S T A T E   O F   N E W   Y O R K
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                                  6983--A
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                               May 20, 2021
                                ___________
 
 Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
   --  recommitted  to  the  Committee  on  Civil Service and Pensions 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  increasing  benefits payable by the correction officers'
   variable supplements fund to beneficiaries
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section  13-194 of the administrative code of the city of
 New York is amended by adding a new subdivision 12 to read as follows:
   12. IN ADDITION TO THE PAYMENTS SET FORTH IN PARAGRAPHS (C) AND (D) OF
 SUBDIVISION FOUR OF THIS SECTION, THERE SHALL BE PAID TO EACH  BENEFICI-
 ARY  ON  OR ABOUT THE DECEMBER FIFTEENTH NEXT SUCCEEDING HIS OR HER DATE
 OF RETIREMENT, AN AMOUNT EQUAL TO  THE  VARIABLE  SUPPLEMENTS  PAYMENTS,
 SUBJECT  TO  THE PROVISIONS OF ITEMS (I) AND (II) OF SUBPARAGRAPH ONE OF
 PARAGRAPH (E) OF SUBDIVISION FOUR OF THIS SECTION, THAT HE OR SHE  WOULD
 HAVE  RECEIVED, HAD HE OR SHE RETIRED ON THE DATE OF HIS OR HER EARLIEST
 ELIGIBILITY FOR SERVICE RETIREMENT, IN THE PERIOD MEASURED FROM (1)  THE
 LATER  OF (I) SUCH EARLIEST ELIGIBILITY DATE AND (II) JANUARY FIRST, TWO
 THOUSAND TWENTY-TWO AND (2) HIS OR HER DATE OF RETIREMENT.
   § 2. This act shall take effect immediately.
   FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This bill provides certain New York  City  Employees'
 Retirement  System  (NYCERS) Correction officers a lump sum benefit upon
 retirement, commonly referred to as a Deferred  Retirement  Option  Plan
 (DROP),  equal  to the amount of Correction Officer Variable Supplements
 Fund (COVSF) payments such officer would have received if he or she  had
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06509-05-2
 S. 6983--A                          2
              

 
 retired  at  the  later  of their respective earliest service retirement
 eligibility date or January 1, 2022.
   Effective Date: Upon enactment.
   BACKGROUND:  Correction  officers  who  participate  in NYCERS and who
 retire with immediate payability of a service retirement at their earli-
 est service retirement eligibility date (e.g., after 20 or 25  years  of
 credited service) are entitled to receive supplemental non-pension COVSF
 benefits in the amount of $12,000 per calendar year. Correction officers
 who  continue to work beyond their earliest service retirement eligibil-
 ity date are ineligible to receive COVSF payments until retirement, even
 though they would be eligible to retire from service and  receive  COVSF
 benefits.
   IMPACT ON BENEFITS: This bill would provide to NYCERS correction offi-
 cers  who  continue  to  work  beyond  their earliest service retirement
 eligibility date a lump sum DROP payment consisting of the annual  COVSF
 payment  each year beyond the later of their earliest service retirement
 date or January 1, 2022 (i.e., the COVSF payments the retiree would have
 received if he or she had retired at his or her earliest service retire-
 ment eligibility date or January 1, 2022, whichever  is  later)  without
 any adjustment for interest.
   The DROP does not apply to deaths or to disability retirement, even if
 those  events  occur  after  the earliest service retirement eligibility
 date.
   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 $90.2 million.
   Under the Entry Age Normal cost method used to determine the  employer
 contributions  to  NYCERS,  there  would  be an increase in the Unfunded
 Accrued Liability (UAL) of approximately $48.7 million and  an  increase
 in the Present Value of future employer Normal Cost of $41.5 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, 2021, the remaining working lifetime of NYCERS correction offi-
 cers is approximately 11 years.
   For  the  purposes  of this Fiscal Note, the increase in UAL was amor-
 tized over a 11-year period (10 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 $11.1 million each year.
   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 Final June 30, 2021 actuar-
 ial  valuation  of NYCERS. In accordance with the OYLM used to determine
 employer contributions, the increase  in  employer  contributions  would
 first be reflected in Fiscal Year 2023.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2021 (Lag) actuarial valuation  of
 NYCERS  to  determine the Preliminary Fiscal Year 2023 employer contrib-
 utions.
   The 8,054 NYCERS Correction officers as of June 30, 2021 had an  aver-
 age age of approximately 41.1 years, and average service of approximate-
 ly 10.6 years.
 S. 6983--A                          3
 
   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, 2021
 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year
 2023 employer contributions of NYCERS.
   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  NYCERS  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 of NYCERS 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, Michael J. Samet,  am  the  Interim
 Chief  Actuary  for,  and  independent  of, the New York City Retirement
 Systems and Pension Funds. I am a Fellow of the Society of Actuaries and
 a Member of the American Academy of 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 2022-30 dated April 21,
 2022 was prepared by the Interim Chief Actuary for  the  New  York  City
 Employees'  Retirement  System.  This  estimate is intended for use only
 during the 2022 Legislative Session.