (PVFB) by an amount which would depend on the Tier  granted  by
 the purchase of prior cadet service.
   For a Tier 3 member who purchases cadet service and is deemed a Tier 2
 member,  the  enactment  of this proposed legislation would increase the
 PVFB by  approximately  $287,300,  on  average,  for  each  member.  The
 proposed  legislation  would  also  decrease the Present Value of member
 contributions by approximately $44,900, on average,  after  taking  into
 account the cost of the buyback, for a net result of an average increase
 in  the  Present Value of future employer contributions of approximately
 $332,200.
   Under the Entry Age Normal cost method used to determine the  employer
 contributions  to  FIRE,  there  would  be  an  average  increase in the
 Unfunded Accrued Liability (UAL) of approximately $43,700 and an average
 increase in  the  Present  Value  of  future  employer  Normal  Cost  of
 $288,500.
   For  a  Tier  3 Revised or Enhanced member who purchases cadet service
 and is deemed an original Tier 3 member, the enactment of this  proposed
 legislation  would  increase the PVFB by approximately $11,700, on aver-
 age, for each member. The proposed legislation would also  increase  the
 Present  Value of member contributions by approximately $1,400, on aver-
 age, after taking into account the cost of the buyback, for a net result
 of an average increase in the Present Value of future employer  contrib-
 utions of approximately $10,300.
   Under  the Entry Age Normal cost method used to determine the employer
 contributions to FIRE, there would be an average increase in the UAL  of
 approximately  $200  and  an  average  increase  in the Present Value of
 future employer Normal Cost of $10,100.
   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

 A. 8172                             4
 
 characteristics  including the age, years of service, and salary history
 of the member.
   As  there  is  no  data  currently available to estimate the number of
 members who might benefit from the proposed legislation,  the  financial
 impact  would  be recognized at the time of event. Consequently, changes
 in employer contributions have been estimated assuming that the increase
 in the UAL will be financed over the same time period used for actuarial
 losses in accordance with Section 13-638.2(k-2)  of  the  Administrative
 Code  of  the  City of New York. Using this approach, the additional UAL
 would be amortized over a closed 15-year period (14 payments  under  the
 One-Year Lag Methodology) using level dollar payments.
   For  the  purposes  of  this  Fiscal  Note,  the  UAL payment plus the
 increase in the Normal Cost results in an increase  in  annual  employer
 contributions  of approximately $21,500, on average, for each member who
 is deemed a Tier 2 member, and of approximately $600,  on  average,  for
 each member who is deemed an original Tier 3 member.
   With  respect to the timing, increases in employer contributions would
 depend upon when members purchase their prior cadet service but,  gener-
 ally,  increased  employer  contributions  will  first  occur the second
 fiscal year following the processing of the  member's  buyback  applica-
 tion.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the June 30, 2020 (Lag)  actuarial  valuation  of  FIRE  to
 determine the Preliminary Fiscal Year 2022 employer contributions.
   There  are  2,822  active  FIRE  members  as  of June 30, 2020 who are
 currently in Tier 3, Tier 3 Revised, or Tier 3 Enhanced and could poten-
 tially benefit from the proposed legislation by being deemed  a  Tier  2
 member  (i.e. age 29 and older). These active members had an average age
 of approximately 33.1 years, average service of approximately 4.6 years,
 and an average salary of approximately $94,200.
   There are 3,243 active FIRE members  as  of  June  30,  2020  who  are
 currently  in  Tier  3  Revised or Tier 3 Enhanced and could potentially
 benefit from the proposed legislation by being deemed an original Tier 3
 member (i.e.  age 26 and older). These active members had an average age
 of approximately 31.7 years, average service of approximately 3.9 years,
 and an average salary of approximately $86,400.
   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.  Additionally,  1.2 years of cadet service was assumed
 based on the amount of cadet service previously purchased by members  of
 the New York City Police Pension Fund.
   The  Actuary  is proposing a set of changes for use beginning with the
 June 30, 2019 (Lag) actuarial valuations of FIRE to determine the  Final
 Fiscal  Year  2021 Employer Contributions (2021 A&M). If the 2021 A&M is
 enacted, it is estimated that it would produce Present Value of Employer
 Contributions and annual employer contributions results that are approx-
 imately 2-3% larger for those deemed a Tier 2 member  and  approximately
 2-3% smaller for those deemed an original Tier 3 member.
   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

 A. 8172                             5
 
 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:
     * Future purchases of non-qualifying service by members who would be
     deemed Tier 2 were this bill to pass.
     * The initial, additional administrative costs of FIRE and other New
     York City agencies 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.
   FISCAL  NOTE  IDENTIFICATION:  This  Fiscal Note 2021-45 dated June 9,
 2021 was prepared by the Chief  Actuary  for  the  New  York  City  Fire
 Pension  Fund.  This  estimate  is intended for use only during the 2021
 Legislative Session.