S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   8226
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              August 25, 2021
                                ___________
 
 Introduced  by M. of A. STECK -- read once and referred to the Committee
   on Governmental Employees
 
 AN ACT to amend the retirement and social security  law,  the  education
   law  and  the administrative code of the city of New York, in relation
   to providing cost-of-living adjustments

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. Subdivision c of section 78-a of the retirement and social
 security law, as added by chapter 125 of the laws of 2000, is amended to
 read as follows:
   c. Said cost-of-living adjustment shall be computed on a base  benefit
 amount  not to exceed eighteen thousand dollars of the annual retirement
 allowance defined in subdivision b of this section.   EFFECTIVE  ON  THE
 FIRST  DAY  OF  SEPTEMBER,  TWO THOUSAND TWENTY-TWO, SAID COST-OF-LIVING
 ADJUSTMENT SHALL BE COMPUTED ON A BASE  BENEFIT  AMOUNT  NOT  TO  EXCEED
 TWENTY-ONE  THOUSAND  DOLLARS OF THE ANNUAL RETIREMENT ALLOWANCE DEFINED
 IN SUBDIVISION B OF THIS SECTION.
   § 2. Subdivision c of section 378-a of the retirement and social secu-
 rity law, as added by chapter 125 of the laws of  2000,  is  amended  to
 read as follows:
   c.  Said cost-of-living adjustment shall be computed on a base benefit
 amount not to exceed eighteen thousand dollars of the annual  retirement
 allowance  defined  in  subdivision b of this section.  EFFECTIVE ON THE
 FIRST DAY OF SEPTEMBER, TWO  THOUSAND  TWENTY-TWO,  SAID  COST-OF-LIVING
 ADJUSTMENT  SHALL  BE  COMPUTED  ON  A BASE BENEFIT AMOUNT NOT TO EXCEED
 TWENTY-ONE THOUSAND DOLLARS OF THE ANNUAL RETIREMENT  ALLOWANCE  DEFINED
 IN SUBDIVISION B OF THIS SECTION.
   §  3. Subdivision c of section 532-a of the education law, as added by
 chapter 125 of the laws of 2000, is amended to read as follows:
   c. Said cost-of-living adjustment shall be computed on a base  benefit
 amount  not to exceed eighteen thousand dollars of the annual retirement
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD04154-02-1

 A. 8226                             2
 
 allowance defined in subdivision b of this section.   EFFECTIVE  ON  THE
 FIRST  DAY  OF  SEPTEMBER,  TWO THOUSAND TWENTY-TWO, SAID COST-OF-LIVING
 ADJUSTMENT SHALL BE COMPUTED ON A BASE  BENEFIT  AMOUNT  NOT  TO  EXCEED
 TWENTY-ONE  THOUSAND  DOLLARS OF THE ANNUAL RETIREMENT ALLOWANCE DEFINED
 IN SUBDIVISION B OF THIS SECTION.
   § 4. Subdivision c of section 13-696 of the administrative code of the
 city of New York, as added by chapter  125  of  the  laws  of  2000,  is
 amended to read as follows:
   c.  Said cost-of-living adjustment shall be computed on a base benefit
 amount not to exceed eighteen  thousand  dollars  of  the  annual  fixed
 retirement  allowance  defined in subdivision b of this section.  EFFEC-
 TIVE ON THE FIRST DAY OF SEPTEMBER, TWO THOUSAND TWENTY-TWO, SAID  COST-
 OF-LIVING  ADJUSTMENT  SHALL BE COMPUTED ON A BASE BENEFIT AMOUNT NOT TO
 EXCEED TWENTY-ONE THOUSAND DOLLARS OF THE  ANNUAL  RETIREMENT  ALLOWANCE
 DEFINED IN SUBDIVISION B OF THIS SECTION.
   § 5. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This proposed legislation would amend the City of New
 York's (City) Cost of Living Adjustment (COLA) provision in 13-696(c) to
 raise  the  base  retirement  allowance benefit cap amount, used for the
 COLA calculation, from $18,000 to $21,000.
   This proposed legislation would impact the New  York  City  Employees'
 Retirement  System  (NYCERS),  the  New  York  City Teachers' Retirement
 System (NYCTRS), the New York City Board of Education Retirement  System
 (BERS), the New York City Police Pension Fund (POLICE), and the New York
 City  Fire  Pension Fund (FIRE), collectively known as the New York City
 Retirement Systems and Pension Funds (NYCRS).
   Effective Date: Upon enactment and applicable to  the  September  2022
 COLA.
   IMPACT  ON  BENEFITS:  Certain  NYCRS  retirees  and beneficiaries are
 eligible to receive a COLA pursuant to the Administrative  Code  of  the
 City of New York (ACCNY) Section 13-696(a) (i.e.  age 62 and retired for
 five  years;  age 55 and retired for 10 years; disabled retirees who are
 retired for five years; and accidental death benefit recipients who have
 been receiving the benefit for five years).
   Currently, COLA is 50% of the Consumer Price  Index,  rounded  to  the
 next  higher 0.1%, but not to exceed 3% and not less than 1%, applied to
 the first $18,000 of the maximum retirement allowance as  adjusted  with
 prior COLAs.
   Spouses paid under a lifetime optional benefit receive 50% of the COLA
 that would have been payable to the retiree.
   Under  the proposed legislation, if enacted, the COLA percentage would
 be applied to the first $21,000 of the maximum retirement allowance.
   FINANCIAL IMPACT: The estimated financial  impact  of  increasing  the
 base  retirement  allowance benefit cap amount, used for the COLA calcu-
 lation as described above is an increase in the Present Value of  Future
 Benefits  (PVFB)  of $1.2 billion and an increase in the annual employer
 contributions of $858.5 million. A breakdown of the financial impact  by
 NYCRS is shown in the table below.
 
                   Additional          Estimated First Year
    NYCRS      Present Value           Annual Employer
             of Future Benefits         Contributions
                ($ Millions)             ($ Millions)
 
   NYCERS            $502.7                  $355.6

 A. 8226                             3
 
   NYCTRS             347.9                   237.2
   BERS                27.9                    15.2
   POLICE             229.9                   191.2
   FIRE                75.0                    59.3
   Total           $1,183.4                  $858.5
 
   In  accordance  with ACCNY Section 13-638.2(k-2), new Unfunded Accrued
 Liability (UAL) attributable to benefit changes are to be  amortized  as
 determined by the Actuary but generally over the remaining working life-
 time  of  those  impacted  by  the benefit changes. For purposes of this
 Fiscal Note it has been assumed that increases in the  UAL  attributable
 to  current  retirees would be recognized immediately and that increases
 in the UAL attributable to active members would be amortized over  peri-
 ods  ranging  from  12  to  15  years  depending  on the NYCRS (11 to 14
 payments under the One-Year Lag Methodology (OYLM)).
   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, 2020 actuarial valuations of NYCRS. In
 accordance with the OYLM used to determine 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 June 30, 2020 (Lag) actuarial valuations of NYCRS to
 determine the Preliminary Fiscal Year 2022 employer contributions.
   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 each respective NYCRS.
   The  Actuary  is proposing a set of changes for use beginning with the
 June 30, 2019 (Lag) actuarial  valuations  of  NYCRS  to  determine  the
 respective  Final Fiscal Year 2021 Employer Contributions (2021 A&M). If
 the 2021 A&M is enacted it is estimated that it would produce  PVFB  and
 annual  employer  contribution  results that are approximately 6-8% less
 than the results shown above.
   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.
   Not measured in this Fiscal Note are the following:
     *  The  initial,  additional administrative costs of NYCRS 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

 A. 8226                             4
 
 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 2021-52 dated June 14,
 2021 was prepared by the Chief Actuary for the New York City  Employees'
 Retirement  System,  the  New York City Teachers' Retirement System, the
 New York City Board of Education Retirement System, the  New  York  City
 Police Pension Fund, and the New York City Fire Pension Fund. This esti-
 mate is intended for use only during the 2021 Legislative Session.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill (legislative bill draft 04154-01-1) would amend subdivision
 c of Section 532-a of the Education Law to prospectively apply the cost-
 of-living adjustment (COLA) percentage to a base benefit amount  not  to
 exceed  $21,000  of  the annual retirement allowance. The current cap on
 the annual base benefit amount  is  $18,000.  This  benefit  improvement
 would be effective in September 2022.
   The  annual  cost  to  the  employers of members of the New York State
 TeachersÆ Retirement System for this benefit is estimated  to  be  $83.1
 million or .48% of payroll if this bill is enacted.
   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
 Annual Report. System assets are as reported in the  System's  financial
 statements,  and can also be found in the System's Annual Report.  Actu-
 arial assumptions and methods are provided  in  the  System's  Actuarial
 Valuation Report.
   The  source of this estimate is Fiscal Note 2021-34 dated June 1, 2021
 prepared by the Actuary of the New York State Teachers Retirement System
 and is intended for use only during the  2021  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:
   This bill would provide an increase in the  defined  benefit  cost-of-
 living  adjustment (COLA) for New York public retirement systems. Start-
 ing with a payment in September 2022, the annual cost of living  adjust-
 ment will be computed on a base benefit amount not to exceed $21,000.
   Insofar  as  this bill affects the New York State and Local Employees'
 Retirement System, pursuant to Section 25 of the Retirement  and  Social
 Security  Law,  the increased costs would be borne entirely by the State
 of New York and would require an itemized  appropriation  sufficient  to
 pay  the  cost of the provision. If this bill were enacted, the increase
 in the present value of benefits would be approximately $1.06 billion.
   Insofar as this bill affects the New York State and Local  Police  and
 Fire  Retirement  System  (PFRS), the increased costs would be shared by
 the State of New York and the participating employers in  the  PFRS.  If
 this  bill  were  enacted, the increase in the present value of benefits
 would be approximately $145 million. The estimated first year cost would
 be approximately $3.1 million to the State of New York and approximately
 $13 million to the participating employers in the PFRS.
   Summary of relevant resources:
   Membership data as of March 31, 2020 was used in measuring the  impact
 of the proposed change, the same data used in the April 1, 2020 actuari-
 al  valuation.  Distributions  and  other statistics can be found in the

 A. 8226                             5
 
 2020 Report of the Actuary and the 2020 Comprehensive  Annual  Financial
 Report.
   The  actuarial  assumptions and methods used are described in the 2020
 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, 2020
 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  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 March 19, 2021, and intended for use only during
 the 2021 Legislative Session, is Fiscal Note No. 2021-106,  prepared  by
 the Actuary for the New York State and Local Retirement System.